BHP Group Ltd (ASX: BHP) has reported its half year result to 31 December 2018, should you buy shares?
BHP is a world-leading resources company, extracting and processing minerals (like iron ore and copper), oil and gas, and has more than 62,000 employees and contractors, primarily in Australia and the Americas. Headquartered in Melbourne, BHP has shares listed on both the ASX and London Stock Exchange (BHP Billiton Plc).
BHP’s Half Year Result
BHP reported that revenue from continuing operations increased by 1% to US$20.74 billion. Profit after taxation from continuing operations attributable to shareholders went up 117% to US$4 billion. Meanwhile, total statutory profit increased by 87% to US$3.76 billion.
However, underlying profit fell by 8% to US$3.73 billion and underlying earnings per share (EPS) dropped 8% to US70.4 cents.
Its underlying EBITDA was US$10.5 billion from continuing operations (click here to learn what EBITDA means).
BHP Dividend and Balance Sheet
BHP declared a dividend of US$0.55 per share, which goes along with the US$1.02 special dividend that was paid in January 2019 and a US$5.2 billion share buy-back. The resource giant said its net debt was $9.9 billion, which was down US$1 billion since June 2018.
Future BHP Growth Projects
In terms of future projects, BHP encountered oil at Trion in Mexico, hydrocarbons at Bongo-2 in Trinidad & Tobago and had early success with the copper exploration program in the Stuart Shelf in South Australia.
The resource giant also added ‘new optionality’ after acquiring interest in the Orphan Basis in offshore Eastern Canada and SolGold, which is a copper project in Ecuador.
BHP Management Comments
BHP CEO Andrew Mackenzie said: “Our focus on portfolio simplification, cash generation and capital discipline delivered higher cash returns to shareholders in the December 2018 half year.
“Since the beginning of 2016, we have reduced debt by US$16 billion, reinvested US$20 billion in the business and returned more than $US25 billion to shareholders.”
Is it time to buy BHP shares?
Mr Mackenzie said that BHP can expect a “strong second half”, with unit costs expected to improve across the business. But, the easy returns have probably already happened from the special dividend and buy-back.
With BHP being one of the biggest cyclical businesses in the world, the best time to buy it is at the bottom of the cycle. I don’t think we’re at the bottom of the cycle, that was during 2016.
I’d much rather invest in the proven shares in the free report below rather than BHP shares.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).