BHP BHP Group Limited

   By Rhiannon Hoyle 
 

SYDNEY--BHP Billiton Ltd. (BHP.AU) said fiscal-year net profit fell 37% because of one-time charges, but the world's biggest miner by market value recorded a 33% rise in underlying profit and a record final dividend, aided by higher prices and production for most of its commodities.

BHP on Tuesday reported a net profit of US$3.71 billion for the year through June, down from US$5.89 billion in the 12 months prior. Weighing on the company's bottom line were US$5.2 billion in impairment charges, mainly tied to the company's U.S. onshore oil-and-gas assets, which it has struck deals to sell.

The miner recorded an underlying profit, stripping out one-time charges, of US$9.62 billion. That was ahead of a US$8.80-billion median of nine analyst forecasts.

Directors declared a final dividend of 63 U.S. cents a share, taking BHP's full-year payout to US$1.18 a share, up from 83 cents a piece the year prior.

"Across our dramatically simplified portfolio of tier one assets, we see this year's strong momentum carried into the medium term as our leadership, technology and culture drive further increases in productivity, value and returns," said Chief Executive Andrew Mackenzie.

BHP has been enjoying tail winds from stronger commodity prices. Average prices for its oil, copper and steelmaking coal were up 26%, 23% and 9%, respectively. Iron ore prices were slightly weaker during the 12-month period, down 3%.

The company has also been producing more. Full-year output of copper jumped 32%, while production of iron ore was 3% higher and steelmaking coal was up 7%. Its petroleum division was the outlier, with an 8% fall in output.

BHP isn't alone in lifting returns to investors. Rio Tinto PLC (RIO.LN) earlier this month pledged US$7.2 billion in shareholder returns, including a record interim dividend.

In July, BHP said BP PLC (BP) would buy the bulk of its U.S. onshore oil-and-gas unit for US$10.5 billion, while it also penned a separate US$300 million agreement to sell its Fayetteville shale business in Arkansas to closely held Merit Energy Co.

The company at the time said it would also use that cash for dividends or share buy backs once the deals were completed in October. On Tuesday, it reiterated it would confirm how and when that cash will be used once the sales are completed.

BHP joined the chorus of miners cautioning on cost inflation, as the industry faces pressure from rising bills for energy and other necessities.

It also lowered its projection for productivity gains, saying it now expects savings of US$1 billion in the 2019 fiscal year from a prior forecast of US$2 billion in the two years through June, 2019. BHP said the guidance was lowered because of asset sales and challenging operating conditions at some Australian coal mines.

The company said threats to global economic growth have increased due to rising trade protectionism.

"Near-term prospects for the U.S. economy are sound, with cyclical fundamentals solid," BHP said. "However, we expect the increase in protectionism to weigh on consumer purchasing power and international competitiveness."

The miner also forecast China's growth to slow modestly in 2018. Commodity producers face challenges from an easing economy in China, the top buyer of a lot of natural resources, where spending on so-called fixed assets such as factory machinery has fallen to its lowest in nearly two decades.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

August 20, 2018 18:58 ET (22:58 GMT)

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