BHP announces record $9bn handout to investors as soaring coal prices fuel profits
BHP is handing out record sums to shareholders, after the multinational miner delivered bumper profits fuelled by soaring coal prices.
It has reported a 26 per cent increase in annual earnings, taking underlying profits to $21.32bn, with revenue also up 14 per cent to $65bn for the year to June.
This is the company’s highest profits since 2011, with the Australia-listed company’s shares rising almost four per cent on Tuesday morning following the the results.
Over the year, BHP managed to generate more than $24bn of excess cash.
The world’s biggest miner is now preparing to deliver a record amount of cash to investors, declaring a final dividend of $1.75 per share – totalling $8.9bn.
This takes its total payments for the year to $16.5bn, the highest divvying out in the Australian company’s 137-year history.
It revealed shareholder returns were close to $36bn, including the shares in Woodside Petroleum given to its shareholders in exchange for the sale of the miner’s petroleum division.
The massive payout finalises a seismic rebound for BHP, in which the company managed to spin out its oil and gas operations, unify its share structure in Australia and approve development of a huge potash project in Canada.
The company’s booming performance was fuelled by its coal business, with prices hitting record levels following Russia’s invasion of Ukraine.
It delivered underlying earnings before interest and tax of $8.7bn against a loss of $577m a year.
This offset a dip in its iron ore business, where revenues dropped to $19.5bn from $24.3bn a year ago.
BHP also argued the results reflected higher copper prices and disciplined cost controls.
Copper prices remain historically elevated, even if they fallen 25 per cent since touching a record in March following a growth slowdown in top consumer China and aggressive interest rate hike.
The miner announced it will also weigh up options to expand production at its top iron ore producing unit to 330m tonnes a year, and would consider plans for commodities like copper and nickel.
The company has also pounced on a sharp drop in commodity prices, launching a $5.8bn cash offer for Australian rival and copper specialist Oz Minerals.
The bid has been knocked back but Henry has declined to rule out a second approach, with BHP aiming to raise its exposure to higher growth resources that will be in demand amid the green transition.
The miner is not just flush with funds, but has also tamed its debt levels.
It ended the year the year with net debt of just $333mn, significantly below the forecast $5bn-$15bn target range.
BHP’s results were part of a rally among London’s big name mining companies, which pushed the FTSE 100 up to its highest levels in over two months this morning.
Glencore and Anglo American’s shares climbed 3.2 per cent and 2.7 per cent respectively, while Rio Tinto’s soared 2.1 per cent.
Their gains buoyed the FTSE 100, adding another 0.5 per cent to the index – rising to 7,544.34.