BHP shares retreat from early gains
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More news: BHP pared back early gains but was still up 1.57% to $41.48 by 2:53 pm AEST after reporting a better-than-expected full-year underlying profit.
Citi analysts said that BHP’s result should be neutral for its share price, noting that the company’s investor presentation placed significant emphasis on copper as it continues to pivot its business. The analysts have a ‘buy’ rating on the stock and a price target of $46.
What they said: “The key downside risks to our projected earnings, cash flows and target price relate to weaker-than-expected commodity prices/economic growth and currency fluctuations,” Citi said in a note.
“Operating risk in BHP is lower than for smaller metals and mining companies with fewer operations. Likewise, upside risk to projected earnings relate principally to higher-than-expected commodity prices/economic growth.
"If the impact on the company from any of these factors proves to be greater/less than we anticipate, the stock will likely deviate from our target price.”
BHP shares lift on better-than-expected underlying profit
More news: Shares in BHP rose more than 2% to $41.72 after the resources giant reported a better-than-expected full year underlying profit of US$13.7 billion (20.25 billion), helped by higher prices and volumes for iron ore and copper during the period. It bettered analyst estimates for $13.26 billion.
RBC Capital Markets analyst Kaan Peker said while earnings and net debt were ahead of expectations, the trimmed dividend was in line.
What they said: "BHP’s FY24 was another strong set of results, which highlights the consistency of the business, good margins and returns through the cycle. The continued shift toward growth was further spelled out in copper, which adds to the investment case in our view," he said in a note.
Impairments weigh on BHP full-year profit
The news: Resources giant BHP has trimmed its dividend after impairments related to Samarco and its nickel business dragged down annual profit.
The numbers: Statutory net profit for the year to 30 June, 2024, fell 39% to USD7.9 billion ($11.7 billion) on the back of a USD2.7 billion writedown of its Western Australian nickel operations and a USD3.8 billion charge related to the Samarco dam failure in Brazil.
However, underlying profit excluding significant items was up 2% to USD13.7 billion, better than analyst estimates for $13.26 billion. Revenue was up 3% to USD55.7 billion.
The company cut its final dividend to 74 US cents a share, down from 80 US cents a share the previous year.
The context: BHP’s revenue increased on the back of higher prices for iron ore and copper, with sales volumes also rising 3% and 5% respectively.
BHP warned that it expects economic conditions to remain challenging in FY25 as geopolitical issues continue to create volatility and impact global markets and trade, but added the company was well-positioned to ride out the challenges on the back of its portfolio of large, long-life and high-quality assets.
Chief executive Mike Henry said the longer-term fundamentals for BHP’s products remained compelling, but said the group expects “near term volatility” in global commodity markets, with China experiencing an uneven recovery in its end use sectors.
The sources: ASX announcement, RBC Capital Markets research, Citi research
