BHP cuts divvy first time in 27 years, shakes up executive

BHP and Japan’s Mitsubishi partners on coal mines in the Bowen Basin, Queensland. (Image: BHP)

BHP Billiton (NYSE:BHP) cut its dividend for the first time since 1988 years on Tuesday, becoming the latest company to do so in a sector struggling with the worst slump in commodity prices in a decade and high debt loads.

In a statement, the world’s biggest mining company saw its first-half underlying profits tumble 92% coming in way below expectations at $412 million for the 6 months to end December from $4.9 billion a year earlier. After impairments related to its US shale operations, BHP racked up a six-month loss of an eye-watering of $5.7 billion.

The Melbourne-based company cut its dividend by nearly three-quarters of a percent to 16 cents from 62 cents during the previous period. BHP plans to adopt a new policy linked to its underlying attributable profit, paying out at least 50% of the total during each reporting period.

BHP also announced a reshuffle of its top brass with iron ore president Jimmy Wilson and petroleum head Tim Cutt both set to leave the company. Former coal head Mike Henry is appointed to take charge of all Australian assets including the Pilbara iron ore division and the massive Olympic Dam copper gold and uranium mine as well as the company’s Nickel West operation.

Shares in BHP made strides in New York, gaining 5.7% on Monday amid a broad-based rally in mining stocks thanks to a surge in crude oil and iron ore prices.

The $67 billion company hit near decade lows last year following a catastrophic dam burst at an iron ore mine in Brazil it jointly owns with Vale.

Unlike some of its peers BHP is still in the red for 2016 with a pending settlement with the Brazilian government over the disaster that could include a fine of as much as $7 billion. The counter has lost 50% of its value over the past year.

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