BHP unveils $14bn spin-off, profit up 8%

Melbourne - Top global miner BHP Billiton will spin off a roughly $14bn company to shareholders, mostly offloading assets it acquired in its 2001 merger with Billiton, as it looks to focus on its strongest businesses.

Chief Executive Andrew Mackenzie, in the top job for just over a year, said the move to simplify BHP to iron ore, copper, coal and petroleum would rev up growth in cash flow and boost returns.

"By concentrating on what we do best, the development and operation of major basins, we can improve our productivity further, faster and with greater certainty," Mackenzie said in a statement.

The plans were unveiled as BHP reported an 8% rise in second-half underlying attributable profit to $5.69bn, according to Reuters calculations off the full year result. That was just below forecasts for a second-half profit of $5.94bn, according to Thomson Reuters Starmine's SmartEstimate.

However, the miner held off announcing a highly anticipated buyback, disappointing investors who had been hoping for a buyback of up to $8bn, according to UBS estimates.

"The balance sheet is strong and getting stronger and laying the basis for future discussions on capital management," Mackenzie told reporters, when asked about the company's thinking on a share buyback.

The spin-off company, yet to be named, will bundle together BHP's aluminium, manganese, Cerro Matoso nickel, some coal assets and the Cannington silver, lead and zinc mine.

The new company was expected to be headquartered in Perth and listed in Australia, with a secondary listing in South Africa. Shareholders in BHP Billiton Ltd and BHP Billiton Plc would receive shares in the new company on a pro-rata basis.

BHP did not give any details of the size of the new company, which analysts had estimated ahead of the results could be worth around $14bn depending on its assets, and said only that it would carry "minimal debt".

The company would be headed up by BHP Billiton chief financial officer Graham Kerr, while Brendan Harris, head of investor relations, would be chief financial officer.

BHP's Australian Nickel West operations were not included in the new company, and a separate sale process was continuing, Mackenzie said. The company was in talks with several potential buyers.