BHP Billiton Ltd, the world's largest mining company, may have full-year profit boosted US$1 billion this year because of the declining Australian dollar, according to FW Holst & Co.

"The sort of moves we have seen have a positive benefit for BHP's earnings," said Rob Craigie, a senior analyst at Melbourne-based Holst, a brokerage that's been operating since 1893. He estimates BHP may report profit before one-time gains of US$23.7 billion, up 54 percent on a year ago.

The Australian currency has fallen 13 percent this half to 84 US cents, increasing profits for companies whose sales are in dollars and costs are in local currency. BHP has more than half its assets in Australia, including iron ore and coal mines that accounted for a third of its sales last year.

"Over the past few months, I have reduced my average forecast exchange rate" to 82.3 Australian cents (69.1 US cents) for the year ending June 30, Craigie said yesterday in a interview. He had previously forecast 95 Australian cents. Every one US cent decline in the Australian dollar adds US$80 million to BHP's earnings after tax, he said.

Net income

The company may report adjusted net income of US$24.6 billion, according to the mean estimate of 16 analysts compiled by Bloomberg News.

The Australian dollar may reach 75 US cents in the next six months because of a slowing in global growth, David Forrester, a currency economist at Barclays Capital in Singapore, said on Tuesday.

The Australian currency rose 9.5 percent in the 12 months ending on June 30, reducing BHP's underlying earnings before interest and tax by US$986 million. The higher Australian dollar increased the cost of mining copper, nickel, iron ore and coal.

"The main impact from a move in currency is on costs," said Ken West, a partner at Melbourne-based Perennial Investment Partners Ltd, where he helps manage the equivalent of A$2.8 billion. A decline in the Australian dollar "is quite significant for costs, there's no doubt about it," he said.

To be sure, the gain from a weaker local currency may be offset by the decline in some commodity prices, Holsts' Craigie said.