BHP Billiton beats first-half profit forecasts

BHP Billiton has pledged to keep its progressive dividend policy unchanged despite the proposed demerger of its non-core operations, as it beat forecasts with a less-than-expected decline in profits in the first half.

The world’s largest mining group said underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 12.3% year-on-year to $14.49bn in the six months to 31 December. Analysts were looking for a figure closer to $13.62bn.

The impact of falling commodity process was mitigated by lower cash costs and capital expenditure.

Underlying basic earnings per share declined by 31% to 100.7 cents.

BHP increased its interim dividend by 5% to 62 cents per share, representing an underlying payout ratio of 62%.

The company said that if the spin-off of its non-core aluminium, coal, manganese, nickel and silver assets - dubbed South32 - is approved, “we do not plan to rebase our progressive dividend downwards, implying a higher underlying payout ratio, and South32 will adopt its own dividend policy”.

"These results demonstrate the effectiveness of our strategy and the quality of our people, assets and processes,” said chief executive Andrew Mackenzie.

“Despite significant falls in the prices of our main commodities over the last six months, group margins remain healthy, free cash flow has increased and we have strengthened our balance sheet. We are confident that we can maintain our progressive dividend policy and continue to selectively invest in projects that offer compelling returns.”