BHP pays record dividend
BHP pays record dividend
Published Date: 2021-02-17 | Source: Stephen Gunnion | Author: Stephen Gunnion
The diversified resources giant says its outlook for global growth and commodity demand remains positive.
BHP Group is paying a record interim dividend after it raised its outlook following a strong first half. The $5.1 billion payout is its highest yet and equal to an 85% payout ratio on an underlying basis.
The diversified resources giant benefitted from record production from its iron ore operations in Western Australia in a rising price environment in the six months to end-December. However, it impaired its energy coal assets due to a big decline in the price of thermal coal.
Profit from operations increased by 17% to $9.75 billion but attributable profit came in 20% lower at $3.88 billion, with earnings per share (EPS) down by the same margin at 76.6 US cents. These included a $2.2 billion exceptional loss predominantly related to the impairments of its New South Wales Energy Coal (NSWEC) operation and associated deferred tax assets, and its Cerrejón open-pit coal mine in Colombia. Underlying profit and EPS both increased by 16% to $6.04 billion and 119.4c respectively. The 101c dividend per share is 55% higher than last year's interim payout of 65c.
Over the period, BHP said its operations generated strong cash flows, its return on capital employed increased to 24% and its balance sheet remained strong with net debt at the bottom of its target range, declining by 7% to $11.8 billion.
In a production update, the group maintained full-year guidance for petroleum and metallurgical coal but has increased guidance for iron ore to between 245 and 255 million tonnes as a result of the restart of its Samarco operations in Brazil. Copper guidance was narrowed to between 1.51 and 1.645 million tonnes, reflecting a strong performance at Escondida operations in Chile. It cut energy coal guidance to between 21 and 23 million tonnes following a 91-day strike at Cerrejón.
BHP said the divestment process for its interests in BHP Mitsui Coal, NSWEC and Cerrejón was progressing, with extensive due diligence being undertaken to assess both demerger and trade sale opportunities.
Its shares rose 3.2% to R455.50 yesterday.
Supercycle talk was reinforced overnight as BHP Billiton (NYSE:BBL) and Glencore (OTC:GLNCY), two of the world's biggest miners, made big dividend announcements. BHP is paying a special dividend of over $5 billion for the first half of its fiscal year-- SUPER PATRIOT Alison Boxxer 🌊🇺🇸 (@AlisonBoxxer) February 16, 2021