BHP (ASX:BHP) to pay record interim dividend after strong half yearly results

• BHP (BHP) will pay a record interim dividend of US$1.50 (A$2.10) after reporting a strong financial performance for the half year
• The company’s underlying profit attributable from continuing operations was $US9.7 billion (A$13.6 billion), an increase from the US$6.2 billion (A$8.7 billion) reported the previous year
• This was underpinned by higher commodity prices, near-record production at Western Australia Iron Ore (WAIO), higher concentrate sales at Spence and favourable exchange rate movements
• Iron ore prices halved since last year’s record highs due to increased regulation from China
• BHP shares up 0.31 per cent to $48.48

BHP (BHP) will pay a record interim dividend to its shareholders of US$1.50 (A$2.10) per share after reporting a strong financial performance for the half year ended December 31, 2021.

The company said its underlying attributable profit from continuing operations rose to $US9.7 billion (A$13.6 billion) in the six-month period, up from US$6.2 billion (A$8.7 billion) in the previous corresponding half year.

The result was underpinned by higher commodity prices, near-record production at BHP’s iron ore operations in Western Australiare (WAIO), higher concentrate sales from the Spence copper mine in Chile and favourable exchange rate movements.

Underlying EBITDA came in at US$18.5 billion (A$25.9 billion) at a margin of 64 per cent for continuing operations, up from US$13.9 billion in the previous corresponding period.

BHP sunk US$2.9 billion into capital and exploration expenditure for the half year and lowered its guidance for the full financial year in this category by US$0.2 billion (A$0.28 billion) to US$6.5 billion due to favourable currency exchange rates.

The company also revised its net debt target range to between US$5 billion and US$15 billion (A$7 billion and A$21 billion), which it said would enable it to maintain a resilient balance sheet during periods of change and external uncertainties.

COVID-19 continued to impact operations to the tune of US$223 million (A$312.8 million) before tax, stemming from lower volumes at its operated assets and the impacts of a host of social distancing measures, temporary relocation costs and higher demurrage charges.

Labour costs also increased on the back of border closures placing pressure on accessing general and skilled workers.

Metallurgical coal and energy coal prices reached record highs, copper prices remained high and potash prices surged during the half year.

Iron ore prices halved since last year’s record highs as the commodity came under pressure from increased regulation in China.

BHP said China presents a source of uncertainty for the company but it expects easier policy to take hold and end-use demand to firm over the course of the calendar year.

At the end of the half, BHP had two major potash projects in development from its continuing operations – the US$2.97 billion (A$4.17 billion) Jansen mine shafts project and the US$5.7 billion (A$8 billion) Jansen stage one project in Canada.

Chief Executive Officer Mike Henry said it was a strong half year for the group.

“Our record interim dividend was supported by our reliable operating performance and continued strong markets for a number of our products,” he said. “We have made strong progress on the execution of our strategy.

“We unified the BHP corporate structure with strong support from shareholders, we announced and advanced the proposed merger of our petroleum business with Woodside, we progressed our divestments of certain coal assets and we announced the final investment decision for our Jansen stage one potash project.

“We have also secured further growth options in future facing commodities.

“We are building on our strong foundations and capital discipline to reshape our business and grow long-term value for shareholders and other stakeholders.”

BHP shares were up 0.31 per cent to $48.48 at 2.30 pm AEDT.