BHP puts shale behind it as dividend hits record high despite profits missing expectations

The finance boss of Anglo-Australian mining giant BHP today admitted its US shale assets had been a “terrible investment” for the company as it posted a record final dividend despite missing profit expectations.

In July BHP, which also has projects in commodities such as offshore oil, copper and iron ore, announced it would sell its US shale oil and gas assets to BP for $10.8bn.

“We exited at the right time. We did not do a good job on shale,” chief financial officer Peter Beaven said at a media roundtable.

“I think we had a good outcome there,” he added.

BHP’s full-year underlying profit rose by a third on stronger prices in the year to 30 June, from $6.7bn (£5.2bn) to $8.9bn, though this missed analysts’ expectations of $9.2bn, according to a Thomson Reuters consensus estimate. Net profit fell 37 per cent to $3.7bn, as the company was hit by one-off charges including payouts related to a disaster at its Samarco mine in Brazil in 2015 and charges from the sale of its American shale gas assets.

BHP paid a record final dividend of 63 cents per share, a rise of 42 per cent, and said it expects to hand more money back to shareholders on completion of the shale assets to BP.

Some analysts had expected the miner to announce a share buyback in the results.

Total revenue rose 20 per cent $45.8bn.

Beaven also said BHP is still seeking a partner for its major Canadian potash project. The mine is expected to bring potash, a form of fertiliser, to the market in the next decade.

“We’re not trying to be crazy about this,” Beaven said, adding the company knows “the market is oversupplied” at present.

“If it doesn’t work out and we have to mothball it, that’s fine,” he added.

BHP primarily makes profit through its iron ore mines, which are used to make steel in Australia. 

Chief executive, Andrew Mackenzie said:

We have announced a record final dividend for shareholders which reflects strong operating performance, solid prices and capital discipline. Our relentless focus on safety and productivity has released additional volumes across our supply chain, with eight per cent volume growth for the year. 

Our rich suite of options coupled with our rigorous Capital Allocation Framework will make sure we get the most out of every dollar we invest.