BHP Annual Profit Declines 35% on Shale Writedowns, Prices

Mining Slump Feeds M&A as Projects Overrun Budgets
BHP Billiton Ltd. signage is mounted on a wall in the lobby of the company's headquarters in Melbourne, Australia. Photographer: Carla Gottgens/Bloomberg

BHP Billiton Ltd., the world’s biggest mining company, said full-year profit fell 35 percent after the company was forced to write down the value of shale gas and nickel assets because of tumbling prices.

Net income was $15.4 billion for the year ended June 30, from $23.6 billion a year ago, the Melbourne-based company said today in a statement. That beat the $14.6 billion average of eight analyst estimates compiled by Bloomberg. The company delayed the approval of the expansion of the Olympic Dam copper and uranium project in Australia, saying it will seek a lower cost solution.

BHP joins Rio Tinto Group and Xstrata Plc in booking declining profits as they battle the dual headwinds of falling commodity prices and rising costs amid sluggish global growth. The $3.3 billion in writedowns this month prompted Chief Executive Office Marius Kloppers to waive his annual bonus.

“BHP and Rio are really suffering from earning stagnation or contraction as the fall in prices is greater than the increase in their output,” Grant Craighead, the Sydney-based managing director of Stock Resources, said in a phone interview before the results. “It’s clear they’re going into a phase of more cautious funding of growth projects.”

BHP, the third-biggest iron ore exporter, dropped 0.2 percent to A$33.21 at 3:47 p.m. Sydney time. The company will pay a final dividend of 57 cents a share, up from 55 cents a year ago.


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