Lower commodity prices and the high dollar cut profits for BHP Billiton to $US5.7 billion in the first half of 2012-13, down 43 per cent on a year earlier, after excluding writedowns totalling $US1.4 billion including against its Australian nickel and aluminium assets.

In the six months ending December 31, BHP saw revenues fall 14 per cent to $US32 billion, down from $US37.5 billion a year earlier, while underlying earnings before interest and tax (EBIT) fell 38 per cent to $US9.7 billion – although this was slightly higher than the consensus estimate of 21 analysts of $US9.5 billion.

The attributable net profit including writedowns was $US4.2 billion, down 58 per cent year on year. BHP declared an interim dividend of US57 cents a share up 4 per cent from the 55 cents declared a year ago.

BHP said soft nickel and alumina prices cut the value of its Worsley refinery by $US1.5 billion and its Nickel West operations by $US865 million.

BHP sold assets worth $US4.3 billion in the half.

BHP said lower commodity prices were responsible for $US5.4 billion or most of the fall in underlying EBIT, particularly a 28 per cent reduction in the realised iron ore price.

While commodity prices generally were "particularly volatile" in the December half, the company expected a general improvement in the global economy to support demand and prices – although the addition of low cost supply in many markets was expected to dampen pricing upside. Overcapacity in aluminium and nickel was likely to persist "for the foreseeable future," BHP said.

BHP reduced its costs by $US944 million in the half, including a $US557 million cut in exploration and business development expenditure.

Iron ore generated $US4.6 billion or 49 per cent of BHP's EBIT and petroleum another $US3.2 billion or 33 per cent.

Iron ore generated $US4.6 billion or 49 per cent of BHP's EBIT, down 39 per cent on the previous corresponding half despite record sales volumes from the Pilbara operations.

BHP said its earnings were reduced by $US164 million spent on expanding capacity including two new ship loaders and a fifth car dumper, which would help it increase production from 188 million tonnes per annum to 220 million tonnes per annum.

Petroleum contributed another $US3.2 billion or 33 per cent of underlying EBIT, down by $US939 million due partly to a 4 per cent drop in realised oil prices to $US105 a barrel, and a 6 per cent drop in gas prices to $US3.63 per thousand cubic feet.

The metallurgical coal business lost $US101 million in the half despite record sales volumes, hit by a 37-39 per cent drop in hard and soft coking coal prices. BHP said its five major coking coal projects were on track and would increase production by 10 million tonnes a year by the end of 2014.

Thermal coal remained profitable, delivering underlying EBIT of $US246 million, despite a 21 per cent reduction in export prices.