BHP reported a 26% drop in annual profit, the lowest in five years, due to sluggish Chinese demand affecting iron ore prices. Despite this, the company declared a larger-than-expected final dividend, leading to a 1% rise in shares. BHP also raised its debt target and hinted at possible acquisitions in copper and potash.

The company’s $10.16 billion underlying profit for the year ended June 30 missed expectations but still exceeded Visible Alpha consensus. BHP reduced its final dividend to $0.60 per share, lower than last year, but above projections. Citi analysts noted inflationary pressures but saw the higher dividend payout ratio positively.

Iron ore prices dropped 19% for BHP, impacting earnings alongside lower steel production in China. However, stronger copper prices helped offset some losses. Despite uncertainties in global trade policies, BHP expects demand for its commodities to remain strong. CEO Mike Henry highlighted policy uncertainty but noted resilient commodity demand.

BHP raised its net debt target range and plans to spend $11 billion on growth projects and exploration over the next two years. The company will consider acquisitions in copper and potash, but only if assets are reasonably-priced and high quality. BHP recently sold copper assets in Brazil for up to $465 million and exited the Kabanga nickel project in Tanzania.

Read more at Yahoo Finance: Iron ore sinks BHP FY profit to 5-year low but dividend boosts shares