BHP profit tumbles 26% with iron ore, coal under pressure
Melbourne: BHP Group's full-year profit fell by more than a quarter as key exports such as iron ore and coking coal remained under pressure from soft Chinese demand, while the company's debt and capital expenditure tallies increases.
The world's biggest miner posted an underlying attributable profit of US$10.2bil for the year to June 30, it said in filings yesterday.
While that was in line with analyst estimates, BHP said a US$4.4bil slide in revenue was 'primarily due to the decline in iron ore and coal prices'.
The result was partially offset by rising earnings from copper.
The miner's profitability has steadily declined since a 2022 record, with lower returns to shareholders and escalating capital expenditure dragging on its share value.
China has wallowed in an enduring property crisis that's led to a steel glut, hitting iron ore demand and capping prices, while coking coal – used to fire the furnaces at steel mills – has also struggled for momentum.
The global economic outlook 'is mixed', chief executive officer Mike Henry said in the earnings statement, although the company remained 'confident in the long-term fundamentals of steelmaking materials, copper and fertilisers'.
Mining majors – including BHP and its peer Rio Tinto Group – are now in a period of relatively high capital expenditure, as they seek to bring their project pipelines into production.
For BHP, this includes hefty spending over the next five years across its copper mines in Chile, where it is struggling to maintain output.
Other big outlays include bringing its Jansen potash project in Canada, and further cash injections at its Pilbara iron ore projects to eventually boost annual exports to 330 million tonnes.
BHP said it increased its net debt range to between US$10bil and US$20bil, up from US$5bil to US$15bil. It will pay a final dividend of 60 US cents.
Capital spending for the next year will be US$11bil, the highest since 2015. Net debt has risen to US$12.9bil, up by US$3.8bil. — Bloomberg
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