The mining major posted a half-year net loss after tax of $US5.67 billion, mainly due to petroleum impairments, and an underlying profit of $412 million.
Lower commodity prices had a negative impact of $7.8 billion.
BHP CEO Andrew Mackenzie said while the company had forecasted lower commodity prices, it now expected a prolonged downturn.
“We prepared early and we saw a lot of this coming,” he said.
Underlying earnings before interest, tax, depreciation and amortisation slumped by 54% to $6 billion and an underlying EBITDA margin of 40%.
“That puts us well ahead of our nearest competitor,” Mackenzie said of the EBITDA margin.
The progressive dividend policy, as expected, has been replaced with a minimum 50% payout ratio.
As a result, the interim dividend for the half is just 16c, down from 62c the same time last year, and much lower than consensus.
“We applaud the move, and consider it a reasonable measure to take to increase the flexibility of the business (and strengthening its balance sheet),” Morgans analyst Adrian Prendergast said.
“While we expected this change, we had forecasted this period to be a 'massaged step down' for the dividend and had forecasted 30c, which would have been significantly above earnings per share (versus the actual dividend for the half of 16c).”
After posting half-year capital expenditure of $3.6 billion, a 40% drop, guidance for FY16 is $7 billion, down from $8.5 billion, dropping to $5 billion from $7 billion in FY17.
Mackenzie said within the $5 billion, funds had been allocated to continue studies on projects like the Spence supergene copper project and the Jansen potash development.
“We’ll continue to explore which might lead to further investment,” he said.
“Stunningly simple”
Following on from last year’s South32 demerger, BHP has pledged to further simplify the business.
From March 1, the company’s minerals production operations will be reorganised into two regional units – Minerals Australia and Minerals Americas, while petroleum will remain its own separate unit.
Perth-based iron ore boss Jimmy Wilson will leave the company, as will petroleum president Tim Cutt, with the latter to be replaced by Steve Pastor who will have a closer focus on operations.
Current coal president Mike Henry will become president of Minerals Australia, taking over responsibility of the iron ore, Nickel West, Olympic Dam and coal assets in Australia.
Current copper president Daniel Malchuk will remain in Santiago and become Minerals Americas president.
Dean Dalla Valle will remain in Brazil overseeing the response to the Samarco dam disaster.
BHP has also streamlined its “functional model”, establishing a 12-member executive leadership team comprising Mackenzie and all of his direct reports.
Chief financial officer Peter Beaven will assume responsibility for strategy and business development.
Chief legal counsel Geoff Healy will become chief risk and legal officer, while the marketing and supply functions will consolidate under Singapore-based Arnoud Balhuizen.
A new technology function has been established and will be led by Singapore-based Diane Jurgens.
Mackenzie said the changes were about creating a “stunningly simple” BHP with greater transparency and connectedness.
Shares in BHP rose by 2.7% to $A17.64, the highest price since the first week of the year.
