Financial results for the year ended 30 June 2024
27 August 2024
Operational excellence underpins strong returns and investment in growth
BHP delivered a strong set of results in FY24 on the back of solid operational performance. We delivered record volumes at Western Australia Iron Ore, where we extended our lead as the world’s lowest cost iron ore producer. Across our global copper assets, we grew overall copper volumes by 9% for the second consecutive year and expect to deliver a further 4% in FY25.
As a result of this strong performance, combined with our healthy balance sheet, we determined a final dividend of 74 US cents per share, a 53% payout ratio, continuing our track record of delivering robust shareholder returns through the cycle.
We have a pipeline of copper projects under development in Chile and Australia. At Copper SA we have a strategy to deliver up to 650 ktpa of copper and today we published an Inferred Mineral Resource at Oak Dam for the first time. In July, we strengthened our copper resource position and our early-stage options by agreeing to acquire a 50% interest in the promising Filo del Sol and Josemaria copper projects in Argentina, adding to Resolution in the US and our greenfield exploration efforts. In iron ore, studies on further potential expansions at WAIO to increase our output up to 330 Mtpa will be completed in CY25. Construction of our Jansen potash project in Canada is ahead of the original schedule with first production now just over two years away. We have put our Western Australia Nickel operations into temporary suspension as a result of global oversupply of nickel, while continuing to support our people and communities impacted by this decision.
In January, tragically a colleague was fatally injured at BMA and we continue our relentless effort to eliminate fatalities and operate safely. During FY24, we reached 37% female employee participation across BHP globally, including over 40% in our Minerals Americas business. We increased Indigenous procurement spend to over US$600 m. We have reduced operational greenhouse gas emissions by 32% from our FY20 adjusted baseline and today set out our decarbonisation plans through to 2050 in our second Climate Transition Action Plan.
The longer-term fundamentals that drive demand for our products remain compelling. In the near term, we expect volatility in global commodity markets, with China experiencing an uneven recovery among its end-use sectors. The effectiveness of recently announced pro‑growth policies will be an important contributor for the country to achieve its official 5% growth target. India is set to continue as the world’s fastest growing major economy. We anticipate developed economies will face gradual relief from the lingering effects of higher interest rates in coming years.
We are energised to build on the positive momentum achieved this year. Our tier 1 assets, track record of operational performance and strong balance sheet allow us to invest in future growth and maintain strong cash returns to shareholders through the cycle.
Mike Henry
BHP Chief Executive Officer
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BHP | Financial results for the year ended 30 June 2024
| We increased capital investment in copper and potash by US$1.5 bn and we expect that ~65% of our medium-term capital will be allocated to these future-facing commodities.In July, we signed an agreement with Lundin Mining to jointly acquire Filo Corp. and to enter a joint venture with the intent of developing the Filo del Sol and Josemaria copper projects. | We have determined a final dividend of US$3.8 bn.This brings total cash returns to shareholders announced for the year to US$7.4 bn, which is US$1.46 per share fully franked. |
Social value
We progressed towards our 2030 goals and continued to embed social value in our strategic decision making
| Decarbonisation | Safe, inclusive and future-ready workforce |
| Operational GHG emissions[iv]9.2 MtCO2-eDown 32% since FY20 baseline, adjusted basisOur operational GHG emissions were 1% higher than FY23 due to increased business activity as expected. We remain on track to achieve our target of reducing our operational GHG emissions by at least 30% from FY20 levels by FY30, through structural abatement, and we are making good progress with our value chain GHG emissions (Scope 3) strategy.Today, we published our second Climate Transition Action Plan which updates on our climate strategy and outlines our decarbonisation plans. Our plans include up to US$4 bn in spend and commitments over the decade to 2030 to execute our operational decarbonisation plans.[v] | Female employee workforce participation[vi]37.1% Up 1.9% pointsFY23 35.2%Female employee workforce participation more than doubled from 17.6% in CY16 and in our Minerals Americas operations it is now over 40%. This is a point of differentiation from our competitors.~51% of our external hires were female (FY23: 48%). We improved our representation of women in leadership to 31.7% (FY23: 29.7%). |
