* Incoming CEO Mackenzie has 22 years oil, gas experience
* H1 profit before one-offs drops 43 pct to $5.68 bln
* Takes $3 bln charge on alumina, nickel assets
* BHP sees iron ore, coal prices dampened by new supply
* Shares touch 17-month high
By Sonali Paul
MELBOURNE, Feb 20 Global miner BHP Billiton
appointed the head of its non-ferrous business as its
new chief executive on Wednesday to replace Marius Kloppers, as
it reported an expected 43 percent drop in half-year profit.
Andrew Mackenzie, 56, whom Kloppers wooed from rival Rio
Tinto in 2008, will move into the top job in May,
taking the reins at a time when the company is battling to
protect margins by cutting costs amid weaker commodity prices.
The announcement came as BHP reported its profit before
one-off items tumbled to $5.68 billion for July-December 2012
from $10 billion a year earlier and took $3 billion in
writedowns on its aluminium and nickel businesses.
BHP's shares rose nearly 1 percent to a 17-month high of
A$39.34 after Mackenzie's appointment before dipping slightly in
a flat overall market.
Analysts said the change of CEO was not comparable with
rival Rio Tinto Ltd, which sacked former CEO Tom
Albanese last month for misjudged deals in aluminium and coal.
"It's a tenure thing," said Hayden Bairstow, a CLSA mining
analyst. "Tom Albanese was taken out for performance, but this
Mackenzie, a prize-winning scientist who grew up in an
industrial town near Glasgow, was at oil and gas giant BP
before he entered the mining industry, giving him crucial
experience in the key commodities BHP has targeted for growth as
it looks to make itself less dependent on iron ore.
"He's a rare executive because he has experience in both the
oil and gas, petrochemicals and minerals area of this business.
And that fits us perfectly," BHP Chairman Jac Nasser told
Investors and analysts hailed the appointment of Mackenzie,
who headed the company's base metals and energy coal operations,
saying the market would welcome his expertise in energy.
"The new CEO is coming from a very long career in oil and
gas and minerals, especially oil and gas. And oil and gas is a
growing proportion of BHP's business. So I think it will be well
received by the market," said Mark Taylor, senior resources
analyst at Morningstar.
CHANGE OF GUARD
The timing of Kloppers' exit was a bit sooner than expected,
even though the company flagged last November that it was
looking for a new CEO. Kloppers, 50, has been in the job for
nearly six years and said retiring was a tough decision.
He joins the fallen chiefs at BHP's rivals Rio Tinto, Anglo
American and Xstrata, which have all chopped
heads after they splashed out on expensive projects and
acquisitions and allowed costs to get out of control in the boom
Kloppers won kudos for leading BHP through the global
financial crisis in much better shape than its peers, but
disappointed investors with his expensive bid for shale gas
assets in the United States, which led to $2.8 billion in
writedowns and cost him his bonus last year.
Nasser praised Kloppers for making the company stronger and
safer, and his role in overhauling the global iron ore market to
market-based pricing rather than annual contract talks.
"We actually returned more capital to our shareholders
during this period than all of the rest of our peers combined,"
he said, pointing to $36 billion in gains to shareholders,
including $24 billion in dividends.
Kloppers also led the company in three failed takeover tilts
at Rio Tinto, Rio Tinto's iron ore business and Potash Corp
, three deals that fell apart largely as the company had
underestimated the concerns of regulators.
BHP said it expects global commodity prices to remain under
pressure as new low-cost supplies come into production, even
through demand is expected to improve over the next 12 months.
The key challenge for Mackenzie will be to manage the
business in those tougher conditions.
"There's an enormous latent capacity within the company to
improve margins and adjust the portfolio to the current world we
live in," said Tim Schroeders, a portfolio manager at Pengana
Capital, which owns BHP shares.
Net profit fell to $4.2 billion with the aluminium and
nickel writedowns offset by gains from the sales of its Richards
Bay minerals stake, its Browse gas stake, its diamonds business,
and Yeelirie uranium deposit.
BHP raised its interim dividend by 3.6 percent to 57 cents,
also in line with analysts' forecasts.
Rio last week surprised investors with a 15 percent rise in
its dividend despite reporting its first ever loss, hit by $14.4
billion in writedowns on its aluminium business and Mozambican
coal assets, which cost Albanese his job.
BHP last year shelved $40 billion in projects and shut some
loss-making coal mines, as the whole industry battled with
soaring costs, a strong Aussie dollar and sliding commodity
In further moves to protect its margins, it said on
Wednesday it had cut $944 million in costs over the past half
year, but it did not outline a broader target for cost cuts.
That is in contrast with rival Rio Tinto, which
plans to cut $5 billion in costs by the end of 2014.
Senior executives at BHP who were passed over for the top
job include the head of ferrous Marcus Randolph, petroleum chief
Mike Yeager and chief of aluminium, nickel and corporate
development, Alberto Calderon.