Singapore 23/02/2016 - BHP Billiton has posted a $5.7 billion loss for the half-year ended December 2015 as it notes significantly weaker prices across all its major commodities which had a negative impact of $7.8 billion.
The loss compares to a $4.27 billion profit in the corresponding half in 2014.
Revenue fell 37 percent year-on-year to $15.71 billion in July-December 2015, the global miner said Tuesday.
“While we were prepared for lower prices across our commodities, the reduction over the last six months has been more severe and synchronised than expected. The short- to medium-term outlook for the sector remains challenging. We expect prices will take time to recover and are likely to remain volatile,” BHP said.
On copper, prices continued to be affected by growing supply, slightly weaker-than-expected demand, improved productivity at existing operations and a stronger US dollar, said BHP.
In the short- to medium-term, new and expanded copper production is expected to keep the market well supplied, despite cuts being announced to higher-cost production, it said.
In the long term, the copper outlook remains positive as demand is supported by China’s shift towards consumption and the scope for substantial growth in emerging markets, it added.
A deficit is expected to emerge towards the end of this decade in the copper market as grade decline, rising costs and limited high-quality development opportunities constrain the industry’s ability to meet growing demand, BHP forecasted.
Underlying EBIT for its copper business plunged by $1.9 billion to $101 million in the December 2015 half year, reflecting lower realised prices and expected grade-related volume decline at Escondida.
BHP said it expects to realise a further $2.1 billion of gains in the 2016 financial year, when adjusted for the impact of lower grades at Escondida.
BHP also cut its interim dividend by 74 percent to 16 cents and adopted a new dividend policy that provides a minimum 50 percent pay-out of underlying attributable profit going forward.
“While we were prepared for lower prices across our commodities, we now believe the period of weaker prices and higher volatility will be prolonged. From a position of strength, we have adopted a dividend policy that further protects our balance sheet and ensures financial flexibility,” said the company.
It will also reduce capital expenditure in the 2016 and 2017 financial years by a total of $3.5 billion, “while retaining a suite of high-return, value-enhancing projects.”
On the same day, BHP also announced a reshuffle of its top management with the creation of a new simplified operating model aimed at making the company “more agile to responding to the challenges and opportunities presented by a rapidly changing global marketplace.”
Standard & Poor’s (S&P) had recently cut BHP’s crediting ratings to A from A+ amid low commodity prices and demand uncertainty.
BHP’s share price had closed at A$17.63 ($12.74) on Tuesday, up 2.6 percent from its previous day’s close.