Economic network

BHP’s continued strength is a boon to shareholders

BHP (ASX: BHP) will pay record full-year dividends after reporting the second-biggest profit in company history for the year to June 30.

The company told SASX on Tuesday that shareholders will receive a total of $16.3 billion (A$23.2 billion) in dividends for the year ending June.

The company reported a 26% increase in underlying profit from continuing operations to $21.3 billion.

Although the final US$1.75 per share was down from a record high of US$2 per share a year ago, the total for the year of US$3.25 per share was a record and the underlying profit was better than the market. planned. The interim in February was a record US$1.50 per share.

Underlying profit from continuing operations for the year rose from $16.99 billion a year earlier, beating forecasts by about $20.8 billion.

“These strong results were driven by safe and reliable operations, project delivery and capital discipline, which allowed us to capture the value of high commodity prices,” said BHP CEO Mike Henry. .

“BHP remains the cheapest iron ore producer in the world, and we have seen record annual sales from Western Australia.

BHP’s underlying EBITDA from continuing operations increased 16% to a record $40.634 billion (excluding BHP Petroleum), while it recorded operating free cash flow up 13 % to $29.285 billion and record free cash flow of $24.3 billion. .

However, demand for iron ore has slowed in China as a slump in the debt-ridden real estate sector and stringent COVID-19 restrictions hammer economic activity, particularly in construction and some areas of manufacturing. consumer demand.

Iron ore prices have been in the range of US$96 per tonne (for 62% Fe fines) to around US$114 per tonne for most of the past two months. Futures on 62% Fe fines on the Singapore Stock Exchange closed at US$110.37 a tonne on Monday.

This weak demand led to a drop in steel activity in the world’s second-largest economy, with crude steel production in July falling 10% to just over 81 million tonnes. This is the lowest monthly figure this year outside the January-February period which is disrupted by the Lunar New Year calendar.

Retail sales, investment and industrial production in July (cement production also fell 7%)

But BHP remains a believer in China with CEO Mike Henry saying in Tuesday’s ASX statement “We expect China to emerge as a source of stability for commodity demand in the year ahead, with a political support that is gradually building.”