The company posted a full-year loss of $US6.38 billion due to $7.7 billion of exceptional items, down from a $1.9 billion profit for the 2015 financial year.

The largest charge was a $4.9 billion impairment against the carrying value of the onshore US gas assets, while the company also recognised $2.2 billion relating to the financial impacts of the Samarco dam disaster in Brazil.

The underlying attributable profit was down by 81% to $1.2 billion, beating forecasts of UBS ($803 million) and Deutsche Bank ($1.02 billion).

Underlying earnings before interest, tax, depreciation and amortisation were down by 44% to $12.3 billion, while underlying EBIT was down 71% to $3.46 billion.

BHP declared a final dividend of 14c per share, in line with DB’s estimate, but lower than UBS’ forecast of 16c per share.

Net debt was up 7% year-on-year to $26.1 billion, but was only $200 million higher than December 31.

BHP CEO Andrew Mackenzie said the past 12 months had been challenging for the company and the overall sector.

“Nevertheless, our results demonstrate the resilience of our portfolio and the diverse ways in which we can create value for shareholders despite low commodity prices,” he said.

“Unit cash costs across the group declined 16% and with increased capital efficiency, supported free cashflow generation of $3.4 billion despite weaker commodity prices.

“Next year, we expect another US$1.8 billion of productivity gains as our new operating model helps sustain momentum, delivering more than $7 billion of free cashflow based on current spot prices and a forecast reduction in net debt.”

Iron ore cost guidance for FY17 has been set at $14 per tonne, down from $15/t in FY16, while Escondida copper unit costs have been set at $1 per pound, down from $1.12/lb.

Queensland coal costs are set to drop by 6% to $52/t, while conventional petroleum costs will rise by 17% to $10 per barrel of oil equivalent.

“We continue to pursue capital-efficient latent capacity opportunities which will support volume growth of up to 4% next year, excluding our onshore US assets where we continue to defer activity to maximise value,” Mackenzie said.

“In addition, we have progressed high-return growth projects, with investment decisions on the Mad Dog 2 and Spence Growth Option projects expected by the end of next calendar year.”

Mackenzie said the reshaping of the company’s portfolio over the past five years had given BHP the right mix of commodities and assets.

“While commodity prices are expected to remain low and volatile in the short to medium-term, we are confident in the long-term outlook for our commodities, particularly oil and copper,” he said.

BHP shares closed A9c higher at $20.25.