SYDNEY: Global mining giant BHP Billiton on Tuesday posted a first-half net loss of $5.67 billion and slashed dividends as plunging commodity prices on the back of a slowing Chinese economy hammered the bottom line.
The result in the six months to December 31 compared to a $4.26 billion profit in the previous corresponding period, with revenue dropping 37 percent to $15.71 billion.
Underlying earnings—which exclude one-off writedowns—were down 92 percent to $412 million.
“Slower growth in China and the disruption of OPEC have resulted in lower prices than expected,” said chief executive Andrew Mackenzie.
“However, our company remains resilient with assets that generate free cash flow through the cycle and a strong balance sheet.”
The Anglo-Australian miner has been hard hit by falling prices for its two main commodities, iron ore and oil, with the company scrapping a long-held pledge to keep dividends steady or rising.
After ratings agency Standard & Poor’s warned BHP it could face another credit rating downgrade if it did not abandon its progressive dividend policy, the interim return to shareholders was slashed to 16 US cents from 62 cents previously.
It follows Rio Tinto adopting a similar scenario earlier this month, when it recorded an annual net loss of $866 million in what it called a “highly challenging environment.”
Mackenzie said the new dividend policy was “part of a broader strategy to help BHP Billiton manage volatility.”
“The divestment of $7 billion of assets and the demerger of South32 leaves us with a focused portfolio of large, low-cost, long-life assets in a set of favored commodities.
BHP, like other miners, has been forced to tighten its belt owing to the commodities crash and chairman Jac Nasser warned of an uncertain outlook.
“While the continued development of emerging economies will underpin longer-term demand growth for commodities, we now believe the period of weaker prices and higher volatility will be prolonged,” he said.