The BHP Group Ltd (ASX: BHP) share price is trading lower on Tuesday morning.
In morning trade, the mining giant's shares are down 3% to $47.11.
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Why is the BHP share price falling?
Investors have been hitting the sell button in response to the Big Australian's half year results.
According to the release, BHP reported a 16% decline in revenue to US$25,713 million, a 28% decline in underlying EBITDA to US$13,230 million, and a 32% decline in profit after tax to US$6,457 million.
Management advised that this was driven by lower average realised prices for iron ore, copper, and hard coking coal. This was partially offset by higher prices for weak coking coal, thermal coal, and nickel.
In light of this sizeable profit decline, BHP elected to cut its dividend by an even larger 40% to 90 US cents per share. This will be paid to eligible shareholders at the end of next month on 30 March.
Earnings miss
While a decline in revenue, earnings, and dividends was in fact expected by the market, the extent of the decline appears to have taken many by surprise. This is what has put pressure on the BHP share price today.
For example, Goldman Sachs was expecting underlying EBITDA of US$13.7 billion and the market was forecasting US$14.3 billion.
Whereas BHP reported underlying EBITDA of US$13.23 billion, which is 7.5% lower than consensus estimates.
In addition, the market was forecasting a fully franked interim dividend of 98 US cents per share. This means that BHP's 90 US cents per share dividend is 8.2% lower than expectations.
Following this decline, the BHP share price is now trading 12% below its recent demerger-adjusted record high.
