BHP share slide almost 5pc following release of first-half results

BHP shares slumped almost 5pc after higher-than-expected costs weighed on the dual-listed miner’s interim profit.

BHP CEO Andrew Mackenzie. (Aaron Francis/The Australian)

BHP Billiton shares have slumped in early trading after higher-than-expected costs weighed on the dual-listed miner’s first-half profit.

BHP (BHP) last night said full-year underlying profit jumped 25 per cent to $US4.05 billion ($5.14bn) because of higher oil and copper prices.

But the profit missed consensus expectations of $US4.25bn because of increased costs, including a $US493m “negative productivity movement” due to maintenance at the Olympic Dam copper and uranium mine in South Australia and its Queensland coal operations.

“The result did not quite meet market expectations, which was largely due to one-offs such as smelter maintenance at Olympic Dam, a fire at WA Iron Ore, and write-offs at Escondida,” UBS analyst Glyn Lawcock said.

At the close of trade, BHP shares had shed $1.49, or 4.76 per cent, at $29.81. Rio Tinto was down 1.64 per cent.

But UBS boosted its price target for BHP, despite the miss, because BHP said it would make $US7bn of free cash flow this half at current commodity prices.

Its new target price is $33.50, up from $31.50 previously.

Macquarie analyst Hayden Bairstow said the results had been broadly in line with the bank’s expectations.

“We believe BHP could return an additional US$1.9bn in cash above its 50 per cent payout ratio at its full-year result, assuming net debt remains at the upper end of the target range,” Mr Bairstow said.