BHP First-Half Profit Swells on Surging Iron Ore Prices

BHP Group, the world’s top miner, reported a 16% rise in its first-half profit as record production from its iron ore operations in Western Australia helped it cash in on sharp price gains.

  • Underlying profit was $6 billion in the six months to Dec. 31, the Melbourne-based company said Tuesday in a statement, up from $5.2 billion in the prior corresponding period. That compares with a median estimate of $6.4 billion (7 analysts).
  • The company will pay a record interim dividend of $1.01, up from $0.65 last year.
BHP First-Half Profit Swells on Surging Iron Ore Prices

Key Insights

  • Iron ore is by far the biggest contributor to BHP’s earnings and the group reported last month a 33% jump in its realized ore price for the December half compared to the year ago period.
  • “Our outlook for global economic growth and commodity demand remains positive, with policymakers in key economies signaling a durable commitment to growth and signaling ambitions to tackle climate change,” said Chief Executive Officer Mike Henry.
  • Ore futures in Singapore surged about 70% last year as China boosted stimulus spending to help accelerate the economic recovery from the pandemic. That led to the country’s steel mills ramping up activity in the second half of the year.
  • BHP’s first-half attributable profit of $3.9 billion included an exceptional loss of $2.2 billion, largely related to previously-flagged impairments at its New South Wales Energy Coal business. The group is progressing a divestment process of its coal assets and said that due diligence was being undertaken to assess both demerger and trade sale opportunities.
  • Annual capital expenditure is expected to be $7.3 billion in fiscal 2021, revised slightly higher from its August estimate due to a stronger Australian dollar.

Market Reaction

  • BHP shares rose over 18% in the six months to Dec. 31, outpacing a 16% gain for its rival Rio Tinto Group. The earnings result was published before trading began Tuesday in Australia.

Get More

  • For more details on the earnings data, click here
  • Read the statement here

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