By David Winning

SYDNEY -- BHP Group Ltd. reported a 4% drop in annual net profit, and said it wanted to stop mining thermal coal and would seek buyers for some older oil and gas assets.

BHP, the world's largest listed miner by market value, reported a net profit of $7.96 billion for the 12 months through June, down from $8.31 billion a year earlier. The result was dragged down by $1.1 billion in one-off charges, including costs tied to its coronavirus pandemic response.

The company said its underlying profit fell by 1% to $9.06 billion, as high iron-ore prices and China's economic recovery helped to cushion weaker demand in countries where the coronavirus crisis has deepened. Still, BHP missed the $9.33 billion median forecast of eleven analysts compiled by FactSet.

Directors declared a final dividend of $0.55 a share, taking full-year ordinary dividends to $1.20 a share. While that exceeded a policy goal of paying out 50% of earnings to shareholders as dividends, the annual payout was 10% lower than 12 months earlier.

Global miners that rely on iron ore as an engine for their earnings are faring better than rivals focused on digging up other commodities during the pandemic. Rio Tinto PLC, BHP's main rival in Australian iron-ore production, this month lifted its midyear dividend. In contrast, Glencore PLC reported a first-half loss and scrapped its dividend as the pandemic sapped demand for commodities ranging from coal to zinc.

Iron ore is a key ingredient in steel making, which China dominates. Economists view steel as a proxy for China's economy because around 90% of output is used locally.

China's economy expanded by 3.2% in the second quarter, faster than expected by economists, after Beijing countered the effect of the pandemic with stimulus measures targeted at infrastructure and construction projects, which require a lot of steel. Iron-ore prices have also been fanned by supply disruptions in Brazil where some mines had to operate at reduced rates or shutter temporarily due to the spread of the coronavirus.

However, recent data have suggested to some economists that China's rebound may have already seen its best days. China's retail sales, a closely watched gauge of consumption, were in negative territory in July when market expectations had been for growth.

The iron-ore price reached $121.75 a metric ton on Friday, close to a six-and-a-half year high, according to S&P Global Platts data. However, many resources analysts think the price could soon peak as China is entering a seasonally weak period of construction, which may restrain demand for iron ore, while supply from Brazil is recovering.

BHP is assuming most major economies will likely suffer deep recessions this year, with the exception of China.

"Recovery will vary considerably by country," said Chief Executive Mike Henry. "Our diversified portfolio and high-quality assets position us to continue to generate returns in the face of near-term uncertainty."

Many resources companies have responded to the impact of the pandemic by shrinking their portfolios to focus on assets that make bigger profit margins and are considered to be less risky.

On Tuesday, BHP said it wanted to concentrate its coal portfolio on higher-quality coking coals, which are used to make steel. That strategic move means the company is looking at ways to exit from its BMC joint venture with Japan's Mitsui & Co., which produces metallurgical coal at two mines in eastern Australia. BHP said it also wants to exit from its New South Wales Energy Coal business in Australia and the Cerrejon thermal coal mine in Colombia.

BHP's thermal coal operations have been a focus for environmental activists and investors worried about the miner's contribution to climate change. Rio Tinto sold its coal assets in 2018.

Mr. Henry said BHP would also look to sell oil and gas assets "that are mature or which are likely to realize greater value under different ownership."

"This approach to actively managing our portfolio for value, risk and returns over multiple time horizons will yield superior returns for our investors," he added.

BHP's net debt rose to $12.04 billion at the end of June, at the bottom end of the company's stated $12 billion-$17 billion target range. Its net debt stood at $9.45 billion a year earlier.

Write to David Winning at david.winning@wsj.com