PERTH (miningweekly.com) – Mining giant BHP Billiton on Tuesday reported an 8.7% drop in revenue, to $65.9-billion, for the year ended June.

Underlying earnings before interest, tax, depreciation and amortisation decreased by 16% on the previous year, to $28.4-billion, while underlying earnings before interest and tax declined by 22% to $6.1-billion.

CEO Andrew Mackenzie said that the drop in revenue and earnings was as a result of the substantial reduction in commodity prices during the year, which a $2.7-billion reduction in controllable cash costs had offset.

“It's important to note that this financial year was characterised by slowing global growth and on average, weaker commodity markets,” he said.

Mackenzie told shareholders that BHP concentrated its efforts on its world-class basins where projects had economies of scale, and a competitive advantage.

“We achieved a thirteenth consecutive annual production record at Western Australian iron-ore and a 28% increase in copper production at Escondida, in Chile, in the 2013 financial year. In addition, liquids production at our onshore US business increased by 76% and our Queensland coal operations returned to full supply chain capacity during the period,” he said.

The diversified giant noted that it expected to maintain strong momentum at all operations in the medium term, forecasting compound yearly production growth of 8% in copper equivalent terms over the next two years.

“This high-margin volume growth and the group’s determination to reduce operating costs is expected to underpin robust operating margins, even in the absence of higher prices.”

Mackenzie added that the long-term outlook for commodity prices was still positive, despite the likelihood that the increased supply in the short term would exert further pressure on prices.

“The growth rates of steel demand in Asia are expected to moderate as the Chinese economy gradually rebalances. This rebalancing should support growth in demand for other industrial metals, energy and agricultural products,” he said.

An overcapacity in the aluminium and nickel industries would persist, however, while the robust near-term supply in copper and US domestic gas was expected to give way to market conditions more influenced by resource decline.

“Over the long term, we maintain a positive outlook as the fundamentals of wealth creation, demographics and urbanisation continue to create demand for commodities across Asia and other markets.”

For the next financial year, BHP said that capital and exploration spend would be reduced to $16.2-billion.

During 2013, no major growth projects were approved; however, of the 18 projects currently in execution at the end of the year, some 70% were expected to deliver first production by the end of the 2014 calendar year.