BHP Billiton Limited (BHP) reported an attributable profit of US$2.6 billion ($4.1 billion) for the half year ended December 2008. The result was down 56.5% from the prior corresponding period amid rapid deterioration in market conditions.

Excluding exceptional items, BHP said attributable profit was US$6.1 billion, up 2.2% on a year ago.

The company’s exceptional items included a US$3.3 billion charge related to the indefinite suspension of Ravensthorpe Nickel Operations.

As a consequence of the suspension, announced on 21 January 2009, the company said it would stop processing mixed nickel cobalt hydroxide product at Yabulu.

The company reported a record net operating cash flow of US$13.1 billion, up 74%.

Commenting on its half-year results, BHP said it achieved a robust operating and financial performance in an environment that deteriorated significantly during the period, particularly over the last quarter.

“Our results benefited from strong volume additions in petroleum and iron ore, as the growth projects in these two CSGs continued to ramp up,” the company noted.

The company explained some of the challenges in the current environment.

“During the six months to December 2008, we have witnessed an unprecedented fall in commodity prices, with market prices falling in the order of 50% during this period,” the company said.

“As the global economy continues to deteriorate, we are witnessing further demand contraction for our products.”

The company said the uncertainty would likely persist in the medium term.

“As a consequence of the macro economic environment we have taken a number of actions consistent with our focus to maximise long term shareholder value,” the company said.

“These actions include the decision not to proceed with the Rio Tinto offers, adjustments in production where physical demand decreased, suspending cash negative operations and deferrals of low priority capital expenditures,” the company elaborated.

BHP added that it continued to focus on its cost performance and expected to see the benefits of falling input prices.

For the half year, BHP said underlying EBIT increased by 23.7% over the corresponding period to US$11.9 billion, with a healthy underlying EBIT margin of 45.6%.

Looking ahead, BHP said it expected global economic growth to be weak over the short to medium term.

The miner added that government stimulus would take some time to flow through to economic activity.

“In reaction to deteriorating financial and economic conditions, there is a risk of increasing protectionism by governments which may hamper any global recovery,” the miner warned.

However, the company noted that its long-term outlook remained unchanged.

“We expect emerging economies’ long term growth to be robust as they continue on the path to urbanisation and industrialisation,” BHP said.

Looking specifically at the commodities market, BHP weakness and volatility has prevailed during the first half of the 2009 financial year.

“We expect that commodity price weakness and volatility will persist,” the company said.

The group noted that weaker local currencies against the US dollar and the benefits of falling input prices, albeit with some lag, have partially offset the impact on margins.

BHP declared an interim dividend of US41c per share, an increase of 41% on last year.

Yesterday, BHP Billiton shares fell 22c to $29.78.