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Mining giant BHP profit hit by US tax charges


SYDNEY: Higher commodity prices helped global mining giant BHP report a first-half net profit of $2.02 billion on Tuesday, but the result was weighed down by a hefty charge from US tax reforms. The result for the six months to December 31 was 37 per cent lower than the $3.20 billion recorded in the previous corresponding period.

BHP announced last week it would recognise a $1.8 billion charge from US tax reforms, although the miner said the lower corporate tax rate would have a positive impact on its American profits in the long-term.

“Higher commodity prices and a solid operating performance delivered free cash flow of $4.9 billion,” BHP chief executive Andrew Mackenzie (pictured) said.

“We used this cash to further reduce net debt and increase returns to shareholders through higher dividends... We remain firm in our resolve to maximise cash flow, maintain discipline and increase shareholder value and returns.”

Underlying profit, a measure preferred by the world’s largest miner, was $4.05 billion, a 25 per cent jump from the prior period, but below analysts’ expectations.

BHP declared a 55 US cents dividend per share, up from 40 cents previously.

“It’s not a good result,” Fat Prophets resources analyst David Lennox said, adding that BHP had lost about $800 million in cost savings in their operations for the period.

“I believe where the market has got caught is their costs across two of their divisions — petroleum and copper — are higher than the market would have expected.

“The market is so used to BHP saving on its cost structures that a $800 million turnaround is something that wasn’t expected.”

The Anglo-Australian firm knocked back a renewed demand from New York-based Elliott Advisors, a significant shareholder, for it to dissolve its dual-listed structure.

Elliott said in early February that BHP would reap $22 billion in value for shareholders if it restructures into one Australian entity and scraps its dual-listing. — AFP

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