BHP Billiton cut more than $US2.7 billion from its cost base last financial year, but lower commodity prices meant the company’s net profit still slumped nearly 30 per cent for the year.
The mining giant this afternoon announced an attributable profit of $US10.9 billion, down 30 per cent from last year’s $US15.4 billion.
The company said it had wiped $US2.7 billion from its “controllable cash costs” during the year, which BHP said was equivalent to a 7 per cent reduction in its unit costs across its business.
Most of that – about $US1.5 billion - came from cuts to BHP’s exploration budgets, while productivity gains at its Queensland coal operations also delivered substantial savings.
Lower iron ore prices hit BHP’s bottom line, however, with underlying before-tax profit from its iron ore operations down $US3.1 billion to $US11.1 billion, despite a 7 per cent increase in iron ore output for the financial year.
BHP said its average iron ore price fell by 17 per cent in the year to an average of $US110/t, with cash costs of production remaining “largely unchanged” during the period.
The mining giant declared a US59c per share final dividend for the year, US2c up on its 2012 final payment.
BHP warned that in the short term increased supply in commodities would exert downward pressure on prices of iron ore, metallurgical coal and copper.
But that would also reduce investment growth across the industry, leading to more balanced supply and demand, it said.
Shares in BHP, which delivered its full-year profit announcement after the market closed, were down 50 cents, or 1.35 per cent, to $36.54 in a broadly weaker market.