BHP Cuts Dividend for First Time in 15 Years on Profit Drop – by David Stringer (Bloomberg News – February 23, 2016)

BHP Billiton Ltd. made a larger-than-expected cut to its dividend, lowering the payout for the first time in 15 years, as the world’s biggest mining company seeks to protect its balance sheet and credit ratings amid a price collapse that saw first-half profits tumble 92 percent.

Underlying profit fell to $412 million at its continuing operations in the six months to Dec. 31, from $4.9 billion a year earlier, Melbourne-based BHP said Tuesday in a statement.

Its first-half dividend was cut to 16 cents from 62 cents a year earlier and the company said it will adopt a policy to provide payouts at a minimum of 50 percent of underlying attributable profit. The payout had been forecast to drop to 31 cents, according to Bloomberg data.

BHP warned in the statement that weaker prices and higher volatility across commodities markets are likely to persist for longer than the company had expected, prompting it to also cut its capital spending forecast and shake up top management.

The producer’s rating was lowered by Standard & Poor’s this month to a level unseen since 2003, and the company was warned it may face a further reduction dependent on its actions outlined Tuesday.

Balance Sheet

“The company is doing everything in its power to protect its balance sheet and to ensure cashflows — despite this long period of price weakness,” Sydney-based Fat Prophets resource analyst David Lennox said by phone.

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