BHP cuts spending, warns on job cuts as full-year earnings slide 26pc
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The Age
6 hours ago
- The Age
BHP profits take a hit as prices fall for Australia's mining exports
Australia's biggest miner BHP has reported a 26 per cent fall in full-year profit and slashed its dividend to the lowest mark in eight years as prices for iron ore and coal tumbled on softer demand from China. The Melbourne-based mining giant on Tuesday said it had earned an underlying profit of $US10.2 billion ($15.7 billion) in the year to June 30, its smallest profit in five years. The result comes as US President Donald Trump's trade wars continue to cast a cloud over the global economy and the outlook for Australia's most lucrative mining exports. BHP earns most of its money from digging up iron ore in Western Australia and selling it to China to be processed into steel. However, demand in China has been starting to cool as its property sector battles an oversupply crisis, which has weakened steel production rates and subdued demand for iron ore. The glut has also pummelled the price of BHP's exports of metallurgical coal, which is used to fire steel-making furnaces. Falling revenue across the year was 'primarily due to the decline in coal and iron ore prices', BHP said in a statement to shareholders. Still, the Australian miner's full-year result was in line with analysts' expectations. Loading Shareholders will receive a final dividend worth US60¢ a share, taking BHP's payout for the year to $US1.10 a share. While that's better than analysts had expected, it's the lowest full-year payout since the year ended June 2017. Chief executive Mike Henry said the past 12 months had been a strong year for BHP, with the company delivering strong outcomes against a 'backdrop of global uncertainty'. The outlook for some of Australia's largest mining and energy companies has deteriorated since April, when the US imposed across-the-board tariffs at much higher rates than many had been expecting, leading to increased uncertainty and lower global growth forecasts.
AU Financial Review
6 hours ago
- AU Financial Review
BHP cuts spending, warns on job cuts as full-year earnings slide 26pc
BHP has delayed a multi-billion dollar expansion of its South Australian copper division and warned Queensland coal jobs could be cut after a 26 per cent slide in full-year earnings forced it to reduce dividends to the lowest level in eight years.
Courier-Mail
7 hours ago
- Courier-Mail
BHP threatens to pause Qld coal mines over 'extreme' royalty rates
Don't miss out on the headlines from QBW. Followed categories will be added to My News. Global miner BHP said it will consider the future of some of its lower margin coal mining operations in Queensland if the state government's 'extreme' super royalties regime and low prices persist. The warning on Queensland coal mines came as BHP raised the spectre of the Albanese government's industrial relations changes creating uncertainty in workforce planning, with implications for labour costs and Australia's international competitiveness. In its results delivered to the ASX on Tuesday, the company said with no change to the ongoing negative impacts of 'extreme royalty rates' it will continue to maintain its existing position of not investing in any further growth in the BHP Mitsubishi Alliance's (BMA) five coal mines in the Bowen Basin. 'We will sustain and optimise our existing operations,' BHP said on Tuesday. 'However, if low coal prices persist, options to pause lower margin areas of our operational footprint will be considered.' BMA's current multi-billion dollar investment in Queensland include the Broadmeadow, Caval Ridge, Goonyella Riverside, Peak Downs, and Saraji coal mines. BHP said it will consider is coal mining operations in Queensland if the state governments 'extreme' super royalties regime and low prices persist. BMA also operates the Hay Point Coal Terminal near Mackay. A spokesman for the Queensland Minister for Natural Resources and Mines rejected any immediate changed to the royalties regime. 'Queenslanders are paying the price from Labor's unpredictable anti-mining agenda, which threatened jobs in North Queensland and drove investment off a cliff,' he said. 'Royalty rates are not under consideration. Unlike Labor, the Crisafulli Government is backing Queensland's hard-working mining families and is supporting the mining industry with streamlined approvals to reduce unnecessary costs and create more jobs.' The mining giant will press forward with boosting iron ore exports from Western Australia, with chief executive Mike Henry noting Chinese steel demand was staying stronger for longer than BHP previously anticipated. Underlying earnings before interest, taxes, depreciation, and amortisation from the BMA operations, which represent Australia's largest producer and supplier of seaborne metallurgical coal, fell by $US1.3bn ($2bn) year-on-year to $US600m. BMA made $US1.1bn in royalty and other payments to government and paid tax at an effective rate of more than 67 per cent, including the onerous royalties. The steep fall in earnings was driven by much lower coal prices, which slid by 27 per cent and the divestment of Blackwater and Daunia mines. 