BHP reports 17% fall in full year revenue and cuts dividend by half

Shares in BHP (BHP) fell marginally to £21.84 in morning trading in London as the mining giant reported a 17% fall in revenue for the year ending 30 June 2023 to $53.8 billion against $65.1 billion last year.

Last year the firm moved its primary listing to Australia, where the shares fell nearly 2% to A$42.71.

Russ Mould, investment director at AJ Bell, said: ‘The muted reaction on the part of investors to this news reflects an acceptance that last year was something of a one-off as the invasion of Ukraine led to a short-term bump in commodity prices. Today’s results from BHP reflect a move back to something like reality.’

LOWER PRICES

The Australian-based miner blamed ‘significantly lower’ prices across iron ore, metallurgical coal and copper for the fall in sales as well an effective inflation rate of 10%.

The company expects to feel the effects of inflation in terms of labour costs ‘to continue into full year 2024.’

Profits from operations were $22.9 billion, down 33% compared to $34.1 billion in the same year ago period.

‘While we increased copper, iron ore and nickel sales volumes, and exchange rates were favourable, profit from operations and underlying EBITDA (earnings before interest, taxes, depreciation and amortisation) decreased primarily as a result of the lower prices across major commodities, and the impacts of inflation on our underlying cost base, particularly on labour, diesel and electricity prices,’ the company said.

Basic earnings per share fell almost 60% to $2.55 from $6.11 a year earlier.

BHP announced a final dividend of 80 US cents, bringing the total payout for the financial year to $1.70 compared to $3.25 last year.

TOUGH CLIMATE FOR MINERS

Richard Hatch, analyst at Berenberg, commented: ‘The macroeconomic backdrop for the miners remains complicated. The energy transition theme, which was a key driver of commodity price outperformance in 2020 and 2021, has faded, driven by Western economies’ difficulties in turning climate targets into reality.

‘Meanwhile, the other key driver of metals demand, China, has been faltering, with economic data mixed and the stimulus promised by government officials and press reports not forthcoming yet.’

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DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Ian Conway) own shares in AJ Bell.