BHP Group Ltd (ASX: BHP) shares are experiencing a decline on Tuesday morning.
At the time of writing, the mining company’s shares have dropped 1% to $40.40.
Investors appear to be reacting negatively to the release of BHP’s half-year results.
BHP Shares Drop Following Half-Year Results
Today, BHP disclosed its half-year performance, reporting earnings and dividends that exceeded consensus expectations.
However, the company also revealed an 8% decrease in revenue to US$25.2 billion, and an 11% decline in underlying EBITDA to US$12.4 billion. The latter figure is slightly above the consensus estimate of US$12.35 billion.
The fall in EBITDA was primarily driven by weaker prices for iron ore and steelmaking coal, although higher copper prices helped offset some of the losses.
Copper emerged as a bright spot for BHP, with underlying copper EBITDA rising 44% to US$5 billion, which helped soften the impact of a 26% decline in underlying iron ore EBITDA, which fell to US$7.2 billion.
As a result, copper now accounts for 39% of the group’s underlying EBITDA, up from 25% a year ago. The increase reflects both a 10% rise in copper volumes and higher copper prices.
Despite these positives, BHP’s year-on-year earnings decline forced the company to reduce its interim dividend.
The company declared an interim dividend of 50 US cents per share, fully franked, marking a 30.5% reduction compared to the previous period but slightly surpassing the consensus estimate of 49 US cents per share. The ex-dividend date for the dividend is March 6, with the payment date set for March 27.
Expert Opinion
Saxo Asia Pacific Senior Sales Trader Junvum Kim weighed in on the results, commenting to Motley Fool Australia:
“BHP Group’s 23% drop in profit highlights the risks of heavily relying on Chinese demand, with earnings falling to USD 5.08 billion and an eight-year-low dividend. CEO Mike Henry’s positive outlook on demand from other major economies offers some reassurance, but concerns about declining commodity prices and Cyclone Zelia in Western Australia remain troubling.”
“Despite these challenges, BHP’s cost-efficient production model and ambitious plans to expand to 330 million tonnes per annum (Mtpa) demonstrate a strategic focus on resilience and growth, positioning the company to take advantage of future opportunities.”
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