BHP | Financial results for the half year ended 31 December 2023
| 20 February 2024 |
Financial results for the half year ended 31 December 2023
Strong underlying financial performance underpinned by reliable operations and disciplined cost control.
We are saddened by the loss of one of our sub-contractors who was fatally injured at BMA’s Saraji mine in January. An investigation is underway into the circumstances of this tragic incident and we are resolute in our commitment to prevent fatalities and serious injuries in our workplace.
Today, we announced underlying attributable profit of US$6.6 billion for the half year. We also announced an interim dividend of 72 US cents per share – a total of US$3.6 billion, equating to a payout ratio of 56%.
The period also had its challenges, with adjustments relating to Nickel West, West Musgrave and Samarco offsetting an otherwise solid operational performance and overall healthy commodity prices.
At our Western Australia Iron Ore operations, we remain the lowest cost major producer globally and in copper we set new production records at our operations in South Australia and Chile. In South Australia, our consolidated copper province has performed strongly and we are pursuing future growth options. In Canada, we’ve sanctioned Jansen Stage 2, which will almost double our planned potash production capacity.
We’ve seen volatility in global commodity prices and demand in the developed world has been softer than expected. That said, China demand is healthy despite weakness in housing and India remains a bright spot. In Australia, the mining industry is facing near-term headwinds in developing resources and it’s essential that the right industrial relations and fiscal settings are in place to support the sector’s ability to compete and win in global markets.
Long term, the mega-trends playing out in the world around us continue to underline our confidence in future demand for steel, non-ferrous metals and fertilisers.
Mike Henry
BHP Chief Executive Officer
| Safety | Social value |
| Fatality at BMA | Female employee representationi 36.2% Up 2.6% pts HY23 33.6% |
| A team member from one of BHP Mitsubishi Alliance (BMA)’s sub-contracting partners was fatally injured in an incident at BMA’s Saraji mine in January. Investigations into the incident are underway. | We have more than doubled our female employee representation since announcing in 2016 our aspiration to achieve a gender-balanced workforce, and more than 30% of our people leaders are female. |
| Financial performance | |
| Underlying attributable profitii US$6.6 bn HY23 US$6.6 bn | Attributable profit US$0.9 bn Down 86% HY23 US$6.5 bn |
| Our underlying attributable profit was in line with HY23, as a result of strong revenue generation and disciplined cost control. All assets are on track to meet their FY24 production and unit cost guidance. FY24 production and unit cost guidance for BMA was revised at the Q2 Operational Review. | Our attributable profit decreased as a result of an exceptional loss of US$5.6 bn following an impairment of Western Australia Nickel, and an increase to the provision related to the Samarco dam failure. |
| Capital management | |
| Capital and exploration expenditureii US$4.7 bn Up 57% HY23 US$3.0 bn | Fully franked interim dividend US$0.72 per share 56% payout ratio |
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BHP | Financial results for the half year ended 31 December 2023
| We are investing in growth and increased our capital and exploration spend by 57% including at Jansen and Copper South Australia. | We have determined an interim dividend of US$3.6 bn. This follows our strong returns to shareholders in CY23, when we were the highest dividend payer on the ASX. |
Group Financial Performance
Earnings and margins
Solid operational performance and disciplined cost control, aided by higher iron ore and copper prices in the period, maintains strong underlying financials.
| Revenue US$27.2 bn Up 6% HY23 US$25.7 bn Attributable profit US$0.9 bn Down 86% HY23 US$6.5 bn Underlying attributable profit US$6.6 bn HY23 US$6.6 bn Profit from operations US$4.8 bn Down 56% HY23 US$10.8 bn Underlying EBITDAii US$13.9 bn Up 5% HY23 US$13.2 bn Underlying EBITDA marginii 53.3% HY23 53.5% Adjusted effective tax rateii 31.0% HY23 29.5% FY24e 30 – 35% | BHP’s revenue increased by US$1.5 bn primarily as a result of higher iron ore and copper prices, as well as the contribution of new mines Prominent Hill and Carrapateena. These were partially offset by New South Wales Energy Coal (NSWEC), where despite a 43% increase in sales volumes, realised prices decreased by 65%. We continue to experience the impacts of inflation on our underlying cost base, particularly on labour and parts, as reflected in a global inflation rate of 6.3% across our operating jurisdictions during CY23. Unit costsii were however approximately 5.4%iii higher across our major assets during HY24 reflecting our disciplined cost and reliable operational performance and the normalisation of commodity linked consumable prices such as diesel and acid. This strong operational performance saw Western Australia Iron Ore (WAIO) maintain its lead as the lowest cost major iron ore producer globally and overall Group Underlying EBITDA increase by 5%, with an Underlying EBITDA margin of 53.3%. For further details see Underlying EBITDA waterfall. We expect the lagged impact of global inflation to continue into H2, particularly in relation to labour, and as we negotiate long-term supply arrangements. We continue to assess the impact of the Australian Federal Government’s ‘Same Job Same Pay’ industrial relations reforms which will add to our labour costs. | Underlying attributable profit was in line with the prior period, however we reported an exceptional loss, which decreased attributable profit by US$5.6 bn, due to: · a US$2.5 bn impairment of Western Australia Nickel; and · a US$3.2 bn charge related to the Samarco dam failure. For further details see note 2 – Exceptional items and note 9 – Significant events – Samarco dam failure. Our adjusted effective tax rate of 31% was above the 30% Australian corporate tax rate. The adjusted effective tax rate for FY24 is still expected to be in the range of 30 to 35%. Our operating costs include US$1.8 bn of revenue or production based royalties. Once these are included, our Group effective tax rate was 40.9%. The average comparable rate of ASX50 companies is approximately 30%iv. For further details see Adjusted effective tax rate. |
| Detailed financial information is included in Appendix 1 |
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BHP | Financial results for the half year ended 31 December 2023
Cash flow and balance sheet
Strong cash flow generation underpinned US$5.1 bn of investments in the period.
