BHP has come good with a December half profit every bit as good as everyone expected – $8 billion – and announced that the best thing it can do with its mountain of cash it to buy BHP shares.

It also has to buy a new CEO with Chip Goodyear quitting at the end of the year – I reckon if they didn’t pay the boss so much, he’d have to work longer.

The market isn’t worried about that though – all eyes instead were on the announcement that BHP’s capital management programme is being boosted by $10 billion to a total of $13 billion.

What that means is that BHP will buy back $13 billion of its own shares over the next 18 months. Plenty of small Australian shareholders would prefer to see a bonus dividend instead, but the international investors who really own the world’s biggest diversified resources company are delighted with the buy-back.

Stockbroker Charlie Aitken, an unabashed BHP fan along with just about everyone else, has previously suggested the management would do better by using its moolah to undo the dual-listing structure by buying and cancelling the London Billiton end of the firm, but there’s no sign of anything so brave. Chairman Don’t Argue Argus has unwound the Brambles dual listing, which he also chaired, but BHP is in a different league.

Which remains the real lesson of today’s figures. Managing something this big and rich is a major challenge, but BHP thinks it has strong internal candidates to replace Chip.

It remains to be seen if they can bring under control the cost blow-outs that have started to become a regular feature of the top Australian company.

Peter Fray

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