BHP Billiton reported a record $6.4bn annual loss on Tuesday, hammered by a bad bet on shale, a dam disaster in Brazil and a commodities slump, but said it expects its free cash flow to more than double this year.
“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,” Chief Executive Andrew Mackenzie said in a statement.
Even excluding $7.7bn in writedowns and charges, underlying profit slumped 81 per cent to $1.2bn for the year to June 2016 from $6.4bn a year ago, hit by weak iron ore, copper, coal, oil and gas prices.
The underlying profit was the weakest since the merger of BHP and Billiton in 2001, but better than analysts’ expectations of around $1.1bn.
BHP follows rival Rio Tinto Group in posting lower profits after prices, including of its top earner iron ore, plunged to about half their 2011 peak on oversupply and slower growth in China, the biggest commodities buyer.
The result will likely mark a nadir for BHP, with a rebound in prices and higher output to lift profits this fiscal year, according to Morgans Financial.
“It was always going to be a very tough year operationally,” Adrian Prendergast, a Melbourne-based Morgans analyst, said before the results.
The current year has “volumes flat to recovering across the divisions, along with much better prices in some of their markets, it’s really going to see that recovery in earnings,” he said.
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