BHP's profit jumps 29 per cent to $7.25 billion, dividend increases

Daniel Fowler
February 19, 2020

BHP shareholders will receive a heftier, fully franked 65 U.S. cents per share interim dividend after the global miner lifted its first-half statutory profit 29 per cent to $US4.87 billion ($A7.25 billion).

Underlying profit from continuing operations was up 29% at US$5.19 billion, broadly in line with the US$5.22 billion median estimate compiled by FactSet and The Wall Street Journal.

Net operating cash flow of $7.4 billion and free cash flow of $3.7 billion reflects higher iron ore prices and a solid operating performance, the company said.

New chief executive Mike Henry, who took up the top job in January, said the company was in "good shape".

The board said it would pay an interim dividend of 0.65 United States dollars (50p) per share.

Mr Henry said metals prices had "held up" and there had been no payment issues.

Indeed, given its importance, the company today provided commentary on the iron ore outlook, with BHP positing that supply conditions will likely normalise over the next one to two year period.

BHP is the first among its peers to report earnings. Global miners are all expected to have cashed in on last year's higher iron ore prices, with a further boost coming as China pumped more money into its economy to alleviate an economic slowdown.

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Mr Henry said on Tuesday the miner would focus on "future-facing commodities" - copper, nickel and potentially potash - as the world moves from carbon fuels.

Iron ore supply faced great downward pressure in the second half of a year ago, on the back of the imbalance in Brazil's export recovery and stronger-than-expected downstream demand from China amid its slack implementation of winter cut at steel mills.

BHP also intends to accelerate efforts to curb its carbon emissions, Henry said in a Bloomberg TV interview, and will set out new targets later this year.

Henry said the company could sell its thermal coal assets if it found a buyer at the right price.

BHP dug up 121 million tons of iron ore in the six months through December, and expects its share of production to total between 242 million tons and 253 million tons in the 2020 fiscal year.

BHP has also been using more renewable power and was working to reduce so-called "scope three" emissions - or the emissions of its customers.

"For the 12 months ahead, we assess that directional risks to prices across our diversified portfolio are mixed, with the duration and intensity of the novel Coronavirus outbreak a major source of uncertainty", the miner said in a statement.

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