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BHP lifts payout as prices boost profit

 

BHP Billiton has joined other big miners in lifting payouts to shareholders as strong commodity prices boost profits.

The resources giant will deliver $US2.9 billion in dividends for the first half of the 2016/17 financial year, lifting its interim dividend by 38 per cent from a year earlier, and paying 17 US cents per share above its stated policy of paying a minimum 50 per cent of underlying profit.

It joins peers Rio Tinto and South32, both of whom lifted payouts earlier this month following strong profit growth and amid a reluctance to spend on new projects.

BHP's dividend increase comes despite a 37 per cent drop in half-year net profit to $US2.02 billion ($A2.55 billion), after it accounted for one-off losses of $US2 billion related to a cut to corporate tax rates in the US and the 2015 Samarco dam failure in Brazil.

Underlying profit for the six months to December 31 rose 25 per cent to $US4.05 billion, supported by stronger iron ore, copper and oil prices.

The result still missed analyst expectations for underlying profit of around $US4.3 billion.

Chief executive Andrew Mackenzie was upbeat about BHP's future prospects despite the one-off challenges.

"These are very strong foundations and position us to deliver our targets for the full year," he told reporters.

Revenue from iron ore, BHP's biggest division, rose 4.2 per cent to $US7.2 billion.

The miner benefited from higher prices for the steel-making ingredient, which have remained between $US60 and $US70 through the last year on continued strong demand from Chinese steel mills.

Copper revenues jumped more than 50 per cent to $US6.4 billion due to stronger prices and increased production from the Escondida mine in Chile.

The petroleum business recorded an 8.5 per cent rise in half-year revenue, while coal revenue edged up three per cent.

BHP recorded a surprise productivity loss of $US496 million in the half-year, but has maintained its previous guidance for $US2 billion in gains over the two years to June 2019.

It also cut net debt by 23 per cent to $15.4 billion.

The company is progressing with the planned exit from its troubled US shale assets, Mr Mackenzie said, with initial bids expected to be received in the June 2018 quarter.

He rebuffed a renewed push by activist hedge fund Elliott Advisors for a review of BHP's dual-listed company structure, saying the costs of collapsing this currently outweigh the benefits.

Ahead of the results announcement, BHP shares on the Australian market fell 13 cents to $31.30.

COPPER, IRON ORE BOOST BHP'S HALF YEAR PERFORMANCE:

* Net profit down 37pct to $US2.02b

* Underlying profit up 25pct to $US4.05b

* Revenue up 16 pct to $US21.8b

* Interim dividend up 15 US cents to 55 US cents, fully franked