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BHP Billiton Reports a $6.4 Billion Record Loss—But There’s Good News

(FILES) This file photo taken on Februar(FILES) This file photo taken on Februar

BHP Billiton (BHPLF) reported a record $6.4 billion annual loss on Tuesday, hammered by a bad bet on shale, a dam disaster in Brazil, and a commodities slump, but said it expects its cash flow to more than double this year.

The world’s biggest mining company said with cost cuts and a reduction in net debt it expects to generate more than $7 billion in free cash flow in the year to June 2017, at current prices for iron ore, copper, coal, oil and gas.

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“While commodity prices are expected to remain low and volatile in the short to medium term, we are confident in the long-term outlook for our commodities, particularly oil and copper,” Chief Executive Andrew Mackenzie said in a statement.

Excluding $7.7 billion in writedowns and charges, underlying profit still slumped 81% to $1.2 billion for the year to June 2016 from $6.4 billion a year ago, hit by weak prices for its major commodities.

The underlying profit was the weakest since the merger of BHP and Billiton in 2001, but better than analysts’ expectations of around $1.1 billion.

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Shoring itself up against tough markets, BHP, like rival Rio Tinto , in February abandoned its long-held policy of never cutting dividends, and flagged instead it would pay out at least 50% of underlying profit from then on.

It announced a full-year dividend of 30 cents, which it said was more than the minimum under its new payout policy, although it was just below analysts’ forecasts around 32 cents.

Net debt rose slightly from December to $26.1 billion, which was higher than the $25 billion that analysts had expected, but BHP said it expects net debt to fall in the 2017 financial year.

“We continue to pursue capital-efficient latent capacity opportunities which will support volume growth of up to 4% next year, excluding our onshore U.S. assets where we continue to defer activity to maximise value,” Mackenzie said, referring to its shale oil and gas business.