Nearly $8bn of exceptional items have driven BHP Billiton to a net loss of $6.39bn for the 2016 financial year, as the miner anticipates commodity prices to remain low and volatile in the short-term.

The Anglo-Australian miner underlying earnings of $1.2bn in the 12 months to June 30, slightly ahead of market consensus of $1.09bn, but down by four-fifths from $6.4bn the previous year, writes Peter Wells.

However, a long list of exceptional items topping $7.7bn (after tax) have sent the company to a reported net loss of $6.39bn, from a net profit of $1.91bn in its last financial year. Some of these include charges associated with redundancies and closures across its businesses, impairments in its coal unit and also the recognition of for the deadly collapse of a dam at its Samarco joint venture in Brazil.

It is the first reported loss since the 2001 merger of Australia’s BHP and Anglo-Dutch Billiton, and UBS believes it is the largest reported loss for BHP since inception.

Andrew Mackenzie, chief executive, said the past 12 months have been challenging for both BHP and the industry, but the company’s portfolio remained resilient. He continued:

Over the past five years we have actively reshaped our portfolio, and we are confident we have the right mix of commodities, assets and opportunities to create substantial value over time. 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.

Full-year revenue fell 31 per cent from a year earlier to $30.9bn, in line with the average of analyst estimates. Prices for iron ore and oil – two of the company’s key commodities – both hit multi-year lows within the past 12 months.

Iron ore with a 62 per cent iron content fell 11.9 per cent in the group’s latest financial year, but prices hit a multi-year low below $40 a tonne in December. So far this year, prices are up 35 per cent. Oil hit a 12-year low, below $30 a barrel in January.

The company said its average realised price for iron ore was down 28 per cent in FY16 to $44 a tonne, while the average realised price for crude oil of $39 a barrel was down 43 per cent from a year earlier.

BHP, like stablemate Rio Tinto, has been ramping up production in the Western Australian Pilbara region. , BHP said iron ore production fell 2 per cent in the 12 months to June 30 to 227m tonnes, with record volumes at its Western Australian Iron Ore operations offset by the suspension of operations at Samarco. The miner said it expected production in its 2017 full year to be between 228m-237m tonnes, an increase of up to 4 per cent.

BHP said it would pay a final dividend of US14 cents, taking the full-year payout to US30 cents, down from $1.26 last year.

In February, the company slashed its interim dividend by 74 per cent and abandoned its “progressive” dividend policy, which had been underpinned for years by the China growth-led mining boom, and shortages in key industrial commodities that had pushed materials prices higher. Mr Mackenzie said at the time: “We now have to recognise we are in a new era, a new world, and we need a different dividend policy to handle that.”

Peter O’Connor, metals & mining analyst at Shaw and Partners in Sydney said the 2016 financial year – and specifically the first half – will be seen as the earnings nadir for the company, with the prior low being in 1999 (on an underlying basis). Rising commodity prices should help, Mr O’Connor added, pointing out prices in FY17 are already tracking 15 per cent higher than in FY16.

“In short not a pretty set of results – the biggest loss ever – but that is backward looking,” Mr O’Connor said in a note to clients. “Other than ‘lessons learnt’ from the past, focus on the outlook = better commodity backdrop, cost out, and heaps of ‘latent’ growth capacity at low capital intensity. Deleveraging will be the story, just not quite yet as the same speed as Rio Tinto, Fortescue Metals, Newcrest Mining et al.”

BHP shares ended 0.5 per cent higher in Sydney on Tuesday, versus an overall 0.1 per cent decline for the S&P/ASX 200. So far this year, shares are up 13.6 per cent versus a 4.5 per cent gain for the broader index.