Reported in bloomberg news online today, BHP Billiton Ltd., the world’s largest mining company, may have full-year profit boosted $1 billion this year because of the declining Australian dollar, according to FW Holst & Co.

The Australian currency has fallen 13 percent this half to 84 U.S. 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 for the year ending June 30, Craigie said today in a interview. He had previously forecast 95 Australian cents. Every U.S. one cent decline in the Australian dollar adds $80 million to BHP’s earnings after tax, he said.

BHP fell 3.8 percent to A$36.40 at the 4:10 p.m. Sydney time close on the Australian Stock Exchange.

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

BHP spokesman Peter Ogden declined to comment when contacted at his Melbourne office today.

Global Growth

The Australian dollar may reach 75 U.S. cents in the next six months because of a slowing in global growth, David Forrester, a currency economist at Barclays Capital in Singapore, said Sept. 23.

The Australian currency rose 9.5 percent in the 12 months ended June 30, reducing BHP’s underlying earnings before interest and tax by $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. BHP’s base metals unit, which includes copper, accounted for 16 percent of revenue last year. Copper has declined 19 percent to $6,936 a ton since the end of June. It may average $7,100 in 2009, the Australian Bureau of Agricultural & Resource Economics said on Sept. 22.

“I have further reduced my commodity price forecasts so that in actual fact those changes in commodity price forecasts may more than offset the benefit from the exchange rate,” Craigie said.

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