BHP.US H1 profit drops 23% to a six-year low, drastically cuts dividend to 50 cents.

As demand for key commodities such as iron ore and copper declined, BHP Group's half-year profit fell 23 per cent from a year earlier.

The world's largest listed miner said its basic attributable profit to shareholders in the six months to Dec. 31 was $5.08bn, the lowest in six years for the period, and below analysts' expectations of $5.39bn. BHP also cut its interim dividend to 50 cents from 72 cents a share in the year-earlier period, the lowest payout in the period since 2017.

The profit decline follows a trend at BHP since it set a record annual profit of $33.1bn in June 2022, when it benefited from a surge in iron ore demand. Since then, its annual profit has more than halved, capital returns have fallen and capital expenditure has increased, putting pressure on its share price.

Despite this, CEO Mike Henry remained upbeat in a statement, saying: “Despite the uncertainties in the global economy and trade, demand for BHP Group's products remains strong, with early signs of recovery in China, a resilient US economy and strong growth in India.”

During the reporting period, benchmark iron ore prices fell 5 per cent, while copper prices dropped 9 per cent.

Operating profit at the copper division rose 44 per cent to $5bn, helped by strong fundamentals, China's stimulus plans and the US rate cut. In contrast, earnings at the iron ore division fell 26 per cent to $7.2bn.

Last week, BHP's iron ore mines in the Pilbara region of Western Australia were affected by the tropical cyclone Yasi. The company said it maintained its production forecast of about 282m-294m tonnes of iron ore from the region in the year to June 30, but expected production would not be at the top end of the range because of the storm.