| Net operating cash flow US$8.9bn Up 31% HY23 US$6.8 bn Capital and exploration expenditure US$4.7 bn Up 57% HY23 US$3.0 bn Free cash flowii US$3.8bn Up 9% HY23 US$3.5 bn Net debtii US$12.6 bn FY23 US$11.2 bn HY23 US$6.9 bn Gearing ratioii 21.7% FY23 18.7% HY23 12.9% | Our net operating cash flow increased by 31% as a result of the higher Underlying EBITDA and lower income tax and royalty-related taxation payments, partially offset by an increase in working capital. In line with our Capital Allocation Framework (CAF), we generated free cash flow of US$3.8 bn after investing US$5.1 bn. Our investments in the period included: · US$3.4 bn in organic development including US$1.7 bn on improvement projects; US$1.3 bn major capital in facing‑commodities; and US$199 m of exploration spend; and · US$1.4 bn of maintenance and decarbonisation expenditurev. Capital and exploration expenditure is expected to bevi: · For FY24 and FY25, ~US$10 bn per annum, including US$0.4 bn of exploration in FY24; and · In the medium term, ~US$11 bn per annum on averagevii. We have flexibility to adjust capital spend and phasing of projects to accommodate market dynamics and cash flow generation. | BHP’s balance sheet remains strong. During the half, BHP issued US$4.8 bn of new bonds and retired US$5.7 bn of debt of which US$5 bn related to the OZL acquisition facility. Our net debt increased by US$1.5 bn to US$12.6 bn from 30 June 2023, largely reflecting net operating cash flow more than offset by: · Payment of dividends to BHP shareholders of US$4.0 bn, and to non‑controlling interests of US$0.6 bn; and · Capital and exploration expenditure of US$4.7 bn. Our net debt target range of between US$5 and US$15 bn enables us to maintain a resilient balance sheet during periods of change and external uncertainty while retaining the flexibility to allocate capital within our CAF towards shareholder returns and growth opportunities. For further details see Net debt waterfall. |
| Detailed financial information is included in Appendix 1 |
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BHP | Financial results for the half year ended 31 December 2023
Value and returns
Continuing to balance investing in the business and cash returns to shareholders.
| Interim dividend 72 US cps Fully franked 56% payout ratio Underlying return on capital employed (ROCE)ii 26.4% HY23 29.4% | Earnings per share – basic 18.3 US cps HY23 127.5 US cps Earnings per share – Underlyingii 129.6 US cps HY23 130.3 US cps | Our operations continued to generate strong Underlying ROCE of 26.4%, including 62% at WAIO. An interim dividend of US$0.72 per share (US$3.6 bn), equivalent to a 56% payout ratio will be paid to shareholders on 28 March 2024. This extends our track record of strong returns. Including the determined dividend, we will have returned ~US$44 bn cash to shareholders since 1 January 2021. |
Important dates for shareholders
BHP’s Dividend Reinvestment Plan (DRP) will operate in respect of the interim dividend. Full terms and conditions of the DRP and details about how to participate can be found at: bhp.com
| Events in respect of the interim dividend | Date |
| Announcement of currency conversion into RAND | 27 February 2024 |
| Last day to trade cum dividend on Johannesburg Stock Exchange Limited (JSE) | 5 March 2024 |
| Ex-dividend Date JSE | 6 March 2024 |
| Ex-dividend Date Australian Securities Exchange (ASX), London Stock Exchange (LSE) and New York Stock Exchange (NYSE) | 7 March 2024 |
| Record Date | 8 March 2024 |
| Announcement of currency conversion into AUD, GBP and NZD | 11 March 2024 |
| DRP and Currency Election date | 11 March 20241 |
| Payment Date | 28 March 2024 |
| DRP Allocation Date2 | 15 April 2024 |
1 5:00pm AEDT.
2 Allocation dates may vary between registers but all allocations will be completed on or before 15 April 2024.
Shareholders registered on the South African branch register will not be able to dematerialise or rematerialise their shareholdings between the dates of 5 March 2024 and 8 March 2024 (inclusive), and transfers between the Australian register and the South African branch register will not be permitted between the dates of 27 February 2024 and 8 March 2024 (inclusive). American Depositary Shares (ADSs) each represent two fully paid ordinary shares and receive dividends accordingly.
Any eligible shareholder who wishes to participate in the DRP, or to vary a participation election should do so before 5:00pm (AEDT) on 11 March 2024, or, in the case of shareholdings on the South African branch register of BHP Group Limited, in accordance with the instructions of your CSDP or broker. The DRP Allocation Price will be calculated in each jurisdiction as an average of the price paid for all shares actually purchased to satisfy DRP elections. The DRP Allocation Price applicable to each exchange will be made available at: bhp.com/DRP