BHP is about to announce a big fall in profit

BHP is expected to reveal an almost 50% fall in profit when it announces its full year results late today.

Analysts are expecting $7.5 billion, dragged down from last year’s $13.8 billion by falling commodity prices.

BHP has been cutting jobs and trimming operating expenses in a bid to catch falling prices for its ores.

The prices BHP has been getting for its iron ore are down 41%, for oil 33% and coal 20%. And those are average prices over three months. The average will fall further.

Much of the result depends on progress of productivity gains from a $US4 billion efficiency program. A lot of bad news has already been announced, including impairments and write downs totalling $US4.75 billion.

In a quarterly report to the market last month, BHP says the June half year will include additional charges of between $US350 million to $US650 million.

And it had already outlined a write down in the value of its US shale oil operations of about $US2.8 billion.

And in January the world’s biggest miner announced it was shutting 40% of its US oil shale operations following sharp falls in prices. It started this current financial year with just 10 rigs in operation, down from 26 last year.

And overall revenue at BHP has been reduced by spinning off South32 which had revenue of $US8.3 billion.

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