BHP Billiton has seen full year profits dive a staggering 30 per cent as the end of the resources boom continues to wreak havoc with the bottom lines of leading mining concerns.
The world’s biggest mining company fell well short of consensus expectations with net profits of USD$10.9 billion ($12.3 billion) during the last fiscal year, for a year-on-year dive of 29.5 per cent.
Revenues declined 9 per cent, enervated by the protracted slump in spot prices for key commodities such as iron ore and coal.
BHP CEO Andrew Mackenzie tried his best to put a positive spin on the figures, maintaining that it was “a strong result in what I believe are challenging times,” during a press teleconference.
As a result of onerous economic conditions the company embarked upon a heavy cost-cutting program nearly a year ago, with the total cost reductions estimated at around USD$2.7 billion, with “a lot more to come.”
In spite of the precipitous decline in full year profits and sustained weakness in commodities prices, BHP has maintained its commitment to a key potash project in North America while also opting to raise dividends.
BHP announced it will spend nearly USD$2.6 billion on the completion of the Jansen potash project in the Canadian province of Saskatchewan over the next three years.
The company has already invested USD$1.2 billion on the development of the project, referring to potash as a potential “fifth pillar” for BHP in addition to iron ore, coal, petroleum and copper.
BHP has also increased the final fully-franked dividend to 59 US cents from 57 US cents last year, bringing the full-year dividend up 4 cents to USD$1.16 per share.
Mr. Mackenzie said the company was optimistic about the ability of China to maintain a high level of demand for minerals and resources in the near future, stating that the country’s ongoing urbanization would give a “significant spark to demand for many of the commodities we produce,” while also noting that signs pointed to annual economic growth this year of between 7 per cent and 8 per cent.