BHP
(ASX:BHP) has slashed its interim dividend after net earnings plummeted 86% to just $US927 million. The drop was attributed to two massive write-downs/provisions against its Nickel West business in WA and the lingering costs of the dam wall collapse at the Samarco pellet plant joint venture in Brazil with Vale.
The interim dividend has been set at 72 US cents a share, down from 90 cents a share a year ago.
The slump in earnings was understandable given the announcement of $US6.7 billion (over $A10 billion) in one-off items last week.
The miner said revenue rose 6% to $US27.32 billion, thanks to another standout performance by its WA iron ore operations.
Underlying earnings were steady at $US6.6 billion for the December half-year, with underlying EBITDA rising 5% to $US13.875 billion.
BHP had revealed the two decisions in an advance statement to stock exchanges last Thursday.
These were a $US3.5 billion ($US2.5 billion post-tax) write-down in the value of its Nickel West business and an income statement charge of $US3.2 billion (post-tax) in relation to the Samarco dam failure.
BHP Brasil’s provision for the Samarco dam failure will rise to $US6.5 billion as of December 31, 2023, compared to $US3.7 billion as of June 30 the previous year, of which $US300 million was utilized in the period to December 31, 2023.
Despite the dramatic news, the interim results contained good news for investors, with another stellar performance from its WA iron ore business and top returns from its growing copper operation in Australia and South America.
BHP’s WA iron ore business saw a 27% jump in underlying EBITDA to $US9.6 billion on a 21% rise in average prices for the half.
Copper also performed well, with overall copper reported underlying EBITDA of $US3.5 billion, up 23% from a year earlier.
Directors noted that BHP’s revenue increased primarily due to higher iron ore and copper prices, as well as contributions from new mines. However, they highlighted the impacts of inflation on the underlying cost base, particularly on labor and parts, with a global inflation rate of 6.3% across operating jurisdictions during CY23.
