BHP FY26 scorecard: record iron ore, soft copper guidance – and a dividend surprise brewing
BHP capped FY26 with record iron ore and copper output, but lower FY27 copper production guidance gave the market a reason to sell.
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Mentioned
KEY POINTS
- BHP shares have rallied hard through FY26, riding higher copper and iron ore prices, disciplined cost control across every asset, and investor bets on record production from the world's biggest miner.
- BHP's FY26 operational review confirmed record iron ore, near-2Mt copper output and a stronger-than-expected balance sheet, but softer FY27 copper guidance triggered a share price selloff that extended into a second day.
- Here's the key data from BHP’s update, the critical investor takeaways, and what the major investment banks made of the result.
Key takeaways
Q4 landed in-line-to-better than expected: Iron ore of 68.1Mt was close to the consensus estimate of 68.3Mt (FactSet StreetAccount), copper's 491.9kt edged past the 490.6kt consensus, and coal beat outright, both met and energy coal running well ahead of forecast.
FY27 copper guidance was the soft spot. A guide of 1,650–1,800kt is a step-down of more than 150kt on FY26's actual output – the number that dragged an otherwise clean update into the red.
The balance sheet outperformed: Net debt of roughly US$9bn beat consensus, supporting BHP’s dividend outlook.
Neutral response: Sentiment among analysts at the major investment banks was neutral, and shares fell 2.3% on the day largely on the FY27 copper number, and are down sharply today.
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BHP Group share price chart
What management said
New chief executive Brandon Craig framed FY26 as proof of "the power of a disciplined operating system and world-class assets," pointing to record iron ore and a second straight year of ~2Mt copper output, delivered as copper prices ran about 35% higher than a year earlier. Management said cost control held despite inflation, diesel and supply-chain pressure.
On growth, BHP is pushing beyond its traditional iron ore and coal business, and copper is central to that push. In Argentina, its giant Vicuña copper project – still years from production – locked in 40 years of tax and regulatory certainty under the government's new investment incentive scheme, while in Chile, BHP applied to restart the mothballed Cerro Colorado copper mine. In Canada, its new Jansen mine marks BHP's first move into potash, a crop fertiliser ingredient, with first production still on track for next year.
The bad news? Escondida's feed grade is guided to fall from 0.90% to around 0.70% in FY27, an unplanned conveyor failure at Carrapateena will cost up to eight weeks of output, and BHP plans to build anode inventory ahead of a smelter shutdown in FY28 – together explaining most of the step-down.
Expert views
What the brokers liked
Coal's strong finish, with met coal from BMA – BHP's Queensland coking coal joint venture with Mitsubishi – beating consensus by around 14% on a genuine recovery in stripping and yield after Tropical Cyclone Koji. Balance sheet discipline also stood out – UBS noted net debt undershot its own US$9.5bn estimate, aided by ~US$5bn of divestment proceeds including the Antamina silver stream and strong free cash flow.
What the brokers didn't like
FY27 copper guidance, roughly 3% below consensus at the midpoint; Ord Minnett now models a 12% year-on-year slide in group copper output, driven mostly by the Escondida grade decline. The Carrapateena outage lands on the asset central to BHP's copper growth pitch, which several brokers said raises execution questions ahead of November's site tour.
What was interesting
Macquarie called it a "holding year" for WAIO, BHP's Western Australian iron ore business: production was flat at 291Mt and FY27 guidance is flat again, with strike risk, an inventory rebuild and maintenance work clearing the way for a push toward 305Mtpa in FY28, underpinned by Ministers North. Views on relative value diverged, with some brokers favouring Rio Tinto even as copper's medium-term outlook was described as constructive for both.
Earnings forecast changes
Revisions were mixed, not uniformly negative: Macquarie lifted FY26 EPS 7% on the stronger result but trimmed FY27 by 4% on softer guidance, while consensus FY27 EPS eased about 1.2% to $2.56. Price target changes were modest, generally 1–3%.
Future catalysts
FY26 results on 18 August, with unit cost and capital guidance alongside the final dividend; the Copper South Australia site tour in November; and the Vicuña final investment decision, targeted for the second half.
Updated BHP broker consensus
Earnings cuts were minor and concentrated in FY27, with FY26 numbers largely intact – a split suggesting brokers see the copper guidance as a timing issue, not a structural dent in the growth thesis. In the end, the operational update yielded no ratings changes from the big brokers and only three small price target adjustments.
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BHP Group Broker Consensus Summary 17 July 2026. Source: Market Index Broker Consensus. To obtain a stock’s Broker Consensus Rating, we assign a value of +1 to any rating better than HOLD/NEUTRAL/MARKETWEIGHT, a value of 0 for any rating equivalent to HOLD/NEUTRAL/MARKETWEIGHT, and a value of -1 to any rating worse than HOLD/NEUTRAL/MARKETWEIGHT. We then take the average of all assigned rating values and assign a Broker Consensus Rating of BUY to values greater than +0.5, a rating of HOLD for values between -0.5 and +0.5, and a rating of SELL for values less than -0.5. The Broker Consensus Target is simply the average of the target prices we have on file for each broker. Typically, brokers define their target prices as a 12-month forecast. Each target price is based on fundamental valuation assumptions. Upside/Downside data based on closing prices 16 July 2026.
With a Broker Consensus Rating of 0.18, BHP is rated at better than a hold, but well off the 0.50 we associate with a consensus buy. BHP’s Broker Consensus Target edged lower from $61.72 prior to the FY26 operational update to $61.44 post. This implies 3.9% upside based on the 16 July closing price of $59.14.
Conclusion
Strip out the FY27 copper number and this was a clean scorecard: everything else landed inside guidance.
Looking forward, the dividend deserves close attention when BHP delivers its FY26 results on 18 August because of the flexibility the balance sheet now allows. With net debt undershooting guidance and more asset-sale proceeds flagged for FY27, Ord Minnett lifted its payout ratio forecast to 70% from 60%, while UBS expects the final dividend could beat consensus by 16%.
Zoom out further, and the FY27 copper guidance miss sits inside a bigger story: both BHP and rival Rio Tinto (RIO) are tilting growth capital toward copper, despite near-term production challenges. A single grade-driven production dip is noisy and likely to be short-lived. More importantly, the fact that two of the world's biggest miners are committing a substantial chunk of their capital to copper for the next decade constitutes a structural trend investors cannot ignore.
This article draws on institutional research from Macquarie, UBS, Ord Minnett, Goldman Sachs, CLSA and RBC Capital Markets (July 2026), and data from FactSet StreetAccount (July 2026).
