BHP Billiton Ltd, the world’s biggest mining company, reported that full-year underlying profit declined 81 percent for the worst result since 2001 after raw materials tumbled to a 25-year low in January.
Underlying profit was US$1.2 billion in the year ended June 30 from US$6.4 billion a year earlier, Melbourne-based BHP said yesterday in a statement.
That beat the US$1.04 billion average estimate among 19 analyst forecasts compiled by Bloomberg.
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BHP follows rival Rio Tinto Group in posting lower profits after prices, including its top earner, iron ore, plunged to about half their 2011 peak on oversupply and slower growth in China, the biggest commodities buyer.
The result will likely mark a low point for BHP, with a rebound in prices and higher output to lift profits this fiscal year, according to Shaw and Partners Ltd.
“I’m confident this is the earnings nadir,” Sydney-based Shaw and Partners Ltd analyst Peter O’Connor said by telephone after the result was announced. “The direction for earnings from here is higher.”
BHP has advanced 13 percent in Sydney trading since touching an 11-year low on Jan. 21.
The 98-member Bloomberg World Mining Index has advanced about 40 percent after commodities surged the most in the first half since the 2008 financial crisis as China’s economy stabilized and policymakers backed growth.
“While commodity prices are expected to remain low and volatile in the short to medium term, we are confident in the long-term outlook for our commodities, particularly oil and copper,” CEO Andrew Mackenzie said in the statement.
BHP will make investment decisions on the Mad Dog 2 conventional oil project and a copper growth program at the Spence operation by the end of next year, he said.
BHP recorded a full-year net loss of US$6.4 billion, the producer said in its statement.
That is the first annual loss since the company was formed in the 2001 merger of BHP Ltd and Billiton PLC, according to data compiled by Bloomberg.
Underlying profits were the lowest since fiscal 2001, data showed.
The producer booked after-tax charges of US$7.7 billion related to the deadly dam spill at its Samarco iron ore joint venture in Brazil, global tax issues and against its US shale assets amid weaker oil prices, BHP said. ‘
The dam collapse on Nov. 5 in Brazil’s Minas Gerais State released 60 million cubic meters of iron waste through a valley, leaving as many as 19 people dead and hundreds more homeless.
Samarco will not have necessary approvals to restart operations this year and the results of an external investigation into the incident will be available in the next few weeks, BHP said in its statement.
BHP’s full-year dividend fell 76 percent to US$0.30 a share, under a policy set out in February that links the payment to profits. Capital expenditure fell 42 percent to US$6.4 billion and will be cut further to US$5 billion in the current fiscal year, it said.
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