BHP has delivered a record payout to shareholders but the global miner’s underlying result has fallen short of expectations.
The ASX-listed titan more than doubled its full-year net profit to $US8.31 billion ($A12.27 billion) for the year to June 30 on the back of strong iron ore prices and easing costs associated with the 2015 Samarco dam disaster.
But BHP’s underlying profit from continuing operations fell by 2.0 per cent to $US9.46 billion following the divestment of US shale assets, short of consensus estimates of $US9.73 billion.
Including the shale assets, the company’s underlying result was 2.0 per cent higher than last year’s $US9.1 billion profit, but still under consensus expectations of $US9.4 billion.
Nevertheless, the company declared a record final dividend of 78 US cents per share, up from 63 US cents a year ago, for a record full-year dividend of $US2.35 per share.
BHP said the final payout was on top of a record US$17 billion it had already returned to shareholders in FY19.
RBC Capital markets analysts Paul Hissey, Alexander Hislop and Paul Kaner remained underwhelmed, declaring BHP’s payout short of their expectations.
“It is difficult to ascertain consensus dividend expectations (particularly how they relate to specials) … however, the final dividend is clearly lower than our estimates,” they said.
RBC said the company’s softer underlying result appeared to be driven by higher costs at Queensland Coal, as well as general cost increases in the petroleum and copper divisions.
BHP chief executive Andrew Mackenzie said FY19 would provide the company with the momentum needed to prosper, even as the trade war between China and the US weighs on commodity prices.
“We continue to enjoy strong sales to China … but while (the tension) continues it is putting a bit of a dampener on world economic growth,” Mr McKenzie said.
BHP said it expected China’s economic growth to slow modestly but the company believed the impact of weaker exports would be partially offset by easier monetary and fiscal policy.
“Over the longer term, we expect China’s economic growth rate to decelerate as the working age population falls and the capital stock matures,” BHP said in its release to the ASX.
Mr Mackenzie said BHP’s review of its thermal coal segment was continuing but repeated the company did “not intend to invest to grow these businesses”.
In July, Mr Mackenzie announced BHP was spending $US400 million to create a climate investment program to reduce emissions from its own operations as well as those generated from its resources.
BHP’s revenue from continuing operations rose 3.0 per cent to $US44.3 billion, dampened by the impacts of Cyclone Veronica in Western Australia, resource headwinds and unplanned outages in the first half of the year.
Strong iron ore prices helped deliver $11.1 billion in pre-tax earnings for the segment, which was nearly half of the $23.2 billion in pre-tax earnings achieved across the group.
Exceptional losses associated with the Samarco incident eased to $US818 million from $US5.2 billion a year ago.
BHP’s ASX-listed shares dropped by as much as 1.66 per cent to $35.65 within the first 30 minutes of trade on Tuesday, and were still down by 0.57 per cent at $36.045 by 1315 AEST.
BHP PAYS RECORD FINAL DIVIDEND
* FY19 net profit $US8.31bn ($A12.27b) up from $US3.70b
* Underlying profit from continuing operations down 2.0pct to $US9.46b
* Underlying profit from total operations up 2.0pct to $US9.1b
* Revenue from continuing operations up 3.0pct to $US44.3b
* Final dividend of 78 US cents, up from 63 US cents pcp.