It won’t get any bigger for the Big Australian. While $US24.3 billion in earnings before interest and tax for 2007-08 will exceed the overall profits of our banking cartel, it’s not quite in the same league as Global Big Oil.

Exxon-Mobil recently reported a world record $US11.68 billion in earnings for the June quarter but this fell short of expectations so the stock sank 3%.

And so it was with BHP-Billiton today as it fell $1 or 2.6% to $37.60 in morning trade as almost $500 million a week in operating earnings didn’t get the job done in the great game of beating expectations.

As Alan Kohler reported on Business Spectator today (also in this Crikey edition), BHP-Billiton’s earnings have risen more than 700% since 2003, the first full year after the Billiton merger and before WMC was swallowed.

But the stock price has only increased 400% over the same period because investors don’t believe the profits are sustainable.

Indeed, copper, nickel and oil prices have all come off sharply in recent weeks, although the dominance of coal and iron ore have more to give as the latest contract increases feed through into earnings.

Australia’s first lady Therese Rein is presumably one of many happy BHP-Billiton shareholders although, strictly speaking, no one seems to know if that is the case.

This Crikey story in February 2007 pointed out that her highly government-dependent share portfolio included $158,000 worth of BHP-Billiton shares. Since then, the stock has risen more than 20%.

When we inquired about whether the Rudds still retained six figure stakes in ANZ and NAB last week, the PM’s office emailed through the following reply:

The Register of Members’ Interests shows that by letter dated 3 July 2007 Mr Rudd (then Leader of the Opposition) informed the Registrar that Ms Rein had established a blind trust.

The Registrar was advised that:

(a) the trust is managed by independent trustees

(b) legal title in the holdings is vested in the trustees

(c) the Trust Deed contains binding instructions which prohibit the trustees from notifying Ms Rein about the purchase, holding or disposal of the specific contents of the trust; and

(d) the trustees are authorised to provide Ms Rein only such information as is required for the proper administration of her taxation affairs, such as the total value of holdings and the value of franking credits.

In his declaration dated 11 March 2008 Mr Rudd advised the Registrar that Ms Rein maintained the blind trust arrangements notified to the Registrar in July 2007.

This doesn’t really answer the question. Surely placing an existing portfolio of shares into a blind trust isn’t blind at all because the Rudds still know what went into it.

Therese has certainly done well by hanging onto the Big Australian, but at a personal level she’d be even better off if Kevin’s government blocked the Rio Tinto takeover bid. BHP could then focus on returning tens of billions to shareholders and running mines rather than building empires. And that would send the share price soaring back above $40.

After yesterday’s B&B Power writedown, this list of $100m-plus losses is now up to 11 for 2007-08 and headed for a record.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey