BHP share price on watch after first-half earnings miss

BHP has released a set of results that appear to have fallen short of expectations…

| More on:
A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • BHP has released its half-year results
  • The mining giant had a very profitable half
  • However, the miner appears to have fallen short of expectations

The BHP Group Ltd (ASX: BHP) share price will be on watch on Tuesday.

This follows the release of the mining giant's half-year results this morning.

BHP share price on watch amid earnings miss

  • Revenue down 16% to US$25,713 million
  • Underlying EBITDA down 28% to US$13,230 million
  • Profit after tax down 32% to US$6,457 million
  • Interim dividend down 40% to 90 US cents

What happened during the first half?

For the six months ended 31 December, BHP reported a 16% decline in revenue to US$25,713 million. This reflects lower average realised prices for iron ore, copper, and hard coking coal, partially offset by higher prices for weak coking coal, thermal coal, and nickel.

In respect to earnings, BHP posted a 28% decline in underlying EBITDA to US$13,230 million. The main drag on the miner's earnings was the aforementioned copper and iron ore price weakness.

This led to the company's iron ore underlying EBITDA falling 31.4% to US$7,641 million. It was a similar story for BHP's next largest segment, copper, which posted a 34.1% decline in underlying EBITDA to US$2,814 million.

In light of its softer earnings, the BHP board determined to pay an interim dividend of 90 US cents per share. This equates to a total return of US$4.6 billion and is the equivalent to a 69% payout ratio.

How does this compare to expectations?

According to a note out of Goldman Sachs, its analysts were expecting "underlying EBITDA US$13.7bn vs. cons US$14.3bn."

So with the Big Australian reporting an underlying EBITDA of US$13,230 million, it has missed on both estimates.

And while BHP has beaten Goldman's dividend estimate of 88 US cents per share, it has fallen short of the consensus estimate of 98 US cents per share.

This could be bad news for the BHP share price this morning.

Management commentary

BHP's CEO, Mike Henry, was pleased with the half. He commented:

BHP has today announced a strong first half dividend of 90 US cents per share, on the back of solid operating performance. During the half, we delivered well on the production front, with Western Australia Iron Ore posting another record half. BHP remains the lowest cost major iron ore producer globally. We continued to make strong progress on executing our strategy, including the development of growth options.

Significant wet weather in our coal assets impacted production and unit costs, as did challenges in securing sufficient labour. Inventory movements during the half contributed to costs, including the planned draw-down at Olympic Dam after inventory built up during the smelter refurbishment last year. We expect these factors to abate in the second half and for unit costs to fall, in line with revised guidance.


The good news is that BHP's production guidance remains unchanged for the full year.

In addition, Henry is feeling positive about BHP's prospects in the second half thanks largely to the reopening of China. He adds:

We are positive about the demand outlook in the second half of FY23 and into FY24, with strengthening activity in China on the back of recent policy decisions the major driver. We expect domestic demand in China and India to provide stabilising counterweights to the ongoing slowdown in global trade and in the economies of the US, Japan and Europe. The long-term outlook for our commodities remains strong given population growth, rising living standards and the metals intensity of the energy transition, including for steel making raw materials.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A man face plants into the deep snow, indicating a company frozen in a trading halt.
Materials Shares

Why are Arafura shares frozen on Wednesday?

Arafura shares aren’t trading today. But why?

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Mineral Resources share price sinks to 52-week low: Is it a buy?

Do analysts think this beaten down mining stock is in the buy zone?

Read more »

A young man goes over his finances and investment portfolio at home.
Materials Shares

BHP stock: Buy, sell, or hold in August 2024?

The Big Australian's shares have just hit a 52-week low. Do analysts see this as a buying opportunity?

Read more »

a man clasps his hand to his forehead as he looks down at his phone and grimaces with a pained expression on his face as he watches the Pilbara Minerals share price continue to fall
Materials Shares

Here's why this ASX All Ords lithium stock just crashed 33%!

Another lithium miner is hitting the pause button on its operations.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Materials Shares

Pilbara Minerals share price charges higher on huge production beat

This lithium giant outperformed expectations during the fourth quarter.

Read more »

Miner on his tablet next to a mine site.
Materials Shares

Arafura share price charging higher on $1.5 billion debt funding

Investors are snapping up Arafura shares as its Nolans rare earths project secures milestone funding success.

Read more »

woman and two men in hardhats talking at mine site
Materials Shares

Lynas share price tumbles on disappointing revenue slump

What's going on with this rare earths stock today?

Read more »

A person with a round-mouthed expression clutches a device screen and looks shocked and surprised.
Materials Shares

Small-cap ASX lithium stock rockets 115% on new discoveries

What is getting investors excited today? Let's find out.

Read more »