BHP First-Half Net Profit Down 20%, Underlying Earnings Lift

   By Rhiannon Hoyle 
 

SYDNEY--BHP Group Ltd. reported a 20% drop in first-half net profit mostly because of a write down against the thermal-coal business it wants to offload, but said underlying profit rose as prices for iron ore and copper strengthened.

BHP, the world's largest listed miner by market value, reported a net profit of $3.88 billion for the six months through December, versus $4.87 billion a year earlier.

The result was dragged down by $2.2 billion in one-off charges, which included a post-tax impairment charge of $1.2 billion in relation to New South Wales Energy Coal and associated deferred tax assets that was flagged in January. BHP also recoded costs of roughly $200 million linked to the coronavirus pandemic and almost $400 million against its Samarco joint venture with Brazil's Vale SA, which recently restarted operations after a 2015 fatal dam collapse.

The company said its underlying profit rose by 16% to $6.04 billion, underpinned by higher prices for iron ore and copper. Still, that missed the $6.33 billion median forecast from 17 analysts compiled by Vuma.

Directors declared an interim dividend of $1.01 a share, up from 65 cents in the same period a year ago.

The company reported net debt of $11.84 billion, below a US$12 billion-US$17 billion target range.

The rise in prices of iron ore and copper, BHP's two biggest earners, offset weaker prices for other commodities including oil and steelmaking coal. During the half, BHP's average realized price of iron ore jumped 33% year-on-year, and copper was up 28%.

Iron-ore prices surged to a nine-year high late in 2020 owing to frenzied buying from China, where steel production has been strong amid its faster-than-expected economic recovery.

Output was broadly flat during the period. BHP last month said it produced more iron ore but less coal, copper and petroleum in the first half of its fiscal year.

Operations were strong, it said, but production was held back by planned maintenance, depletion of some oil and gas fields, weaker copper grades and adverse weather.

BHP said plans to offload its thermal-coal operations were ongoing, with options for a demerger or trade sale being investigated.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

February 15, 2021 16:56 ET (21:56 GMT)

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