BHP: Mining giant hit by lower iron ore prices
Mining giant BHP has reported a jump in profit for the half-year ended 31 December 2024, despite a drop in revenue due to lower iron ore prices.
Attributable profit surged to $4.4bn (£3.5bn), up 376 per cent from $0.9bn in the previous half-year.
Revenue declined eight per cent to $25.2bn, largely driven by weaker iron ore pricing, though this was partly offset by higher copper prices and volumes.
Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $12.4bn, down 11 per cent, with an EBITDA margin of 51.1 per cent.
Unit costs fell 3.9 per cent across major assets.
Copper’s contribution to group EBITDA increased to 39 per cent from 25 per cent, which reflected a 10 per cent rise in volumes and higher copper prices.
Net operating cash flow fell 6 per cent to $8.3bn, while free cash flow dropped 30 per cent to $2.6bn.
The adjusted effective tax rate rose to 36.4 per cent, reflecting new Chilean mining tax rates and increased earnings from Chilean copper.
At the end of the period, net debt stood at $11.8bn, up from $9.1bn due to BHP’s capital investments and cash returns to shareholders. In the first six months of the company’s fiscal year, it allocated $3.2bn to new potash and copper projects.
The group also completed the $2bn formation of Vicuña Corp, a joint venture with Lundin Mining, to develop copper projects in Argentina.
Overall, capital and exploration expenditure increased 10 per cent to $5.2bn. BHP said it’s on track to spend around $10bn for the full fiscal year.
The company declared an interim dividend of $0.50 cents per share, amounting to $2.5bn in total distributions.
BHP has now returned around $50bn in cash to shareholders since January 2021.
Mike Henry, BHP’s chief executive officer, commented: “The strength of our results underscores BHP’s operational resilience and ability to perform through the cycle. Our commitment to cost control and disciplined investment ensures we remain well-positioned for the future.”
On market dynamics, Henry added: “The demand for our products remains strong despite global uncertainties. We see positive momentum in China, continued strength in the US, and significant growth opportunities in India.”
Discussing shareholder value, he noted: “We continue to deliver robust returns while balancing investment in the business. The interim dividend of $2.5bn reflects our confidence in BHP’s future cash generation and resilience.”
Former RBS chief Ross McEwan is set to succeed Ken MacKenzie as chair on 31 March 2025.