BHP racks up $US24bn profit

BHP shareholders will receive a big payout after underlying profits soared during the financial year, though the mining major has braced for more inflationary pressures and expansion costs.

Results reported to investors this morning for the 2022 fiscal year revealed BHP’s bottom line had grown by 39 per cent since last year to deliver an underlying attributable profit of $US23.8 billion ($A34 billion).

Factoring in the $US7.1 billion ($A10.1 billion) the mining giant made from the demerger of its petroleum assets to Woodside Energy, BHP’s attributable profits were $US30.9 billion ($A44.1 billion).

BHP announced a final dividend of $US1.75 to lift its full-year payment to $US3.25 per share.

It means the business will have paid out $US36.0 billion ($A51.3 billion) in dividends to investors for fy22 if including the one-off in-specie payment made to shareholders following the Woodside deal.

BHP chief executive Mike Henry said the company had delivered a strong operational performance.

“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,” chief executive Mike Henry said.

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

Baseline profits were supported by strong coal and copper prices and mostly steady output from its Western Australian iron ore operations, which was marginally lower than last year at 249 million tonnes (equity share).

Iron ore

BHP lifted production guidance for Western Australian iron ore to 300 million tonnes for FY23 after reporting that its South Flank iron ore operation, which started producing in May 2021, was ramping up ahead of schedule.

The company said it would also consider methods to increase output by another 30 million tonnes during this financial year.

Though costs across most commodities were kept within estimates, BHP reported unit costs had risen by around 13 per cent across its major assets.

Direct costs for iron ore rose by around $US2.07 to $US15.05 per tonne and the miner has forecast unit costs could climb to between US$18 and US$19 for fy23.

This was due to higher diesel prices, the South Flank ramp-up, rail track maintenance and general ‘covid-19’ related costs, BHP said.

OZ Minerals

Addressing media, Mr Henry could not be drawn on whether the company would make another bid for OZ Minerals, but said it was disappointing that the board has chosen not to engage.

It comes just over a week after OZ Minerals rejected BHP’s $A8.3 billion takeover for its copper and nickel assets on the grounds the $25 per share offer “significantly undervalued” the company.

“[It was] a very full value and fair offer and pretty compelling for OZ shareholders,” Mr Henry said.  

“It was pretty disappointing I have to say that the board has chosen not to engage.

“Having said that we have lots of levers for growth.”

He maintained that OZ was a ‘nice to have and not a must-have’ and that it would had options to add to its options for future-facing commodities such as copper and nickel.

BHP shares were up 3.8 per cent on the back of the update, last changing hands at $40.40 at 11:24am AEST.