BHP Billiton CFO Graham Kerr Explains Annual Profit Declines

BHP Billiton BHP CFO Graham Kerr discussed a large drop in the diversified natural resources company's annual profit, along with the company's plans to tighten operations, and China's need for energy on CNBC's Squawk Box Tuesday morning. "There is no doubt that our profit result was down versus the previous year, largely attributed to a drop in prices, which had a negative $9 billion impact," said Graham. "But to the things that we can control, you know, volume growth grew by 7 percent year on year. We pulled $2.7 billion worth of costs out [of] the business, and our major projects remain on schedule and budget. At the same time, we still have a healthy margin of 33 percent." Graham noted that falling commodity prices are the symptom of a healthier marketplace. Related: BHP Billiton Annual Profit Declines 30% "There was a period where supply was struggling to keep up with demand, which led to very high prices. Where are we today? You know, we see more supply coming into the marketplace, and as a result we see more of a balanced market," said Graham. "But I think it's important to the understand when you look at the emerging economies, and in particular China, the growth rates are 7 to 8 percent in long with government expectations are still very healthy, and as a consequence, we expect to see continued demand for our products." He considers China's growth "healthy by most standards," despite the 7 to 8 percent growth rate being something that many analysts disagree with. Graham is confident that China will move away from being an economy based off infrastructure expansion to one that emphasizes more energy and food production. "We think we are very well equipped to meet that growing demand," said Graham. At the time of this writing, Jason Cunningham had no position in the mentioned equities.