BHP misses on profit, pays record dividend

BHP has announced a record final dividend of 78 US cents per share but the global miner’s underlying profit has narrowly fallen short of expectations.

The ASX-listed titan more than doubled its full-year net profit to $US8.31 billion ($A12.27 billion) for the year to June 30 on the back of strong iron ore prices and easing losses associated with the 2015 Samarco dam disaster.

But BHP’s underlying profit from continuing operations fell by 2.0 per cent to $US9.46 billion following the divestment of US shale assets, short of consensus estimates of $US9.73 billion.

Including the shale assets, the company’s underlying profit was 2.0 per cent higher than last year’s result at $US9.1 billion but under consensus expectations of $US9.4 billion.

Nevertheless, the company declared a final dividend of 78 US cents per share, up from 63 US cents a year ago, for a full-year dividend of $US2.35 per share.

BHP said the final payout was on top of a record US$17 billion it had already returned to shareholders in FY19.

Chief executive Andrew Mackenzie said the full-year result would provide the company with the momentum needed to prosper, even as the trade war between China and the US weighs on commodity prices.

“We continue to enjoy strong sales to China … but while (the tension) continues it is putting a bit of a dampener on world economic growth,” Mr McKenzie said.

“I believe we have built a company that will survive and will prosper.”

BHP said it expected China’s economic growth to slow modestly but the company believed the impact of weaker exports would be partially offset by easier monetary and fiscal policy.

“Over the longer term, we expect China’s economic growth rate to decelerate as the working age population falls and the capital stock matures,” BHP said in its release to the ASX.

Mr Mackenzie said BHP’s review of its thermal coal segment was continuing but repeated the company did “not intend to invest to grow these businesses”.

In July, Mr Mackenzie announced BHP was spending $US400 million to create a climate investment program to reduce emissions from its own operations as well as those generated from its resources.

BHP’s revenue from continuing operations rose 3.0 per cent to $US44.3 billion, with higher commodity prices and record production from several sites offset by the impacts of Cyclone Veronica in Western Australia, resource headwinds and unplanned outages in the first half of the year.

Strong iron ore prices helped deliver $11.1 billion in pre-tax earnings for the segment, which was nearly half of the $23.2 billion in pre-tax earnings achieved across the group.

Exceptional losses associated with the Samarco incident eased to $US818 million from $US5.2 billion a year ago.

BHP’s ASX-listed shares dropped by 1.6 per cent to $35.67 within the first 30 minutes of trade on Tuesday, still 7.5 per cent higher than $33.17 a year ago.


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