Lower commodities prices weigh on BHP’s annual profit

The news: Resources giant BHP has slashed its dividend as significantly lower commodities prices weighed on its full-year profit.

The numbers: Statutory net profit for the year to 30 June fell 58% to USD12.9 billion ($20.1 billion), while underlying profit was down 37% to USD13.4 billion, slightly lower than analyst estimates. Revenue was down 17% to USD53.8.2 billion. The company cut its final dividend by more than half to 80 US cents a share, from $US1.75 a share last year.

The context: BHP’s weaker results were driven by lower prices for iron ore, copper and coking coal, as well as lower volumes of iron ore shipments due to weather disruptions. Chief executive Mike Henry said commodity demand has remained relatively robust in China and India, even as developed world economies have slowed substantially.

What they said: “In the near term, China’s trajectory is contingent on the effectiveness of recent policy measures. We expect buoyant growth in India with strong construction activity underpinning an expansion in steelmaking capacity,” BHP CEO Mike Henry said.