The slide in iron ore, copper, oil and gas prices in the six months to December has forced BHP Billiton (BHP) to bite the bullet and slash interim dividend 74% to just 16 cents a share.
That was after underlying profit plunged 92% in the half year to just $US412 million (that’s before all the write-downs and losses taken in the period).
The cut in dividend means the miner has abandoned its so-called progressive dividend policy (like rival Rio Tinto) and hacked into returns to shareholders to protect its cash flow and limit its debts as it rides out the downturn in demand for commodities and the associated plunge in prices.
The company said net debt at the end of December was “broadly unchanged at $US25.9 billion from where it was at the end of December, 2014.
More than $US8 billion in write-downs (mostly on its US shale gas business) and the writing down in the value of stocks of metals (such as copper) plus redundancy costs, and the impact of the sell off in its key commodities, saw the world’s biggest miner report a loss for the half year of $5.67 billion, against a profit in the December, 2014 half year of $4.265 billion.
Revenue fell 37% in the half year to $US15.7 billion.
BHP 1Y – BHP posts massive loss
Directors said in this morning’s announcement that while the company was prepared for a downturn and period of low prices, “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.
So a new dividend policy had to be enacted, and that calls for the payout of “50% of underlying attributable profit at every reporting period,” the statement to the ASX said.
The current interim of 16 cents a share consists of the 4 US cents a share minimum under this new rule, and an extra 12 US cents a share to reflect the difference between underlying attributable profit and free cash flow in the six month period, directors explained.
Underlying attributable profit for the latest half plunged 92% to just $US412 million from $US4.890 billion a year earlier.
