BHP interim profit plunges on hefty charges

Mining giant BHP Group (LSE: BHP) saw its attributable profit tumble 86% to $927m in the six months to December 31st, weighed down by major one-off charges.

The Anglo-Australian company took a $2.5bn non-cash impairment on its Australian nickel assets, amid falling nickel prices and competition from cheap Indonesian supply. BHP also booked a $3.2bn charge related to the 2015 dam disaster at its Samarco iron ore mine in Brazil.

Stripping out exceptional items, underlying attributable profit was broadly flat at $6.57bn. But overall operating profit still dropped 56% to $4.8bn, despite a 5.9% rise in revenues to $27.23bn.

Higher iron ore and copper prices drove the top-line increase, along with contributions from BHP’s new Prominent Hill and Carrapateena copper mines in South Australia. But this was partly offset by a 65% drop in realised coal prices.

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BHP cut its interim dividend by a fifth to 72 US cents per share. CEO Mike Henry said the company faced “challenges” from its nickel operations and the Samarco charge, although commodity prices remain “overall healthy”.

Shares in the FTSE 100 miner fell 2.7% Tuesday morning following the downbeat results statement. With China’s demand “healthy” but developed world appetite “softer than expected”, BHP warned the Australian industry faces “near-term headwinds”.

The news has weighed on the entire sector.