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19 Feb 2019 | 07:36

BHP Billiton profits slide on lower production amid unplanned outages

Miner BHP Billiton reported Tuesday first-half underlying profit fell as lower copper prices and unplanned production outages hurt performance.

For the six months ended 31 December 2018, underlying profit rose 8% to $3.7bn from a year earlier. Revenue rose 1.05% to $20.74bn, with copper revenues falling 17%, as copper prices and production fell.

Copper equivalent production fell by 1% to 825,000 tonnes, iron ore production rose 2% to 119,226 tonnes and petroleum production fell 1% to 63m barrels of oil.

A negative movement in productivity of $460m was recorded and reflected a negative impact of $835m related to unplanned production outages at Olympic Dam, WAIO, Spence and Nickel West. 'We expect a strong second half performance to offset the negative productivity movement in this period, bringing the overall movement to broadly flat for the full year, down from the previous guidance of US$1 billion,' the company said. Unit costs at the company's major assets were above full year guidance as a result of planned maintenance and production outages during the period. Net operating cash flow of US$6.7bn and free cash flow of US$3.6bn was reported for the half, with volumes and commodity prices broadly in line with the prior period.

In the December 2018 half year, BHP reported an exceptional net loss of $210m in relation to the Samarco dam failure. BHP declared an interim dividend of $0.55 a share, which equated to a payout ratio of 75%. Capital and exploration expenditure guidance was unchanged at below $8bn a year for the 2019 and 2020 financial years. Total copper production guidance for the year was expected in the lower range of 1,645 and 1,740 kt. The miner suffered a fatality at Saraji in December 2018, despite improvements in its safety performance indicators. 'The collapse of the Brumadinho dam in Brazil is a tragedy and we offer our heartfelt sympathy to all those affected. At BHP, we are committed to learn from what happened, and as an industry we must redouble our efforts to make sure events like this cannot happen,' the company said. 'Our strong balance sheet and fully funded capital investment plans allowed us to return the US$10.4 billion net Onshore US proceeds to shareholders in the form of a US$5.2 billion off −market share buy −back completed in December 2018 and a US$5.2 billion special dividend paid in January 2019.'

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