BHP Billiton's shares tumbled in Australia Wednesday as investors showed their disappointment with the lack of a share buyback and concerns over the global mining giant's demerger plans, analysts said.
The stock slumped around four percent in morning trade, with the sell-off following a similar scenario in London, where the firm is also listed.
It follows the world's biggest miner on Tuesday reporting weaker-than-expected underlying earnings of US$13.4 billion and a net profit of US$13.8 billion.
BHP also outlined a proposal to create a new independent company by demerging non-core assets, including some of its aluminium, coal, manganese, nickel and silver operations.
The Anglo-Australian resource major also failed to announce the US$3.0 billion share buyback that some analysts had been expecting.
Combined, the news sent the stock down 4.08 percent to Aus$38.06 around mid-day on the Australian stock exchange.
CLSA resources analyst David Radclyffe said the decline could reflect disquiet from BHP's British shareholders, some of whom would not be able to hold stock in the new company due to overseas investment restrictions.
"We're in favour of the deal, but I can understand why the Plc shareholders feel a little bit left out," Radclyffe told AFP, referring to BHP's British listed shareholders.
The new entity, to be named NewCo, will only be listed in Australia, not London, with a secondary listing in Johannesburg.
"The market seems to be pricing in a little bit of disappointment from them today, probably a little bit more than warranted," added Radclyffe.
"In saying that, the stock was trading at a three-year high, so a little bit of profit-taking -- given that there was nothing additional in the result to keep that momentum -- is probably not too surprising."
BHP Billiton chief executive Andrew Mackenzie told reporters he did not believe the sell-off in London was a rejection of the demerger option, instead pointing to the absence of a share buyback and the complex nature of the proposal.
"No, I don't think so," he was quoted as saying by Fairfax Media when asked if the falling share price was a sign the demerger was unpopular.
"We've had a number of pre-announcements of this over time and those were very much related to an outline of this transaction."
Mackenzie noted that the absence of a share buyback could be a possible factor.
"Expectations for (a) large capital management event were playing in peoples' minds," he said.
IG Markets strategist Stan Shamu said in a capital-focused market environment, the lack of a share buyback weighed on shareholders.
"Investors were hoping for a buyback to the tune of US$3 billion, and in a capital-focused market this wasn't taken well," Shamu said.
"Additionally debt levels are quite high and the company feels it needs to strengthen the balance sheet before committing to a buyback."
Shamu added that near-term uncertainty over the new entity could also mean there would not be a capital return to investors for some time.
By spinning off some assets into a new company, BHP said its business would beable to focus more intensively on its core long-life operations -- iron ore, copper, petroleum, coal and potash.
NewCo is expected to list in the first half of the 2015 calendar year.