BHP Billiton profit slides on commodities’ slump

Global miner BHP Billiton posted a 31% drop in half-year profit as prices for all its main products collapsed, but beat market forecasts and flagged further belt tightening to withstand the tough conditions. The company again cut its targets for capital spending and said it would reap savings of $4bn in the three years to 2017, shoring up cash flows so it could stick to its policy of not cutting dividends. “We are confident that we can maintain our progressive dividend policy and continue to selectively invest in projects that offer compelling returns,” Chief Executive Andrew Mackenzie said in a statement. The world’s biggest miner could not match rival Rio Tinto’s recent $2bn share buyback as its petroleum arm, the business that sets BHP apart from other miners, has been battered by a 50% fall in oil prices since June. But investors still hailed better than expected results in iron ore, BHP’s biggest earner, and in the aluminium, manganese and nickel businesses that the company plans to hand to shareholders in a new company called South32. Amid tough conditions “they’re doing better than the market’s expecting, so that’s a great outcome,” said Ric Ronge, a portfolio manager at Pengana Capital. Underlying attributable profit fell to $5.35bn for the six months to December from $7.76bn a year earlier, ahead of analysts’ forecasts for around $5.1bn. BHP raised its interim dividend 5% to $0.62, also slightly ahead of market forecasts. Underlying earnings from iron ore slumped 35%, but thanks to cost cutting BHP achieved a 57% earnings before interest, tax, depreciation and amortisation (EBITDA) margin despite the price slump.