* Annual profit leaps 26%, shares climb 5.5%; record
* Fails to rule out new bid for OZ Minerals, first offer
* OZ Minerals 'nice to have, but not a must-have' - CEO
Aug 16 (Reuters) - BHP Group Ltd reported bumper
profits on Tuesday on the back of gains in prices of coal and
other commodities, and declined to rule out a second approach in
its spurned $6 billion bid for OZ Minerals.
Shares in the world's biggest miner by market value rose
5.5% after a greater-than-expected 26% rise in earnings to $21.3
billion for the year ended June 30 - its highest since 2011 -
and the announcement of a record dividend.
Flushed with funds and more nimble after unifying its London
and Sydney public holdings, BHP is back looking for acquisitions
and on Aug. 8 offered to buy copper and nickel miner OZ Minerals
in a A$8.34 billion ($5.8 billion) deal - its second takeover
bid in a year. The offer was declined.
"We have lots of levers for growth and M&A is just one of
those levers ... we will remain disciplined," said BHP Chief
Executive Officer Mike Henry in an earnings briefing.
Henry did not comment on whether BHP would return to OZ
Minerals with a revised offer. Shares in OZ Minerals were up
1.2% at 0230 GMT while the Sydney benchmark was up 0.5%.
"It's nice to have but not a must-have," Henry said,
referring OZ Minerals. "It's pretty disappointing that the board
(of OZ Minerals) chose not to engage."
The leap in underlying profit from continuing operations
beat a consensus estimate of $20.89 billion compiled by Vuma
Profits were boosted by its coal business, with prices
hitting record levels after Russia's invasion of Ukraine. BHP
said the results reflected higher coal and copper prices, and
disciplined cost controls.
LOOKING TO EXPAND
Copper prices have fallen 25% since touching a record in
March because of a growth slowdown in top consumer China and
aggressive interest rate hikes that threaten a global recession.
The bid for OZ Minerals, along with the merger of its
petroleum business in June, shows BHP has excess cash flow and
is looking to expand, said Azeem Sheriff, a market analyst at
"The copper and energy space is really positive for the
company and that's been flowing through in step-forward guidance
as well," Sheriff said.
RBC analysts said in a note: "BHP retained $4bn of cash
despite finishing with net debt of $300m, indicating to us that
the balance sheet remains prepped for further M&A."
For the fiscal year ended June 30, shareholders will get a
final dividend of $1.75 per share, making a peak annual
distribution of $3.25 per share, at a time when other miners
have cut investor returns to contend with declining profits.
The miner said it will assess options to expand production
at its top iron ore producing unit to 330 million tonnes a year,
and continue to explore growth options in "future-facing"
commodities like copper and nickel.
BHP warned of a slowdown in advanced economies as monetary
policy tightens, and said it expects labour constraints to
continue to put pressure on global and local supply chains.
Henry however said he was optimistic about China and its
return from COVID-19 lockdowns should boost demand for
resources. "We expect China to emerge as a source of stability
for commodity demand in the year ahead, with policy support
progressively taking hold," he said.
Rival miner Rio Tinto, reported a 29% drop
in first-half profit and more than halved its dividend in July,
citing softening demand from China and supply-chain snags.
(Reporting by Savyata Mishra in Bengaluru and Praveen Menon in
Sydney; Editing by Kenneth Maxwell and David Holmes)