BHP Billiton Limited (ASX: BHP) has posted a US$6.4 billion loss for the 2016 financial year (FY16) as revenues tumbled 31% to US$30.9 billion.
There was nothing pretty about the announcement summed up in the image below.
Perhaps the most important numbers are the underlying attributable profit of US$1.2 billion and earnings per share of US 22.8 cents.
Commodity prices wreak havoc
As you might expect from a resources company, commodity prices played a big part in the loss, causing a US$10.2 billion shortfall. And every major commodity BHP is involved in saw prices tumble in FY16 compared to FY15. Oil fell as much as 43%, while the best performing commodity was thermal coal – which only 'lost' 17% of its value.
Writeoffs
BHP has also taken some substantial impairments this financial year which haven't helped. In total BHP reported significant one-off items of US$9.7 billion before tax, including US$7.2 billion for US onshore (petroleum) assets and US$2.45 billion allocated to the Samarco dam failure.
Dividends
The miner has declared a final dividend of US 14 cents per share, adding to the US 16 cents per share paid in the first half of FY16. That's a massive fall (down 76%) from the US$1.24 of dividends paid in the 2015 financial year – but also the first year after BHP Billiton abandoned its progressive dividend policy and began its policy of paying out a minimum of 50% of underlying profit to shareholders.
What now for BHP Billiton?
While the miner appears confident that the outlook appears a little brighter than last year, BHP also warned about China's slowing economy, softening steel production in China in the second half of 2016, growing supplies of copper and weaker demand, and oil prices to trade in a rough range around current prices.
Foolish takeaway
BHP is focusing on productivity improvements and removing costs from its operations, further cutting back capital expenditure and improving its free cash flow generation. What else can the miner do?
While the underlying profit result was better than the US$1.09 billion expected by analysts, the overall result doesn't exactly exude confidence about the future for BHP and its shareholders. Many are likely to be hugely disappointed by this result.
