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August 17, 2016

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BHP posts worst full-year US$6.4b loss

Source: AP | August 17, 2016, Wednesday | Print Edition

THE world’s biggest miner BHP Billiton yesterday reported a US$6.4 billion loss — the Anglo-Australian company’s worst ever full-year result — resulting from weak commodity prices, a plunge in the value of its US shale oil assets and a costly dam disaster in Brazil.

BHP said its revenue sank 31 percent in the fiscal year ending June 30, to US$30.1 billion. It also took US$4.9 billion in write downs of its US oil and gas assets.

BHP chief executive Andrew Mackenzie said the year was a difficult one for his company and the resource industry.

“We’re clearly really disappointed with this result,” said Mackenzie. But he noted that another performance measure, Earnings Before Interest, Taxes, Depreciation and Amortization — or EBITDA — “remained healthy” at US$12.3 billion.

“We are pleased by the strong cash generation of our assets which has resulted in a free cash flow of US$3.4 billion,” he said.

BHP saw a US$1.9 billion profit in the previous year, which was 14 percent of the US$13.8 billion profit for 2013-14.

The latest result is the worst since the company headquartered in Melbourne was formed in 2001 through the merger of two corporations founded in the 19th century — Australia’s Broken Hill Proprietary Co Ltd and London-listed Billiton Plc.

In 2010-11, it posted its best results ever of US$23.6 billion.

Weaker commodity prices, which have gutted profits of many global resource companies including big Japanese trading houses, cost the company US$10.7 billion last year.

A dam failure in November at an iron ore mine co-owned by BHP and Vale in Brazil killed 19 people and caused the worst environmental disaster in the country’s history. Brazil’s Federal Public Prosecution launched a US$43 billion civil suit in May for the disaster, against the joint venture Samarco. BHP has agreed to an initial payment of up to US$1.3 billion to clean toxic pollution from the Doce River.

The Samarco dam failure cost the company US$2.2 billion for the year.

BHP chief financial officer Peter Beavan said the Samarco mine could possibly be reopened, but not this year.

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