BHP beats forecasts as underlying profits rise

27th Aug 2024 07:32

(Sharecast News) - Mining titan BHP reported a bigger-than-expected increase in full-year underlying profits, helped by record volumes of iron ore and higher copper output, but warned of an "uneven" recovery in China.

The world's largest miner said underlying profits for the 12 months to 30 June were $13.7bn, up 1.8% on last year and well ahead of the $13.49bn projected by analysts.

However, attributable profit slumped 39% to $7.9bn, held back by a $5.8bn exceptional loss comprising a $2.7bn impairment of Western Australia Nickel and a $3.8bn charge related to the Samarco dam failure in 2015, which caused a giant mudslide that killed 19 people.

Revenues were up 3% on last year at $55.7bn, mainly due to higher prices of iron ore and copper, where sales volumes also increased 3% and 5% respectively. This was partially offset by lower energy coal and nickel prices, and lower steelmaking coal volumes after the disposal of its Blackwater and Daunia mines in April.

Net operating cash flow increased by 11% to $20.7bn, while net debt reduced to $9.1bn from $11.2bn a year earlier.

The company announced a final dividend of 74 cents a share, equivalent to a 53% payout ratio, bringing the total dividend for the year to $1.46.

Looking ahead, BHP said major economies are expected to diverge in their growth outlooks, with developed economies starting to face "less of a drag" from higher interest rates.

For China in particular, the company reiterated its long-term view that the economic transition could accelerate its demand shift increasingly towards "future-facing commodities".

However the recovery in China's end-use sector still remains mixed. "The Chinese economy has been volatile since CY23, with a steady recovery in a range of sectors important to copper demand, for example power infrastructure, transport and consumer durable goods. Weakness however continued in the steel-intensive real estate sector."