PROFIT & LOSS

BHP maintains high payout rate

Analysts had flagged a soft December half for BHP, but the final figures came in below expectations.

Staff reporter
 BHP's November 2018 train derailment in Western Australia

BHP's November 2018 train derailment in Western Australia

The company posted an underlying attributable profit of US$3.7 billion, down 8% on the previous corresponding period and lower than Macquarie's forecast of close to $4 billion.

Underlying EBITDA was $10.5 billion, above Macquarie's estimate of $10.3 billion, while the EBITDA margin from continuing operations was 52%.

Net operating cashflow was $6.7 billion, while free cashflow of $3.6 billion was above the forecast $2.8 billion.

BHP said its production guidance was expected to be broadly flat for the full year due to unplanned outages at Olympic Dam, Western Australia Iron Ore, Spence and Nickel West.

BHP previously flagged the copper plant outages, Nickel West fire and iron ore train derailment had a total negative impact of around $600 million.

The final impact to the bottom line was $460 million, reflecting a negative impact of $835 million, which was partially offset by a build-up of inventory levels during the outages.

Net debt fell to $9.9 billion, down $1 billion and below Macquarie's estimate of $10.2 billion.

The company declared a 55c per share dividend, above the forecast 52c, unchanged from last year.

"Our focus on portfolio simplification, cash generation and capital discipline delivered higher cash returns to shareholders in the December 2018 half year," BHP CEO Andrew Mackenzie said.

"Our strong balance sheet and fully funded capital investment plans allowed us to return the $10.4 billion net Onshore US proceeds to shareholders in the form of a $5.2 billion off-market share buy-back completed in December 2018 and a $5.2 billion special dividend paid in January 2019."

When adding in today's dividend, it equates to a payout ratio of 75%.

"Since the beginning of 2016, we have reduced debt by $16 billion, reinvested $20 billion in the business and returned more than $25 billion to shareholders," Mackenzie said.

"A strong second half is expected to partially offset the impacts from operational outages in the first half, with unit costs across our business forecast to improve.

"We are confident in our plans to increase shareholder value and returns."

BHP will hold a series of media and investor briefings later today.

 

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.