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BHP hikes dividend as US tax reforms push H1'18 net profit down 37% YOY

BHP Billiton Group hiked its interim dividend to 55 U.S. cents per share, compared to 40 cents per share a year ago, despite a 37% drop in its net profit.

The company posted a profit attributable to shareholders in the first half of the year of US$2.02 billion, or 37.7 cents per share, down from US$3.20 billion, or 60 cents per share, recorded a year ago.

The results included after-tax exceptional losses totaling US$2.04 billion, including US$1.83 billion from U.S. tax reforms and US$210 million related to the dam failure in November 2015 at the Samarco iron ore mine in Brazil.

Without the effect of the exceptional items, underlying attributable profit in the six months would have jumped 25% year over year to US$4.05 billion.

Revenue in the six-month period, meanwhile, increased 16% year over year to US$21.78 billion.

BHP posted a 20% year-over-year jump in its copper production to 429,000 tonnes in the second quarter of its fiscal 2018, as production from the Escondida mine in Chile rose 34% to 315,000 tonnes.

Profit from operations was up 11% to US$6.74 billion in the first half due to higher prices and volumes, partially offset by higher costs, with underlying EBITDA for the period increasing 14% on a yearly basis to US$11.24 billion.

Capital and exploration expenditure for the half increased 6% on a yearly basis to US$2.88 billion. The company reiterated its expenditure guidance for the full year of US$6.9 billion for fiscal 2018, and expects it to remain below US$8 billion per annum for fiscal 2019 and 2020.

BHP managed to cut its net debt by 23% on a yearly basis to US$15.41 billion on the back of strong free cash flow generation. The company noted it is on track to reach a net debt range of US$10 billion to US$15 billion before year-end.

Trade sale bids for the company's onshore U.S. assets are expected in the June quarter this year, and the company will evaluate and negotiate the bids in the September quarter. The completion of the asset sale is expected in the first half of fiscal 2019.