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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  BHP Group    BHP   AU000000BHP4

BHP GROUP

(BHP)
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End-of-day quote. End-of-day quote Australian Stock Exchange - 03/31
28.98 AUD   -4.04%
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BHP 1st Half Net Profit Rises 29%, Dividend Lifted

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02/17/2020 | 04:48pm EDT

By David Winning

SYDNEY--BHP Group Ltd. reported a 29% rise in half-year net profit and lifted its dividend, after strong prices of iron ore more than offset weakness among almost all other commodities that it produces.

BHP, the world's largest listed miner by market value, said it made a net profit of US$4.87 billion in the six months through December, up from US$3.76 billion a year earlier. Earnings improved despite a US$318 million drag from cancelled power contracts at two copper mines in Chile as BHP shifts toward running the operations fully on renewable energy, and costs tied to the Samarco dam failure in Brazil several years ago.

Underlying profit from continuing operations was up 29% at US$5.19 billion, broadly in line with the US$5.22 billion median estimate compiled by FactSet and The Wall Street Journal.

Tuesday's result was the first delivered by Mike Henry since he succeeded Andrew Mackenzie as BHP's chief executive at the start of January. Mr. Henry, a veteran BHP executive who ran the Australian minerals division for more than three years, took the helm at a time when major resources companies are being pressed by investors to map out clearer strategies for growth while balancing benefits to shareholders through dividends and other forms of capital management.

Directors of BHP declared an interim dividend of US$0.65 a share, up from an ordinary payout of US$0.55 a share a year ago, but opted against using surplus cash to pay a special dividend as well. The miner has prioritized bringing its debt burden down, with net debt rising to US$12.84 billion at the end of December.

"The dividend reflects the solid cash flow generated in the period, caution due to near term market volatility driven by the 2019 coronavirus disease outbreak, trade policy and geopolitics, and our preference for net debt to be at the bottom end of the US$12 to US$17 billion target range," BHP said.

BHP has benefited from a tailwind of high iron-ore prices as the market responded to reduced supply in Brazil following a deadly spill of mining waste at an operation owned by Vale SA early last year. BHP last month said its iron ore fetched an average price of US$78.30 a metric ton in the six months through December, up 41% on a year earlier.

However, the coronavirus outbreak in recent weeks has weighed on iron-ore prices, as China idled manufacturing as part of a strategy to contain its spread. Morgan Stanley estimated that more than 40 blast furnaces have been taken offline temporarily with the potential loss of 80 million tons of annualized iron-ore demand--enough to tip the market into surplus.

Mining executives and investors will be watchful for any new moves by Beijing to stimulate the national economy once the virus is contained, as this could stoke demand for resources. China is the world's top buyer of many commodities, accounting for around 60% of the trade in iron ore by sea.

"Despite near term uncertainty--due to the coronavirus outbreak, trade policy and geopolitics--we remain convinced about the positive underlying fundamentals of our commodities," Mr. Henry said.

BHP dug up 121 million tons of iron ore in the six months through December, and expects its share of production to total between 242 million tons and 253 million tons in the 2020 fiscal year. Copper output has also been rising, although oil and gas production in the half-year period was affected by the impact of Tropical Storm Barry in the Gulf of Mexico along with some fields becoming less productive as they approach the end of their life.

 

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

 

Stocks mentioned in the article
ChangeLast1st jan.
BHP GROUP -4.04% 28.98 End-of-day quote.-25.41%
BHP GROUP 2.83% 1252 Delayed Quote.-29.54%
EURO / BRAZILIAN REAL (EUR/BRL) 0.04% 5.7388 Delayed Quote.26.05%
GOLD 0.14% 1580.5 Delayed Quote.7.14%
LONDON BRENT OIL 0.58% 26.13 Delayed Quote.-62.08%
MORGAN STANLEY -2.41% 34 Delayed Quote.-33.49%
SILVER 0.22% 13.973946 Delayed Quote.-19.38%
VALE S.A. 3.47% 43.22 End-of-day quote.-24.77%
WTI 1.61% 20.615 Delayed Quote.-62.40%
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Financials (USD)
Sales 2020 43 353 M
EBIT 2020 16 773 M
Net income 2020 9 133 M
Debt 2020 11 956 M
Yield 2020 7,52%
P/E ratio 2020 9,48x
P/E ratio 2021 10,1x
EV / Sales2020 2,24x
EV / Sales2021 2,31x
Capitalization 85 299 M
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Technical analysis trends BHP GROUP
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 22,30  $
Last Close Price 17,78  $
Spread / Highest target 46,8%
Spread / Average Target 25,4%
Spread / Lowest Target -0,91%
EPS Revisions
Managers
NameTitle
Mike Henry Chief Executive Officer & Executive Director
John Kenneth Norman MacKenzie Chairman
Daniel Malchuk President-Americas Minerals Operations
Geraldine Ann Slattery President-Operations Petroleum
Peter Beaven Chief Financial Officer
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