| Healthy environment | Indigenous partnerships |
| Area under nature-positive management practices[vii]83 k hectaresUp 3,295 hectares since FY23[viii]We have developed a Group-level framework to identify nature‑positive opportunities across our operated assets in Australia, Chile and Canada, supporting our 2030 Healthy environment goal.We achieved the majority of our context-based water target short-term milestones for all applicable operated assets.[ix] | Record Indigenous procurement spendUS$609 m Up 83%FY23 US$333 mWe completed our inaugural assessment of the health of our relationships with a range of Indigenous partners and published the results in our 2024 Annual Report.We have completed all of our FY24 Australian Reconciliation Action Plan targets, including embedding these into our ongoing operations, and released our first Canada Indigenous Partnerships Plan. |
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BHP | Financial results for the year ended 30 June 2024
| Responsible supply chains | Thriving, empowered communities |
| Responsible Minerals ProgramOECD-alignment achievedBHP’s Responsible Minerals Program has been independently assessed as fully meeting all criteria under the Joint Due Diligence Standard which is the most comprehensive OECD-aligned standard. | Total economic contribution[x]US$49.2 bnFY23 US$54.2 bnDuring the year, we contributed US$41.5 bn to suppliers, contractors, employees, governments and voluntary investment in social projects across the communities where we operate. This was 84% of our total economic contribution with shareholder payments of US$7.7 bn (16%). |
| Detailed information on social value is included in Appendix 1 and OFR 6 in the Annual Report |
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BHP | Financial results for the year ended 30 June 2024
Group financial performance
Earnings and margins
Operational excellence and increased prices in key commodities led to strong underlying financial results
Earnings and margins
Operational excellence and increased prices in key commodities led to strong underlying financial results
| Revenue US$55.7 bn Up 3% FY23 US$53.8 bn Attributable profit US$7.9 bn Down 39% FY23 US$12.9 bn Underlying attributable profit US$13.7 bn Up 2% FY23 US$13.4 bn Profit from operations US$17.5 bn Down 24% FY23 US$22.9 bn Underlying EBITDAiii US$29.0 bn Up 4% FY23 US$28.0 bn Underlying EBITDA marginiii 54% FY23 54%. Adjusted effective tax rate 32.5% FY23 30.9% FY25e 33 – 38% | BHP’s revenue increased US$1.8 bn primarily as a result of higher realised prices across iron ore and copper, where sales volumes also increased 3% and 5% respectively. This was partially offset by lower energy coal and nickel prices, and lower steelmaking coal volumes following the divestment of Blackwater and Daunia on 2 April 2024. We experienced a global inflation rate of ~4%, predominantly driven by higher labour costs. This was somewhat offset by lower commodity linked raw materials such as diesel and acid. Our productivity initiatives and cost discipline allowed us to mitigate these ongoing cost pressures with unit costsiii ~2.9%[xi] higher across our major assets. WAIO extended its lead over competitors as the lowest cost major iron ore producer globally.i Overall, Underlying EBITDA increased 4% and Underlying EBITDA margin remained at 54%, the eighth consecutive year we have achieved a margin greater than 50%. For further details see Underlying EBITDA waterfall. | Our adjusted effective tax rate was 32.5% primarily due to: · the impact of the new Chilean mining tax regime applying from 1 January 2024; and · dividend withholding taxes related to our Chilean operations. Our operating costs include US$3.6 bn of revenue or production-based royalties. Once these are included, our Group effective tax rate was 41.7%. For further details see OFR 10 – Effective tax rate. The adjusted effective tax rate for FY25 is expected to be in the range of 33% to 38%, with the increase primarily reflecting the impact of the new Chilean mining tax regime applying for the full financial year. Attributable profit decreased due to an exceptional loss of US$5.8 bn (post-tax), predominantly comprising: · a US$2.7 bn impairment of Western Australia Nickel; and · a US$3.8 bn charge related to the Samarco dam failure. This was partially offset by a US$0.7 bn (post-tax) gain on disposal of the Blackwater and Daunia mines. For further details see Note 3 – Exceptional items and Note 4 – Significant events – Samarco dam failure. |