'Over the longer term, we expect that higher quality steelmaking coals, such as those produced by our BMA assets, will be valued for their role in reducing the greenhouse gas emission intensity of blast furnaces,' the company said. 'In addition, robust hard coking coal imports from developing countries such as India, will lead to growing and resilient demand for decades to come. 'With the major seaborne supply region of Queensland not being conducive to long-life capital investment owing to the current royalty regime, the scarcity value of higher quality steelmaking coals may also increase over time.' 'Just as a figure for you, last year, the effective tax rate for the BMA business in Queensland was over 67 per cent, taking into account the higher royalty burden that we face there now. 'So this is a pretty significant impact on the business for sure.' BMA has more than 9000 employees and contractors, and in the past decade, its mining operations have been a major contributor of royalties, paying more than $21bn to the Queensland Government, with over $1.5bn paid in FY2025. In the 2025 financial year, BMA spent over $1.4bn with more than 820 local suppliers and over $100m was spent with more than 50 Indigenous businesses. BHP says it's considering the future of its Queensland mines. Asked about the prospect of mine closures, Mr Henry said options included partial shutdowns. 'What's happened is due to the changes that were made to the royalty regime a few years ago (under Queensland's previous Labor government), the benefit of any upswing in coal prices has been seriously eroded from a BMA perspective,' he said. 'And so in the face of tougher times, like we see currently, there's less ability or willingness on the part of the business to see through those tough times and perhaps carry some negative cash flows. 'We have to act even more expediently to shut loss-making production because we don't get the benefit on the other side of the equation when prices rise.' BHP told the ASX that its revenue fell 8 per cent to $US51.3bn with underlying attributable profit after tax down 26 per cent to $US10.2bn, compared to its FY24 result of $US13.7bn. BHP declared a higher than expected final dividend of US60c a share, equivalent to a 60 per cent payout ratio, that will be paid on September 25. The company's 2024-25 dividends payouts total $US1.10, compared to a $US1.46 payout in FY24. BHP's share price up was up slightly in early trading at $41.69 after results that were largely in line with market expectations and affected by lower iron ore and coal prices partly offset by higher copper premiums. The group said it will spend $US11bn on capital and exploration expenditure in each of the next two years, reducing to $US10bn on average each year between FY28 and FY30. BHP chief executive Mike Henry said the global economic outlook is mixed. 'Growth is expected to ease to 3 per cent or slightly below in the near-term amid shifting trade policies, yet demand for commodities remains strong, particularly in China and India,' he 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.' Barrenjoey's team of equity analysts, including Glyn Lawcock, said the result was largely in-line with estimates. The full-year dividend payout ratio of 55 per cent came in higher than Barrenjoey and market consensus estimates for a 50 per cent return. Macquarie analysts said BHP had a strong finish to FY25 with an 18 per cent beat in final dividend. 'The re-prioritisation of capital and net debt increase were a key positive; we think this supports higher returns in the future,' Macquarie said. Mr Henry rejected suggestions that a move to increase BHP's net debt target range to between $US10 bn and $US20bn (from between $US5bn and $US15bn) was linked to renewed interest in mega-ming mergers. 'We've been quite clear that M&A is but one of our levers for growth. And frankly, in current markets, it's hard to see the right combination of the commodities that we like, the asset qualities that we like at a price where we can still unlock attractive value for BHP shareholders,' he said. The results came on the back of record iron ore and copper production for BHP. BHP produced 290 million tonnes of iron ore in the Pilbara in 2024-25 and made record shipments. The mining giant continues to weigh up plans to boost production to 330 million tonnes a year and sees a low capital pathway to 305 million tonnes in the meantime. The journey to 305 million tonnes involves building a sixth car dumper – used to unload iron ore from railcars – at a cost of about $US900m.
