BHP Billiton (BHP) is the latest in a line of commodity companies to slash its dividend.
On Tuesday, the Anglo-Australian company reported a loss of $1.06 per share for the second half of 2015 and cut its semi-annual dividend 74% to $0.16 from $0.62. Shares of the company were down more than 5% as of midday trading.
Earlier this month Standard & Poor's Ratings Services lowered BHP's credit rating to A from A+ and placed the company on negative credit watch. In its release announcing the ratings change, S&P said that if BHP maintained in its progressive dividend policy, its rating could be lowered again.
While S&P said BHP shows "prudent risk management" it also mentioned its cash flows are constrained by low commodity prices.
"Slower growth in China and the disruption of OPEC have resulted in lower prices than expected," CEO Andrew MacKenzie said in the company's earnings release.
While BHP primarily deals in iron, coal, and copper, it also has interests in oil and gas -- all of which have suffered from low prices over the last year. The company acknowledged that it believes lower prices and heightened volatility will be prolonged.
Dividend cuts -- some of which have gone completely to zero -- have occurred in several mining and oil and gas companies. Most recently, Anadarko Petroleum (APC) cut its quarterly dividend by 81% to $0.05 earlier this month.
In the mining space, Anglo-American suspended its dividend at the end of last year as part of a much broader "radical" restructuring plan it announced, which also included laying off 85,000 workers and consolidating into three businesses from six.
Similarly, Phoenix-based Freeport-McMoRan (FCX) suspended its dividend at the end of last year and announced plans to curb production last year. When Freeport released fourth-quarter earnings last month, it announced that its focus for 2016 was tackling its debt load, which stands around $20 billion.
In addition to announcing earnings, BHP announced several changes to its business to allow it to become a "simpler" organization, which included personnel changes as well.
"Both assets and functions will have fewer layers and hence fewer people required to lead and run the organisation," Mackenzie said in a statement announcing the changes. "This closer connection between management and operations will promote greater efficiency, rapid sharing of best practice and adoption of new technology to improve safety, productivity and learning - as well as management of risk."