Global miner BHP Billiton reports a loss of $5.67bn

Global mining giant BHP Billiton has reported a significant half-year net loss of $5.67bn (£4bn) for the six months ending December 31st, marking the company’s first loss in more than 16 years.

As a result of this loss, BHP cut its dividend from 62 cents to 16 cents. It made a profit of $4.26bn in the same period a year earlier.

Revenue also fell by 37% to $15.7bn, which caused underlying profit to fall 92% to $412m, compared to $4.89bn a year earlier.

The global mining industry has struggled as of late because of a decrease in demand for key commodities, such as iron ore and coal, due to the decline in China’s economy.

BHP has scrapped its aggressive dividend policy, which pledged to pay a higher or substantial dividend at each half-year result. Jac Nasser, BHP Billiton Chairman, said he had “not made these changes lightly.”

Mr Nasser said: “Our purpose is to deliver consistent and sustainable shareholder value. Since the merger of BHP and Billiton in 2001, we have returned a total of US$77bn in cash to shareholders, more than any other company in this sector.

“At the same time, BHP Billiton understands the fundamental importance of maintaining a strong balance sheet.

“The changes to the dividend policy announced today reflect the Board’s assessment of the outlook for commodities and the increased financial flexibility this demands. 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. The adoption of a dividend payout ratio will further support BHP Billiton’s financial strength, while providing flexibility at the bottom of the cycle and ensuring discipline at the top.

“We have not made these changes lightly. They are a determined response to changing markets that will also help us take advantage of the significant opportunities ahead. We remain strongly committed to returning cash to our shareholders and in every reporting period, the Board will assess the possibility of returning additional cash over that implied by the 50 per cent payout ratio, as we have done this period.”

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