Miner BHP Billiton has posted a loss of $US6.4 billion for the 2016 financial year following its $7.2 billion impairment of US shale assets in January, a slightly better result than had been anticipated by the market.
Miner BHP Billiton has posted a loss of US$6.4 billion for the 2016 financial year following its $7.2 billion impairment of US shale assets in January, a slightly better result than had been anticipated by the market.
Underlying earnings before interest, tax, depreciation and amortisation was $US12.3 billion across the group, on revenue of $US30.9 billion.
The best performer using both revenue and underlying Ebitda measures was the iron ore division, delivering $US10.5 billion and $US5.6 billion respectively.
That was with record production of 257 million tonnes in Western Australia, with a forecast of up to 275mt in the 2017 financial year.
However, the November failure of the Bento Rodrigues tailings dam operated by subsidiary Samarco in Brazil meant an exceptional cost (pre-tax) of $US2.5 billion to the iron ore unit.
Overall, iron ore made a profit of $US1.4 billion.
It comes just a week after incoming The Nationals WA leader Brendon Grylls floated a new $5 per tonne tax on mining that would have cost BHP about $1.1 billion.
Notably, the coal division made an underlying loss after depreciation and amortisation (Ebit) of US$349 million, a fall of 200 per cent on the 2015 financial year.
Coking coal prices received were down just more than 20 per cent on the previous period, although the company said it was making significant cost reductions.
Underlying Ebitda for both petroleum and copper fell around 50 per cent, to $US3,7 billion and $US2.6 billion respectively.
BHP Billiton chief executive officer Andrew Mackenzie said it had been a challenging period for the company and the resources sector generally.
“Unit cash costs across the group declined 16 per cent and with increased capital efficiency, supported free cash flow generation of $US3.4 billion despite weaker commodity prices,” he said.
“Next year, we expect another $US1.8 billion of productivity gains as our new operating model helps sustain momentum, delivering more than $US7 billion of free cash flow based on current spot prices and a forecast reduction in net debt.”
That operating model refers to a move earlier this year changing the company’s management structure, with control over the WA iron ore division moving east to Melbourne, as one example.
“We continue to pursue capital-efficient latent capacity opportunities which will support volume growth of up to 4 per cent next year, excluding our onshore US assets where we continue to defer activity to maximise value,” Mr Mackenzie said.
“In addition, we have progressed high-return growth projects, with investment decisions on the Mad Dog 2 and Spence Growth Option projects expected by the end of next calendar year.
“Over the past five years we have actively reshaped our portfolio, and we are confident we have the right mix of commodities, assets and opportunities to create substantial value over time.
“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.”
BHP will pay a final dividend of 14 US cents per share, worth about $US450 million with 3.2 billion units on issue.
At the time of writing, shares in BHP were up 0.5 per cent to $20.25.
