BHP jumps after posting a 28% HY profit increase
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More news: Shares in BHP surged in morning trade after the company reported a 28% increase in first-half statutory net profit driven by higher commodity prices and higher earnings margins across its copper and iron ore operations.
Shares were 6.81% higher to $53.79 at 12:03pm AEDT.
Milford portfolio manager Greg Cassidy said there was “little to fault” in BHP’s result, noting the company beat market expectations. He said BHP’s focus on the quality of its assets across a range of commodities was evident, adding it was notable that copper generated more earnings than iron ore in the half. Cassidy said this highlighted the direction of BHP’s future as it executes on its bullish copper strategy.
He further pointed to "some nimble" capital allocation decisions, including the sale of the silver stream at Antamina, which he said added value in an area that had received little market attention. He added that investors should consider what further initiatives the company may pursue.
Meanwhile, RBC Capital Markets analyst Kaan Peker maintained a 'sector perform' view on the stock, setting the price target to $51 per share.
BHP profit jumps 28% to USD5.6b, strikes USD4.3b silver deal
The news: Resources giant BHP reported a 28% increase in first-half statutory net profit to USD5.64 billion ($8 billion), boosted by higher commodity prices and higher earnings margins across its copper and iron ore operations.
The numbers: The result missed average forecasts of USD5.99 billion, according to Visible Alpha data.
Revenue was up 11% to USD27.9 billion, edging out analysts' estimates of USD27.2 billion.
Copper contributed the largest share of BHP's overall earnings, rising to more than 50% of group underlying EBITDA for the first time. Full-year copper production guidance was upgraded from 1.8-2 million tonnes to 1.9-2 million tonnes.
The company declared an interim dividend of 73 US cents per share, up from 50 US cents a year prior and above consensus estimates of 63 US cents.
The group also announced that it will receive an upfront payment of USD4.3 billion as part of a new silver streaming agreement with Canadian multinational Wheaton Precious Metals. BHP will deliver silver to Wheaton from its 33.75%-owned Antamina mine in Peru.
The context: BHP chief executive Mike Henry called the deal with Wheaton "the most valuable silver streaming agreement ever". Together with its USD2 billion selldown in Western Australia Iron Ore's inland power network in December, the company said it will unlock over USD6 billion of cash.
What they said: "We are optimistic that the economic backdrop is supportive for our key commodities," said Henry.
"Against a structurally higher cost environment, these conditions reinforce the importance of productivity and cost discipline and play to the strengths of BHP's low cost, diversified portfolio."
