BHP describes resilient operations as profits slip

(Sharecast News) - Australian mining giant BHP Group reported a decrease in a number of key financial metrics in its full-year results on Tuesday, while noting resilient operational performance in the face of challenging market conditions. The Sydney-listed company said that in terms of financial performance, its revenue for the year stood at $53.8bn, marking a 17% decrease from the previous year.

Its attributable profit from total operations took a significant dip, down 58% to $12.9bn, while underlying attributable profit, after adjusting for 2022's discontinued operations amounting to $10.7bn, fell 37% to $13.4bn.

Profit from operations was reported at $22.9bn, making for a drop of 33%, and underlying EBITDA declined 31% to $28bn.

BHP's underlying EBITDA margin contracted to 54%, compared to 65% in the 2022 financial year.

Despite the drops, the company noted that its revenue decrease of $11.3bn was a consequence of significantly lower prices in key commodities, and also highlighted its ability to manage the impact of inflation on costs effectively.

On the operational front, the firm reported a number of positive outcomes, with iron ore production up 1%, while copper and nickel production increased by 9% and 4% respectively.

Notably, BHP achieved production records at its Western Australia Iron Ore (WAIO), Olympic Dam, and Spence sites.

The company said it successfully met its full-year production guidance across copper, iron ore, metallurgical coal, energy coal, and nickel sectors.

Looking at contributions to governments, BHP made payments totaling $13.8bn, down from $17.3bn in the 2022 period.

The firm's adjusted effective tax rate for 2023 was 30.9%, while including revenue and production-based royalties, that figure increased to 41.3%.

In terms of capital management, the company's capital and exploration expenditure rose 16% to $7.1bn.

That increase aligned with BHP's strategy to elevate its exposure to future-oriented commodities, with around 70% of its medium-term capital expenditure projected to be channelled into those areas.

Finally, shareholders received positive news on the dividend front, with the fully-franked final dividend set at 80 US cents per share, which was 13 cents more than the minimum 50% payout rate.

That resulted in total cash returns to shareholders amounting to $1.70 per share for the year, fully franked.

"Our financial results for the year were strong, underpinned by reliable production together with capital and cost discipline as we managed lower commodity prices and inflationary pressures," said chief executive officer Mike Henry.

"Our balance sheet is robust and deliberately positioned to support portfolio growth in commodities the world needs for population growth, urbanisation and decarbonisation.

"In Canada, our investment in potash is progressing at pace with first production at Jansen on track for the latter half of 2026, and we are creating a new copper province in South Australia following the acquisition of OZ Minerals."

Henry added that the company was investing strategically in new ideas, technologies and countries through exploration and early-stage copper and nickel prospects to capture future growth opportunities.

"We continue to build an inclusive, high-performance culture and a more sustainable business, which are key to our future competitiveness and ability to deliver sector-leading returns.

"Today, more than 35% of our employees are female and we have increased Indigenous employee representation globally.

"We are taking action to reduce our operational greenhouse gas emissions through renewable electricity supplies and supporting the development of electric trucks, trains and light vehicles."

As of today, BHP had "among the lowest absolute operational" greenhouse gas emissions of the major miners, Mike Henry claimed.

The CEO added that commodity demand had remained relatively robust in China and India, even as developed world economies had slowed substantially.

"In the near term, China's trajectory is contingent on the effectiveness of recent policy measures.

"We expect buoyant growth in India with strong construction activity underpinning an expansion in steelmaking capacity.

"More broadly, there is increased recognition of the importance of critical minerals and strategies across the globe to incentivise investment in supply and demand, which provides opportunities and challenges."

At 0859 BST, shares in BHP Group were down 0.41% in London at 2,192.5p.

Reporting by Josh White for Sharecast.com.