BHP Cuts Dividend, Stan Chart Reports First Loss in Decades

Lucy Stoeva
23 Feb, 2016
New York City

European markets retreated from the three-week highs. Standard Chartered posted its first loss in more than 25 years. BHP Billiton cut its interim dividend by 74% and posted its first net loss in more than a decade.

[R]4:00 PM Frankfurt, Germany – European markets retreated from the three-week highs. Standard Chartered posted its first loss in more than 25 years. BHP Billiton cut its interim dividend by 74% and posted its first net loss in more than a decade.[/R]

European markets retreated from the three-week highs reached on Monday as oil prices declined and disappointing corporate news.

Brent crude oil futures dropped 2.48% to $33.83 as the growing Iranian output exacerbated concerns about global oversupply.

Oil and energy companies traded lower across Europe, with Galp Energia falling 3.6%, BP down 3.4%, and Royal Dutch Shell losing 2.6%.

Standard Chartered tumbled 5.8% after the bank, which focuses on Asian markets, posted its first loss in more than 25 years, citing weaker global financial markets and loan impairments.

BHP Billiton lost 6.1% after the mining giant cut its interim dividend by 74% and reported its first net loss in more than a decade. Yesterday the stock gained more than 8%.

On the positive side, the London Stock Exchange shot up 13.7% and Deutsche Boerse added 3.2% on the news that two stock exchanges are in merger talks.

German business sentiment is deteriorating, according to the Munich Ifo Institute and the February business climate reading was 105.7, below expectations of 106.7.

Business expectations in Germany declined to 98.8 from 102.3 in the previous month, according to Ifo.

The pound extended losses Tuesday, trading at $1.4081, on increased concerns that the U.K. could leave the European Union after the referendum in July.

In London, FTSE 100 index was down 75.42, or 1.25%, to 5,962.31, while in Frankfurt, the DAX index fell 156.82, or 1.64%, to 9,416.77.

In Paris, the CAC 40 index dropped 60.28, or 1.40%, to 4,238.42.

BHP Billiton Plc fell 6.1% to 746.9 pence after the mining giant cut its half-year dividend by 74% to 16 cents per share after increasing dividends for years.

The miner posted a loss of $5.67 billion for the first six months of its fiscal year, partially due to a write-down of U.S. energy assets.

The dividend cut is an effort to protect the balance sheet during a period of low commodities prices, company officials said.

The resource company also said it will cut capital expenditure.

Danone SA gained 4.6% to €63.69 after the French dairy company reported improving sales and profit margin for 2015.

Revenues grew 4.4% to €22.41 billion in 2015 from the previous year, driven by improving sales in the U.S. and Europe, as well as by rising baby food sales in Asia.

Operating margin reached 12.91%, up 17 basis points from the year ago period, due to Danone’s cost cutting program.

The dairy company forecasts revenue growth of 3% to 5% in 2016 as Danone expects the European dairy business to stabilize.

Persimmon Plc gained 2.8% to 2,029 pence after the British homebuilder posted a 34% increase of 2015 pre-tax profit and forecasted additional growth in 2016.

Annual sales grew 13% to £2.9 billion from the previous year, as the average home selling price improved 4.5% to £199,127, while the number of homes sold climbed 8% to 14,572.

The homebuilder also increased its dividend to 110 pence per share, compared with a provisionally planned payment of 10 pence per share.

Standard Chartered Plc tumbled 5.8% to 411 pence after the bank, which focuses on emerging markets, posted its first annual loss in more than 25 years due to weakness in global financial markets and loan impairments.

The UK-based bank posted a pre-tax loss of $1.5 billion in 2015, down from profit of $4.2 billion in 2014, due to restructuring costs and re-pricing of financial instruments.

Revenue declined 15% to $15.4 billion from the previous year, while bad loans jumped 87% to $4 billion.

“Our 2015 performance was poor, and in many ways unacceptable,” admitted CEO Winters. He added that 2016 would be another difficult year.

The bank cut its exposure to China, took a goodwill impairment charge in Thailand, and questions its presence in Indonesia.

Standard Chartered canceled its dividend for the second-half of 2015, but expects to restart the payments in 2016.

Thales surged 6.3% to €70.90 after the French defense company said revenue grew 8.4% to €14.1 billion, and operating earnings jumped 23% to €1.22 billion from the previous year.

Adjusted net income increased to €809 million in 2015 from €562 million a year earlier, while new orders advanced 31% to €18.9 billion.

“Defense budgets are going up in France, Germany and the U.K.,” said CFO Pascal Bouchiat.