The BHP Group Ltd (ASX: BHP) share price is under the spotlight today after the miner told investors about its FY23 half-year result.
BHP mines commodities like iron, copper, nickel and coal.
HY23 result
Here are some of the highlights of the result:
- Revenue fell by 16% to US$25.7 million
- Attributable profit (total operations) dropped 32% to US$6.46 billion
- Profit / earnings per share (EPS) declined by 32% to US$1.275
- Net operating cashflow sank 41% to US$6.77 billion
- Net debt increased 13% to US$6.9 billion
- Interim dividend cut by 40% to US$0.90 per share, a dividend payout ratio of 69%
The miner reported that it achieved a solid operating performance, with its Western Australian iron ore business achieving another record half. BHP claimed to be the world’s lowest-cost major iron ore producer globally.
The copper division saw a decline in underlying EBIT (EBIT explained) of about US$1.4 billion, while iron ore suffered a US$3.3 billion drop of underlying EBIT. This largely reflected lower resource prices. Lower resource prices are typically unhelpful for the BHP share price.
“Significant wet weather” impacted coal production and costs, as did challenges achieving “sufficient labour”.
The Jansen (potash – greener fertiliser) stage 1 project is “tracking to plan”, with targeted first production brought forward to 2026, from 2027. It has commenced a feasibility study for Jansen Stage 2, which it expects to be completed during FY24.
Management commentary
The BHP CEO Mike Henry said:
We are seeing ongoing positive exploration results from Oak Dam, which provides growth potential for our copper business in South Australia. Our offer for OZ Minerals Limited (ASX: OZL) received unanimous support from their Board ahead of consideration by their shareholders. In Queensland, together with our joint venture partner, Mitsubishi Development Pty Ltd, we have initiated a process to divest the Daunia and Blackwater [coal] mines
We are positive about the demand outlook in the second half of FY23 and into FY24, with strengthening activity in China on the back of recent policy decisions the major driver. We expect domestic demand in China and India to provide stabilising counterweights to the ongoing slowdown in global trade and in the economies of the US, Japan and Europe.
The long-term outlook for our commodities remains strong given population growth, rising living standards and the
metals intensity of the energy transition, including for steel making raw materials.
My thoughts on the BHP share price
I think BHP is a great business, but it’s important that we buy resource businesses at the right price. BHP shares are currently near a high rather than a low in my view.
At some point, I think there will be a much better BHP share price to invest in, so I’d be willing to be patient. Until then, there are other ASX dividend shares I’d rather invest in.
