BHP Group Ltd (ASX: BHP) has just revealed its September 2019 quarterly update to investors, is the share price a buy?
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 September 2019 Quarter Production
The resources giant said that copper production decreased by 3% compared to last quarter to 430kt mainly due to planned maintenance across a number of operations. Volumes in FY20 are expected to be slightly higher than FY19.
Petroleum production dropped 1% compared to the last quarter to 29 MMboe (Million Barrels of Oil Equivalent) because of the impact of Tropical Storm Barry in the Gulf of Mexico and planned maintenance at the North West Shelf.
Iron ore production fell by 3% to 61mt compared to the last quarter because of significant planned maintenance at Port Hedland.
Metallurgical coal production fell 21% because of maintenance activities and energy coal dropped 24% due to higher strip ratios and a change in strategy to focus on higher quality products.
Nickel production fell 25% to 22kt due to planned maintenance and a transition to new ore bodies.
BHP CEO Andrew Mackenzie said: “We delivered a solid start to the 2020 financial year through ongoing strong operational performance across our portfolio. While Group production for the quarter decreased slightly due to the expected impacts of planned maintenance and natural field decline in Petroleum, guidance remains unchanged and we are on track to deliver slightly higher volumes than last financial year.
“The South Flank iron ore project is 50% complete, with all our major projects on schedule and budget. We achieved further encouraging exploration results in Petroleum and at the Oak Dam copper prospect.”
Is The BHP Share Price A Buy?
The BHP share price has fallen over 1% in early reaction to this quarter. Less production means less revenue and probably less profit, unless resource prices go up to compensate.
The only reason I’d want to consider buying BHP shares is the potential for the fully franked dividend yield of 5.4%. This seems pretty good, but if resource prices fell then the dividend would likely be cut as well.
Although the dividend yield may be lower, I’d prefer to buy shares of reliable businesses that can keep growing their profit, like the ones in the free report below.
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