Motley Fool Australia

BHP (ASX:BHP) share price on watch after solid Q1 update

BHP share price

The BHP Group Ltd (ASX: BHP) share price will be on watch today following the release of its first quarter update.

How did BHP perform in the first quarter?

According to the release, BHP has started the new financial year in a positive fashion.

For the three months ended 30 September, the Big Australian achieved Iron Ore production of 66.04 Mt. While this represents a 1% quarter on quarter decline, it was up 7% on the prior corresponding period.

Management notes that record quarterly production at Jimblebar and strong supply chain performance offset the impact from planned major car dumper maintenance.

BHP’s Petroleum production grew quarter on quarter to by 1% to 27 MMboe. This was driven by the first production from Atlantis Phase 3 and higher seasonal demand at Bass Strait, which was partially offset by lower volumes at Shenzi due to planned maintenance, the impact of Tropical Storm Laura in the Gulf of Mexico, and weather impacts at North West Shelf.

This production was stronger than some analysts were expecting. For example, a note out of Goldman Sachs reveals that it was forecasting production of 26Mboe.

Also coming in ahead of expectations was BHP’s Copper production. It delivered quarterly production of 413kt, which was flat quarter on quarter. This compares to Goldman’s estimate of 365kt.

Management advised that this was driven by strong concentrator throughput at Escondida, higher production at Olympic Dam, and a recovery in production at Antamina following a six-week COVID-19 related stoppage in the June quarter.

Elsewhere, Metallurgical Coal production was down 17% quarter on quarter, Energy Coal production fell 18%, and Nickel production reduced 7%.

BHP Chief Executive Officer, Mike Henry, commented: “BHP has started the new financial year with a strong first quarter of safety and production performance. Group production rose two per cent from a year ago driven by solid results in metallurgical coal and iron ore, our major growth projects made good progress, and we secured more options in copper, nickel and oil.”

FY 2021 guidance.

BHP’s revealed that all production and unit cost guidance remains unchanged for the 2021 financial year, except for Cerrejón production guidance which is under review due to an ongoing strike.

In respect to its key commodities, in FY 2021 BHP continues to expect iron ore production of 244Mt to 253Mt, copper production of 1,480kt to 1,645kt, and petroleum production of 95MMboe to 101MMboe.

Our Black Friday Sale - Save 75% on Motley Fool Extreme Opportunities

These are high octane, high upside-potential stocks... Stocks that are growing like gangbusters, and have the potential to quickly turn modest initial investments into small fortunes.

Since inception, our Extreme Opportunities service has delivered some moonshot stock picks that have absolutely shattered the market, some have even trebled in value, completely dwarfing the market average.

And now is a perfect time to join in this Black Friday Sale. You can save a whopping 75% off a full 1-year membership.

Returns as of 27th November

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Related Articles…