Mining giant BHP's profits slump to five-year low - but record output cheers investors

Daily Mail​

5 hours ago

Mining giant BHP posted its weakest annual underlying profit in five years on Tuesday after oversupply concerns and slowing Chinese demand weighed on iron ore prices.
Prices for iron ore, the FTSE 100-listed miner's top-earning commodity, have been relatively volatile this year, with futures trading at $112 per tonne in October 2024 compared with around $101/t at time of writing.
Futures have been under pressure from additional supply from Australia, Brazil and South Africa, as well as weaker Chinese steel consumption, which has kept prices well below the $140/t seen in January 2024 and Covid-era highs touching $220/t.
BHP, the world's largest listed miner, reported an underlying attributable profit of $10.16billion for the year ended 30 June, missing forecasts of $10.22billion and down from $13.66billion last year.
It marked the group's lowest profit since 2020.
BHP announced a final dividend of $0.60 per share, down from $0.74 a year earlier and taking the total annual payout to $1.10 - the miner's weakest dividend since 2017.
But BHP shares rose on Tuesday morning as boss Mike Henry cheered 'record production' and a 'strong performance' despite a 'backdrop of global disruption'.
The group met full-year production guidance across all assets, setting new records in copper and iron ore output.
Henry said BHP would 'continue to invest in growth', earmarking $11billion in capital and exploration to be spent over each of the next two years
He added: '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.
'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.
'Backed by a diversified portfolio of large, long-life assets, disciplined low-cost operations and a strong balance sheet, BHP is well-positioned to deliver enduring value through the cycle.'
BHP shares were up 1.9 per cent to 2,024p in early trading in London, where the group has its secondary listing. Shares in BHP's primary market of Australia also rose.
Adam Vettese, market analyst for eToro, said: 'BHP offers resilience and defensive attributes that appeal to long term investors, even as near-term profits are hit by commodity weakness.
'Investors will need to accept some short-term pain for the longer-term opportunity, but BHP's scale, asset quality and strategy underpin a compelling investment case as the energy transition accelerates.'
Matt Britzman, senior equity analyst at Hargreaves Lansdown, added: 'What sets BHP apart is its enviable cost base.