The world’s largest listed miner was cautiously optimistic about a demand recovery in the developed world in the next 12 months. — Reuters
SYDNEY: BHP Group logs first-half underlying profit that slightly beat analyst expectations, buoyed by strong iron ore prices, and says inflationary impacts are receding.
The world’s largest listed miner was cautiously optimistic about a demand recovery in the developed world in the next 12 months but said it was not yet clear how effective stimulus policies have been in China, its biggest customer.
It was more bullish on India, which it said “has considerable positive momentum behind it”.
BHP said it expects a “more balanced global economy and evidence that the worst of the general inflationary wave is behind us will have a positive impact on our industry in the calendar year 2024”.
For the first half, BHP’s strong revenue growth of 6% was underpinned by higher iron ore and copper prices and contributions from new projects, but was partially offset by lower energy coal prices.
BHP said underlying profit attributable to shareholders was US$6.60bil for the six months ended Dec 31, unchanged from the previous year but topping an LSEG estimate of US$6.42bil.
It declared an interim dividend of US$0.72 per share, compared with US$0.90 per share a year earlier. That beat Citi’s expectation of US$0.68 and a Visible Alpha consensus of US$0.70.
“The market should take a modestly higher dividend than expected as a reflection of BHP’s improving confidence regarding the outlook on commodity demand and prices,” analysts at Citi wrote.
Shares in BHP edged down 0.3% to A$45.91 amid a sour tone in resource stocks.
BHP, which announced a US$2.5bil impairment charge for its Western Australia Nickel business last week, said it sees the nickel industry facing “a difficult multi-year run”, amid a flood of new supply coming out of Indonesia.
“Our base case is that the market may rebalance by the late 2020s,” BHP said.
BHP operates a nickel smelter and a refinery in Western Australia, employing 3,000 people, and has warned that the slump in nickel prices could slow the development of its West Musgrave copper-nickel project.
“You should be expecting that to be a decision in months, not years,” said Henry.
“We weren’t expecting the nickel market to plunge as quickly and as significantly as it has,” he told analysts at a results briefing.
While it welcomed Australia’s moves to shore up the nickel sector through a production tax credit, BHP said that it should not focus on ensuring “the right policy settings are in place to drive the long-term competitive positioning of Australia as a nation”.
The company wants the government to improve industrial relations policies, financial settings, and permitting requirements, chief executive officer Mike Henry said but added that might not be enough for miners that have already put their operations into care and maintenance.
“Given just how significant the challenges in the nickel market are today, that may not be enough to alter course.” — Reuters
