MELBOURNE- Robust iron ore prices drove BHP Group, to its best result in five years on Tuesday but the world’s biggest miner said this year's demand could take a hit if the fallout from the coronavirus outbreak in China extended beyond March.

BHP's underlying profit from continuing operations rose to $5.19 billion for the six months ended Dec. 31 from $4.03 billion a year earlier, the strongest result since 2015, lifted by lofty iron ore prices after last year's supply disruption in Brazil and solid Chinese demand.

The results were below estimates for a profit of $5.28 billion, according to analysts polled by research firm Vuma Financial. An interim dividend of 65 cents, 10 cents higher than last year, undershot forecasts for a dividend of 71 cents.

"As long as coronavirus is ... better contained within this quarter, on balance, we think that for the remainder of the half, the overall market demand and the economy will hold up," new Chief Executive Mike Henry told an investor briefing.

"If it extends beyond that, of course, then we'd be back in looking at what the implications are."

UBS said the dividend was below forecasts because the board took a conservative approach to the virus outbreak. 

For now, BHP has not yet seen a major impact on its business and customers have kept paying for orders, Henry said, adding that other supply disruptions had supported iron ore prices.

"We are moving all of our product. Demand remains pretty resilient. Prices have held up in part because of some other supply side disruptions," Henry said.

Rio Tinto downgraded its forecast on Monday for iron ore shipments for the year after this month's cyclone off the coast of Western Australia. 

BHP is the first among its peers to report earnings. Global miners are all expected to have cashed in on last year's higher iron ore prices, with a further boost coming as China pumped more money into its economy to alleviate an economic slowdown.

China's iron ore imports were at their second-highest level ever in 2019, further boosting profits. 

BHP was positioning itself well in a world that was seeking to reduce carbon emissions, Henry said.

BHP was seeking to raise its exposure to copper and nickel through exploration and early stage acquisition, he said, adding it was also working on a potash project which produces a vital ingredient for fertiliser.

"We need more copper and we need more nickel," Henry told reporters, referring to two metals that are likely to benefit from the shift to electric vehicles and other lower carbon initiatives.

Henry said the company could sell its thermal coal assets if it found a buyer at the right price.

BHP has also been using more renewable power and was working to reduce so-called "scope three" emissions - or the emissions of its customers. It is also reviewing industry associations it funds to ensure they comply with its climate change goals.

BHP was restructuring its technology operations to cut costs and planned to double the number of permanent roles from about 30% to 40% its 72,000-strong workforce now, Henry said.

Australian shares climbed 0.8% on Tuesday to end at $A38.78, as the mining sector rallied after China stepped up stimulus to cushion the impact of the coronavirus outbreak. 

Free cash flow for the miner came in at $3.7 billion, compared with $3.6 billion a year earlier.

(Reporting by Nikhil Kurian Nainan and Rushil Dutta in Bengaluru; Additional reporting by Melanie Burton in Melbourne; Editing by Peter Cooney, Dan Grebler and Tom Hogue) ((NikhilKurian.Nainan@thomsonreuters.com; Twitter: @NikhilKurianN; +91 806 749 1637))