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BHP Billiton records worst full year loss

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World Coal,

BHP Billiton posted its biggest annual loss in the financial year to 30 June (FY2016) after a difficult year for the mining giant. The company reported a US$6.2 billion loss compared to a US$8.7 billion profit in FY2015. Earnings were 44% down at US$12.3 billion.

“The last 12 months have been challenging for both BHP Billiton and the resources industry,” said BHP Billiton CEO, Andrew Mackenzie, who also warned that commodity prices would remain “low and volatile” in the short to medium term.

The company’s flagship iron ore operations recorded the largest loss – US$2.2 billion. Coal and Petroleum and coal recorded much smaller losses of US$9 million and US$7 million, respectively, while the copper business recorded a profit of US$155 million.

The company was also hit by US$9.7 billion in impairment charges, including US$2.5 billion related to the Samarco dam failure in Brazil and US$7.2 billion on its onshore US oil and gas assets.

Despite this, BHP remains “confident in the long-term outlook for our commodities, particularly oil and copper.”

The loss was slightly better that analyst expectations, said David Cheetham, a Market Analyst at, but still “represents an extremely poor financial performance for the first half of 2016.”

“The firm is currently in the process of streamlining their business operations in an attempt to mitigate some of the downside seen by the end of the boom in the commodity super cycle,” continued Cheetham adding that shareholder could take “some solace” in the company retaining its dividend payout of 14 pence per share.

“CEO Andrew Mackenzie cites further productivity gains to be realised in 2017, but it’s hard to be too positive on any company’s outlook when they’re posting record losses,” Cheetham concluded.

Among the productivity gains achieved by the company in FY2016 was a 15% fall in unit cash costs at its Queensland coal business, which helped the company achieve productivity gains of US$437 million. The company is expecting a further US$1.8 billion of productivity gains in FY2017.

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