BHP cuts dividend as commodity prices weigh on earnings

West Australian

a day ago

Strong production results have helped BHP post a lift in full-year net profit, but weak commodity prices continue to weigh on the mining giant's revenues, prompting a dividend cut.
Net attributable profit in the year to June 30 rose 14 per cent to $US9 billion ($A13.9 billion), as BHP posted record iron ore and copper production and raised steelmaking coal production.
The profit rebound came after a 39 per cent slip in the 2024 financial year due to writeoffs of mothballed nickel assets and a $A5.6 billion charge for the Samarco dam disaster in Brazil, and was still short of 2023's $US12.9 billion ($A19.9 billion) net profit result.
With irregular items removed, underlying attributable net profit fell 26 per cent to $US10.6 billion ($A16.3 billion), shrinking the final shareholder to 60 US cents ($A0.92) per share, down from 74 US cents the year before.
Likewise, revenue slipped $US4.4 billion ($A6.8 billion) due to weak coal and iron ore prices, but this was partially offset by copper price strength.
Weaker revenues translated to weaker earnings before interest, tax, depreciation and amortisation, down 10 per cent to $US29 billion ($A44.7 billion), but underlying earnings from copper swelled to 45 per cent of group earnings to a record $US12.3 billion $A18.9 billion.
Iron ore prices have been under pressure in recent years from weaker iron ore demand and steel oversupply, and the outlook for global economic growth was mixed, BHP chief executive Mike Henry said.
"Growth is expected to ease to three per cent or slightly below in the near-term amid shifting trade policies, yet demand for commodities remains strong, particularly in China and India," Mr Henry said.
"We remain confident in the long-term fundamentals of steelmaking materials, copper and fertilisers, which are critical to global growth, urbanisation and the energy transition."
As for the shrunken dividend, the CEO noted it was "well above" BHP's minimum payout ratio.
"This is backed by a strong balance sheet, lower than expected capital spend and confidence in the long-term trajectory of our business," Mr Henry said.
BHP held its capital guidance for exploration expenditure unchanged at $US11 billion ($A16.9 billion) and invested $US2.1 billion ($A3.1 billion) for a 50 per cent interest in the Vicuña joint venture, which includes one of the largest copper deposit discoveries of the past 30 years.