BHP profits soar on higher iron ore prices; Cautious on coronavirus

Marco Green
February 19, 2020

BHP's underlying profit from continuing operations rose to $5.19 billion for the six months ended December 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.

Revenue from continuing operations rose 7.0 per cent to $US22.3 billion in the six months to December 31 - up 3.0 per cent on a statutory basis - in what is chief executive Mike Henry's first major profit report since replacing Andrew Mackenzie in January.

Centrally, the miner recorded earnings (underlying EBITDA) of US$12.1 billion (+15%) against attributable profits of US$4.9 billion (+29%).

BHP paid out a record dividend in August past year, giving back US$3.9 billion (R58.9 billion) to shareholders.

The shares rose as high as $38.96 yesterday and closed up 0.8% at $38.78 in a market that traded in the red all day.

BHP's Escondida mine is the world's largest copper producer located in Northern Chile.

"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.

"My first preference is to be securing these options through exploration and early stage entry", Henry said in the interview.

BHP also intends to accelerate efforts to curb its carbon emissions, Henry said in a Bloomberg TV interview, and will set out new targets later this year.

This is a small part of its portfolio.

BHP owns one such mine and has a stake in another.

The coronavirus outbreak has had no major impact on the miner but the company said it remained cautious of near-term volatility.

Mr. Henry said BHP had delivered a strong set of half-year results, grounded in solid operational performance.

More than 72,000 people have been infected by the virus that has killed over 1,800 people, the vast majority of them in China.

BHP produced 121-million tonnes of iron-ore during the half-year, up 2% on the previous corresponding period, while petroleum production was down 9%, to 57-million barrels of oil equivalent. The interim dividend represented an additional US$700m or 14 U.S. cents per share above the minimum mandated by the group's policy, pushing the company's payout ratio to 63%.

BHP Group's new top executive has a plan to prosper in a world that's accelerating efforts to cut greenhouse gas emissions - double down on the raw materials that've been key through its near 170-year history.

Other reports by Click Lancashire

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