Top global miner BHP Billiton slashes its interim dividend by 75 percent, abandoning a long-held policy of steady or higher payouts as it braces for a longer-than-expected commodities downturn. Hayley Platt reports.
It had been expected. But the 75 percent cut to BHP Billiton's dividend was harsher than markets anticipated. Sinking commodity prices and weakening demand for its products have piled on the pressure for the miner to cut costs. It comes as BHP posted a $5.67 billion loss for the first half of the year. Rabobank's Jane Foley. (SOUNDBITE) (English) RABOBANK, SENIOR CURRENCY STRATEGIST, JANE FOLEY, SAYING: "If you go back to August, their chief executive was suggesting that they wouldn't slash the dividend over his dead body almost, so this is a big decision but it is something of a relief to the market that they finally made an announcement on this to stop the speculation on what they would do." The firm had been under pressure to amend its progressive dividend policy. Credit rating agency, Standard & Poor's already downgrading BHP's stock from 'A+' to 'A'. And it warned it could go further if BHP didn't take action. The group's chief Andrew Mackenzie says he'll simplifying operations. And create a new U.S. and Australian mineral division. (SOUNDBITE) (English) RABOBANK, SENIOR CURRENCY STRATEGIST, JANE FOLEY, SAYING: "BHP of course have come out with the announcement that prices could remain low for a prolonged period and I think the risk is that certainly will see softer prices but the better prices this year is something of a relief at least." The company is also facing millions of dollars in fines and penalties over the Samarco mine disaster in Brazil - which it owns fifty percent of. Despite the gloomy outlook, BHP predicts margins of 40 percent, before interest and tax. Respectably ahead of rival Rio Tinto's reported figure of around 34 percent.