BHP shares tumble after missing expectations in second quarter

The Big Australian has disappointed investors with its second quarter update.

BHP Group Ltd (ASX: BHP) shares are on the move on Thursday morning.

At the time of writing, the mining giant's shares are down 1.5% to $45.65.

This follows the release of the Big Australian's second quarter update.

Miner looking at his notes.

Image source: Getty Images

BHP shares falls on Q2 update

According to the release, iron ore production came in 4% higher quarter on quarter at 65.8Mt, bringing its half year production to 129Mt (down 2% half on half). This puts the company on track to achieve its unchanged FY 2024 guidance of 254Mt to 264.5Mt.

BHP shipped a total of 70.3Mt of iron ore from WAIO (100% basis) during the period. This was achieved with an average iron ore price of US$109.47 per wet metric tonne, which is up 12% since the first quarter.

BHP's copper operations had a softer quarter following a very strong start to the year. Copper production was down 4% quarter on quarter to 437.4kt, but up 7% half on half to 894.4kt. This also leaves BHP well-positioned to achieve its unchanged guidance for FY 2024.

Metallurgical coal production was up 2% in the second quarter to 5.7Mt. However, for the half, it came in 17% lower at 11.3Mt. In light of this, management has lowered its FY 2024 guidance from 28Mt-31Mt to 23Mt-25Mt.

Finally, Energy coal production was up 7% for the quarter and 36% for the half, and Nickel production was down 3% in the second quarter but up 4% for the first half. BHP's guidance for both remains unchanged, but with Energy coal now expected to be at the top end of its range.

How does this compare to expectations?

The market was expecting iron ore shipments of 72.5Mt from WAIO, which would have been a 1% increase quarter on quarter.

In addition, copper production was expected to be 454kt and met coal was forecast to come in at 6.9Mt.

As you can see above, this means that the miner has fallen a short of expectations with this update. This may explain why BHP's shares are falling today.

Management commentary

BHP's CEO, Mike Henry, was pleased with the quarter and half. He said:

Operationally, BHP has had a solid first half. WA Iron Ore production was up 5% quarter-on-quarter, while first half copper production rose 7% reflecting a record half at Spence and ongoing strong performance and additional tonnes at Copper South Australia. NSW Energy Coal had its best first half in five years, while BMA had a tough six months following significant planned maintenance and low starting inventories. At Nickel West, we are evaluating options to mitigate the impacts of the sharp fall in nickel prices.

We progressed our growth agenda during the quarter with ongoing construction of the Jansen mine in Canada and the sanction of Jansen Stage 2, which doubles our planned potash production capacity. In South Australia, we successfully integrated our Copper SA business and significant exploration drilling beneath Olympic Dam has identified attractive copper mineralisation above 1% grade along a 2 km strike, with areas above 2%.

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.

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