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BHP Group Ltd. reported a 32% fall in first-half net profit and pared its interim dividend from a record-high level, mostly because of weaker prices for some of the commodities it sells, including steel ingredient iron ore and industrial metal copper.
The world’s largest miner by market value
BHP,
BHP,
said it made a net profit of $6.46 billion in the six months through December. It made a profit of $9.44 billion in the same period a year earlier, when strong commodity prices boosted its bottom line.
BHP said its underlying attributable profit–a closely watched measure that strips out exceptional items to illustrate the underlying performance of the business–totaled $6.60 billion, down 32% on the year-prior period. The market expected an underlying profit of roughly $6.82 billion, according to 15 analyst forecasts compiled by Vuma Financial.
“Predominantly, it’s a price equation,” Chief Executive Mike Henry told reporters on a call.
Directors declared an interim dividend of $0.90 a share, compared to a record midyear payout of $1.50 a share a year ago. The market had anticipated a dividend around $0.88 a share, according to the Vuma consensus estimates.
“It’s still a pretty big number, fifth highest ever for us,” Mr. Henry said.
He said BHP and Mitsubishi Corp.,
8058,
a joint-venture partner, have started looking for a buyer for their Daunia and Blackwater coal mines. The joint venture is the world’s largest exporter of steelmaking coal, from mining operations in Australia’s Queensland state.
Those two mines would struggle to compete for future investment within BHP, which has previously said it wants to focus on only the highest quality steelmaking coal, said Mr. Henry.
“What we are doing here is further concentrating our portfolio on the best-of-the-best assets,” he said.
BHP has been seeking to increase its exposure to commodities such as copper that it expects to be in high demand as the world decarbonizes and electrifies.
The company in December signed an agreement to buy Australian copper miner OZ Minerals Ltd. in what would be its biggest acquisition in more than a decade. The OZ Minerals board has unanimously recommended shareholders vote in favor of the deal, which gives the company an enterprise value of about 9.8 billion Australian dollars, or roughly US$6.8 billion.
Mr. Henry said he expects the OZ Minerals shareholders to vote on the deal in April.
The company is also advancing one major development: its Jansen potash project in Saskatchewan, Canada. On Tuesday, BHP said it has accelerated studies on a second-stage of that development, and would expect to finish a feasibility study in fiscal year 2024.
The first stage of the development is on track versus a revised plan for first potash output in 2026, the company said.
BHP’s first-half earnings decline mainly reflected a downswing in commodity prices in the six-month period.
Prices for iron ore, BHP’s most lucrative commodity, tumbled to a three-year low late last year amid concerns about the state of China’s property market and the outlook for the global economy. The average price the miner got for its iron ore was 25% below the year-prior period.
For its copper, another core business, the miner was paid 19% less than the same period in 2021.
In recent months, prices for those commodities have been rising once more, as China has sought to stabilize its real-estate market and emerge from almost three years of strict Covid-19 controls.
Mr. Henry said BHP is positive on the outlook for commodity demand this year, in big part because of China’s projected economic recovery. China and India should counterbalance an economic slowdown in the U.S. and Europe, he said.
“We now have even greater conviction that China will be a stabilizing force for global economic growth over the remainder of this year,” Mr. Henry said.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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