BHP reports 86% drop in annual profit amid falling commodity prices
Amid falling commodity prices, the world's biggest miner BHP Billiton has reported 86% fall in annual profit on Tuesday. The company has warned that China's slowing economy would result into more market instability.
In a statement, the Melbourne, Australia-based Company said it saw a net profit of $1.9 billion for the 12 months, down from $13.8 billion in previous year. Revenue fell 22% to $52 billion.
While responding, the mining giant has mentioned that it is looking forward to cut costs, by bringing down its target for capital spending from $9 billion to $8.5 billion in the coming financial year.
A number of miners like BHP have got affected by a slowdown in China's economy. They are under a lot of pressure as a slowdown in China's economy leads to a lower demand for main commodities, including iron ore and coal. Furthermore, BHP noted that commodity prices were ‘notably lower’ entering into the new financial year.
BHP's CEO Andrew Mackenzie said that in the coming time, they are expecting ongoing economic reforms in China for the contribution in periods of market volatility. He added, “While we remain confident in the long-term outlook for commodities demand as emerging economies continue to urbanize and industrialize, we have lowered our forecast of peak Chinese steel demand”.
In the past few weeks, the price of commodities like coal, oil and iron ore have fallen to multiyear lows.