The country's largest resources group Broken Hill Proprietary (BHP) has reported only its second annual bottom-line loss in its 113-year history after writing down the value of its most troublesome assets by a A$2.77 billion (about HK$12.97 billion). BHP unveiled a 6.1 per cent slide in net operating profit to $1.3 billion for the year to May 31, but the write-downs - which reflect how BHP sees Asia's crisis affecting the global economy and commodity prices - produced an overall loss of $1.47 billion. The size of yesterday's write-downs were at the top end of expectations and were welcomed by analysts who have been calling for BHP to more realistically value its underperforming assets. Shaw Stockbroking resources analyst John Colnan believed the write-downs - which he said 'reflect some horrendous decisions of the past' - were necessary. 'The potential for huge write-downs has been overhanging the company for the past six to nine months,' he said, adding investors were happy the write-downs were now 'out of the way'. BHP claims it is 'focused tightly' on lowering its cost base, restructuring its portfolio around high-quality assets and reducing its debt. Proceeds from asset sales during the year were $3 billion and BHP signalled it could offload another $2 billion to $3 billion in assets. Cost reduction benefits boosted pretax profit by about $363 million and BHP said it intended to push on with its cost-cutting programme. BHP's largest write-downs were in its struggling copper business, which had already suffered a $550 million write-down the previous financial year. The company revealed yesterday it had slashed the value of its copper assets in North America and Peru by $1.6 billion.
