New | BHP Billiton half-year earnings plunge 31pc

Resources giant BHP Billiton, the world's biggest miner, posted a 31 per cent drop in half-year profit as prices for all its main products collapsed, but beat market forecasts and flagged further belt tightening to withstand the tough conditions.

The company again cut its targets for capital spending and said it would reap savings of US$4 billion in the next two years, shoring up cash flows so it could stick to its policy of not cutting dividend payouts.

"We are confident that we can maintain our progressive dividend policy and continue to selectively invest in projects that offer compelling returns," chief executive Andrew Mackenzie said.

BHP could not match rival Rio Tinto's recent US$2 billion share buy-back as its petroleum arm, the business that sets BHP apart from other miners, has been battered by a 50 per cent fall in oil prices since June last year.

But investors still hailed better-than-expected results in iron ore, BHP's biggest earner, and the aluminium, manganese and nickel businesses that the company plans to hand to shareholders in a new company called South32.

"Quality operations are making a fist of the tough environment, and they're doing better than the market's expecting, so that's a great outcome," said Ric Ronge, a portfolio manager at Pengana Capital.