Continued strength for BHP a boon for shareholders

Company News

by Glenn Dyer

BHP (ASX:BHP) will pay record full year dividends after reporting the second-biggest profit in the company’s history in the year to June 30.

The company told the SASX on Tuesday that shareholders will receive a total of $US16.3 billion ($A23.2 billion) of dividends for the year to June.

The company reported a 26% rise in underlying profit from continuing operations to $US21.3 billion.

Even though the final of $US1.75 a share was down from the record $US2 a share a year ago, the total for the year of $US3.25 a share was a record and it and the underlying profit were better than the market had been forecasting. The interim in February was a record $US1.50 a share.

Underlying profit from continuing operations for the year was up from $US16.99 billion a year earlier, topping forecasts around $US20.8 billion.

“These strong results were due to safe and reliable operations, project delivery and capital discipline, which allowed us to capture the value of strong commodity prices,” BHP CEO Mike Henry said.

“BHP remains the lowest-cost iron ore producer globally, and we delivered record annual sales from Western Australia.

BHP’s underlying EBITDA from continuing operations was up 16% to a record $US40.634 billion (excluding BHP Petroleum) while it recorded net operating cash flow up 13% to $US29.285 billion and record free cash flow of $US24.3 billion.

However, demand for iron ore has been slowing in China as a crisis in the debt-ridden property sector and strict COVID-19 curbs hammer economic activity, especially in construction and some areas of consumer demand.

Iron ore prices have been in a range from $US96 a tonne (for 62% Fe Fines) to around $US114 a tonne for much of the last two months. 62% Fe fines futures on the Singapore Exchange ended at $US110.37 a tonne on Monday.

That weak demand has seen steel-making activity in the world’s second-largest economy slide with crude steel output in July slumping 10% to just over 81 million tonnes. That was the lowest monthly figure this year outside the January-February period which is disrupted by the timing of the Lunar New Year.

Retail sales, investment and industrial production for July (cement output fell 7% as well)

But BHP remains a believer in China with CEO Mike Henry saying in Tuesday’s ASX release “We expect China to emerge as a source of stability for commodity demand in the year ahead, with policy support progressively taking hold.”

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