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BHP | Financial results for the year ended 30 June 2024
Cash flow and balance sheet
Strong cash flow generation and balance sheet underpinned our investment in organic growth
| Net operating cash flow US$20.7 bn Up 11%FY23 US$18.7 bn Capital and exploration expenditure US$9.3 bn Up 31%FY23 US$7.1 bn Free cash flowiiiUS$11.9 bn Up 111%FY23 US$5.6 bn Net debtiiiUS$9.1 bnFY23 US$11.2 bnHY24 US$12.6 bn Gearing ratioiii15.7%FY23 18.7%HY24 21.7% | Our net operating cash flow increased 11%, compared to FY23 when we made significant income tax finalisation payments relating to FY22.We generated free cash flow of US$11.9 bn after investing US$9.3 bn in line with our Capital Allocation Framework (CAF). Our investments included:· US$5.9 bn in organic development including ~US$2.7 bn on copper projects and ~US$1.1 bn at Jansen; plus ~US$0.5 bn of exploration spend primarily at Copper South Australia; and· US$3.0 bn of maintenance[xii] and decarbonisation expenditure with US$1.2 bn sustaining capital at WAIO to support our medium-term goal of producing >305 Mtpa.We expect capital and exploration expenditure to be:[xiii]· ~US$10 bn for FY25, including ~US$0.5 bn of exploration; and· ~US$11 bn for FY26 and per annum on average in the medium term.[xiv]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 FY24, BHP issued US$4.8 bn of new bonds and repaid US$6.3 bn of debt, of which US$5.0 bn related to the OZL acquisition facility and US$1.3 bn to maturing bonds.BHP’s global credit ratings[xv] have remained unchanged during FY24 with Moody’s rating A1(stable)/P-1 and S&P Global’s rating A-(stable)/A-1 (long-term/short-term respectively).Our net debt decreased by US$2.0 bn in the year largely reflecting:· Net operating cash flow of US$20.7 bn; and· Proceeds from the divestment of Blackwater and Daunia of US$1.1 bn;Partially offset by:· Capital and exploration expenditure of US$9.3 bn; and· Payment of dividends to BHP shareholders of US$7.7 bn, and to non‑controlling interests of US$1.4 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 uncertainties while retaining the flexibility to allocate capital within our CAF towards shareholder returns and growth opportunities. We are comfortable to move above our net debt target temporarily to execute value accretive opportunities in the portfolio.For further details see Note 21 – Net debt. | ||
| Detailed financial information is included in Appendix 1 and OFR 4 in the Annual Report | ||||
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BHP | Financial results for the year ended 30 June 2024
Value and returns
Continuing our track record of balancing investment in the business and cash returns to shareholders
| Full year dividendUS$1.46 per shareFully franked54% payout ratio Underlying return on capital employed (ROCE)iii27.2%FY23 28.8% | Earnings per share – basic155.8 US cpsFY23 255.2 US cps Earnings per share – Underlyingiii269.5 US cpsFY23 265.0 US cps | Our operations continued to generate industry leading Underlying ROCE[xvi] of 27.2%.A final dividend of US$0.74 per share (US$3.8 bn), equivalent to a 53% payout ratio will be paid to shareholders on 3 October 2024.This brings total cash dividends announced for FY24 to US$1.46 per share (US$7.4 bn), equivalent to a 54% payout ratio, making this the fourth largest full year ordinary dividend declared.This extends our track record of strong returns while balancing investment in growth. Including the determined FY24 final dividend, we will have returned over US$42 bn cash to shareholders since 1 July 2021. |
Important dates for shareholders
BHP’s Annual General Meeting will be held on Wednesday 30 October 2024.
BHP’s Dividend Reinvestment Plan (DRP) will operate in respect of the final 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 final dividend | Date |
| Announcement of currency conversion into RAND | 3 September 2024 |
| Last day to trade cum dividend on Johannesburg Stock Exchange (JSE) | 10 September 2024 |
| Ex-dividend Date JSE | 11 September 2024 |
| Ex-dividend Date Australian Securities Exchange (ASX) and London Stock Exchange (LSE) | 12 September 2024 |
| Ex-dividend Date New York Stock Exchange (NYSE) | 13 September 2024 |
| Record Date | 13 September 2024 |
| Announcement of currency conversion into AUD, GBP and NZD | 16 September 2024 |
| DRP and Currency Election date | 16 September 20241 |
| Payment Date | 3 October 2024 |
| DRP Allocation Date2 | 17 October 2024 |
1 5:00 pm AEST.
