In the final six months of 2002, the group's earnings were down over 20% to $931m (�587m) when compared with the same period in 2001.

BHP: the world's largest miner

BHP Billiton, the world's largest diversified mining firm, reported the drop in earnings despite rises in the price of major commodities such as oil, copper and nickel in 2002.

BHP Billition chief executive Charles Goodyear said prospects remain healthy due to a mix of rising commodity prices, strong demand and internal restructuring.

However, he warned that international tensions make predicting market conditions difficult.

"We are seeing... good operating performance from our business and good cost savings coming through, and project development on time and on budget, so the operating side of the business is actually doing quite well," Mr Goodyear told the BBC's World Business Report.

Dollar woes

BHP Billiton struggled last year because it earns US dollars for the commodities it sells, but pays wages in the local currencies of the countries in which it operates - such as Australia and South Africa.

That was good news while the rand and Australian dollar were weak, but the strengthening of those currencies has made operating costs more expensive and hit BHP Billiton's bottom line.

It's tough to get optimistic in the current uncertainty we see out there Charles Goodyear, BHP Billiton chief executive

Investors are watching recently appointed chief executive Mr Goodyear closely to see if he can restore confidence in the company's profitability.

Mr Goodyear was appointed last month to replace Brian Gilbertson who left after only six months as chief executive because of differences with the board.

Despite "substantial uncertainty" in the geopolitical climate, Mr Goodyear said, copper prices have moved up recently, while "nickel prices are over $8000 a tonne, energy coal prices have recovered to $27 a tonne or more".

"We are seeing very strong demand in China, particularly for iron ore and alumina... so despite the very uncertain economic time around the world some of the pricing and demand is not bad."

Nonetheless, he remained cautious.

"We can't give a long projection, but it's tough to get optimistic in the current uncertainty we see out there."

But in the meantime he's hoping that rising prices for oil will help offset declines in other commodities that the company mines.

Shareholders had sent BHP Billiton's stock 3% higher by mid-morning on Monday in London.