BHP’s profit tumbles to $US6.4 billion

South32’s inaugural result will be crucial to provide investors with clarity, UBS analyst Glyn Lawcock told The Australian Financial Review.

In response, BHP said it would cut costs.

It will also trim its capital spending 9 percent in the new year to $650 million. More cuts are planned for 2016.

Some analysts argue that the mining big may have no various aside from to chop again additional on spending by way of to 2016 if it needs to take care of its progressive dividend coverage which has been a cornerstone for buyers.

The company’s board lifted its full year dividend by 2 percent to US$1.24.

The cuts will allow BHP to create “capital flexibility to improve our competitiveness”, said Mackenzie.

“The continued weakening of BHP’s core operating currencies are providing a strong tailwind to BHP’s cost reduction programs”, Macquarie Wealth said in a research note ahead of the results. It has guided for $US12.6 billion for 2015. During the year, it recorded annual production records for alumina at Brazil Aluminium, coal at Illawarra Metallurgical Coal, alloy at Australia Manganese and ore at South Africa Manganese. BHP said in February it was on track to have pulled out at least $US3 billion in the first 12 months. The result was buoyed by the big fall in the Australian dollar, and higher volumes. Coal and copper are down well in the double-digit percentages year-on-year, while iron and oil prices have almost halved. The company’s net debt stands at $US402 million, and it could draw upon another $US1.5 billion in outstanding credit.

Will Mr Mackenzie talk to the importance of M&A to growth?

BHP Tuesday lowered its forecast for Chinese peak steel demand and expects subdued output for the rest of this year as the construction sector slows.

“But if you look at the history, the question is, do they have the licence to do so?” he said. That was the lowest since 2003, the company confirmed in an e-mail.

South32 intends to reduce layers of management, aggregate functional support at the regional head offices, foster stronger relationships with stakeholders and optimise its procurement function, as part of growth strategy.