2 Allocation dates may vary between registers but all allocations will be completed on or before 17 October 2024.
Shareholders registered on the South African branch register will not be able to dematerialise or rematerialise their shareholdings between the dates of 10 September 2024 and 13 September 2024 (inclusive), and transfers between the Australian register and the South African branch register will not be permitted between the dates of 3 September 2024 and 13 September 2024 (inclusive). American Depositary Shares (ADSs) each represent two fully paid ordinary shares and receive dividends accordingly.
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BHP | Financial results for the year ended 30 June 2024
Any eligible shareholder who wishes to participate in the DRP, or to vary a participation election should do so before 5:00 pm AEST 16 September 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
Economic outlook[xvii]
BHP’s external operating environment in FY24 remained relatively volatile. Our key commodity prices were mixed with significant variation in performance between individual commodities.
In the near term, we expect steady global growth slightly above 3% for CY24 and CY25. Major economies are expected to diverge in their growth outlooks, with developed economies facing less of a drag from higher interest rates, China experiencing an uneven recovery among its end-use sectors, and India likely to continue as the fastest growing major economy. Geopolitical risks remain relatively elevated and are likely to remain so in the near term. Inflation has been easing across our major operating regions, although the trajectory towards central bank inflation targets will continue to be bumpy. And while wage growth has largely normalised in Chile and has recently peaked in Australia, we still expect the lagged impact from inflation and some lingering labour market tightness to impact our cost base into FY25.
Commodity demand
Demand for commodities in the developed world has been relatively soft over CY23 and into CY24 as anti-inflationary policies, sluggish industrial activity and the last of the lagged impacts of the energy crisis were felt. The impact of higher interest rates is expected to continue to restrain household consumption in the developed world for the balance of CY24, but we expect steel, copper and nickel demand to recover across the OECD. China is on track to meet official CY24 macroeconomic growth targets, but the property sector is likely to remain a drag. India is expected to continue as a bright spot for commodity demand.
The Chinese economy has been volatile since CY23, with a steady recovery in a range of sectors important to copper demand, for example power infrastructure, transport and consumer durable goods. Weakness however continued in the steel-intensive real estate sector. Policymakers have acknowledged that more support is needed to embed a recovery in this sector, and in mid-CY24 a more decisive policy pivot emerged with the objective to reduce the oversupply in the market. Against this backdrop, steel production was lower in H1 CY24 compared to the previous year, however annual steel production is still expected to be more than 1 Bt for the sixth consecutive year.
We believe that China’s economic transition could accelerate its demand shift increasingly towards ‘future-facing commodities’.
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BHP | Financial results for the year ended 30 June 2024
The picture has been more positive in India, where a capital investment upswing continues to be well entrenched and commodity demand has been robust. The Indian economy has maintained healthy momentum after the general election, particularly in relation to demand linked to the steel sector.
Over the long term, the outlook for our key commodities remains positive. We continue to expect that population growth, urbanisation, rising living standards, and the infrastructure required for decarbonisation and electrification will drive demand for steel, non-ferrous metals such as copper, and fertilisers.
For the review and outlook relating to our individual commodities please refer to the relevant segment sections from page 7.
Costs and inflation
The negative impact of inflation on our cost base continues to recede, but some elements remain a concern. Non-energy raw material costs have largely normalised and returned to regular cyclical variations. Wage growth in Chile has broadly returned to long-run averages, while Australian wage growth peaked in H1 FY24. Electricity costs in Australia have been volatile in H2 FY24 due to weather-related factors.
We continue to expect the lagged effect of inflation to flow into FY25. The labour market remains a core inflationary concern, although we believe that we are now past the peak and conditions should continue to ease. However, regulatory changes underway in Australia will add to our labour costs and reduce the international competitiveness of the Australian economy.
Overall, the cost of mining production continues to be higher than it was prior to the pandemic. This implies that price support is also higher and low-cost operators stand to capture potentially higher relative margins in certain commodities.