A doubling of iron ore prices helped BHP swing back into profit for the second half of 2016.
By Cameron Drummond
BHP has reported a half year profit of $US3.2 billion, facilitated by a broad-trend commodity price resurgence and operational cost reductions.
Results from the world’s biggest miner were slightly better than analysts’ expectations of $US3.1bn.
Its underlying profit for H2 2016 surged to $US3.2bn from $US412m year-on-year due to higher than expected commodity prices and cost reductions across its operations.
This marked a huge turnaround from BHP’s first reported half year loss in 16 years of $US5.67bn, recorded in H1 2016.
“This is a strong result that follows several years of a considered and deliberate approach to improve productivity and redesign our portfolio and operating model,” BHP chief executive Andrew Mackenzie said.
“Our steadfast commitment to this plan has positioned us to take full advantage in a period of higher prices with underlying EBITDA up 65 per cent to US$9.9 billion.”
The company’s overall commodities outlook was positive, with continued growth expected for iron ore, coal, copper, oil and gas during 2017.
BHP’s average realised sale price of iron ore in H1 2017 had increased 28 per cent compared to the same reporting period last year, as strong prices were boosted by increased Chinese manufacturing.
Steel production, although tipped to weaken in China, was expected to grow modestly elsewhere.
“Steel production in the rest of the world is likely to improve marginally, led by India,” the company said.
“In the long-term, the global steel market will grow modestly, supported mainly by incremental demand from India and other populous emerging markets.”
BHP declared an interim dividend of 40 US cents per share, up from the 16 US cents dividend it paid for the same period last year.
“We are confident in the long-term outlook for our commodities, particularly oil, with markets expected to rebalance in the near-term and copper where we expect a deficit to emerge in the early 2020,” Mr Mackenzie said.
“We have the right settings in place to substantially grow shareholder value.”