BHP has joined the industry trend of lifting returns to shareholders by significantly increasing its dividend for the first half of the 2018 financial year.
The miner will deliver an interim dividend of 55 US cents for the December 2017 half year, a 38 per cent improvement on the 40 US cents it paid for the same period of fiscal 2017.
BHP has increased its first-half dividend despite a 37 per cent fall in after-tax profits compared to the December 2016 six-month period.
The company’s profits copped a $US2 billion exceptional loss related to a United States decision to reform its corporate tax regime, which BHP flagged last week.
It is expected the US tax changes will, however, benefit the company’s operations in the country in the future, as the corporate rate has been cut from 35 per cent to 21 per cent moving forward.
Outside of the one-off US tax hit, BHP’s performance strengthened as higher commodity prices lifted its revenues in most areas.
Its earnings of $US11.2 billion (up 14 per cent) and earnings margin of 53 per cent reflected improved commodity prices, as well as solid operating performance, the company reported.
BHP chief executive officer Andrew Mackenzie said the higher commodity prices and operating performance delivered free cash flow of $US4.9 billion.
“We used this cash to further reduce net debt and increase returns to shareholders through higher dividends,” Mackenzie said.
“We are on track to deliver further productivity gains of $US2 billion by the end of the 2019 financial year as we secure improvements in both operating and capital productivity, aided by smarter technology application across our value chain.
“Our capital expenditure program remains focused on high-return, low-risk development opportunities in commodities where we see greatest potential. We remain firm in our resolve to maximise cash flow, maintain discipline and increase shareholder value and returns.”
BHP continues to search for potential buyers for its US shale business, with initial offers expected during the June 2018 quarter.