Reporting Season

BHP reports record first half earnings

Tue 15 Feb 22, 11:32am (AEST)
BHP Iron Ore Train
Source: iStock

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Key Points

  • BHP has posted half yearly earnings for the period ending 31 December 2021
  • BHP topped consensus on both earnings and dividends
  • The company will pay a record interim dividend of $2.10
  • BHP expects to benefit from rising inflation

BHP (ASX: BHP) opened 1.39% higher today after strong pricing in iron ore, coal, oil and copper helped the big miner post a beat against consensus on both earnings and dividends in the company’s half yearly report. 

BHP continued to rise in the early hours of trading, with a current price of $49.40 (+2.21%) at the time of writing.

BHP reported record first half earnings of $13.63bn. This represented a respectable beat against analyst expectations of $13.46bn.

Likewise, the company will pay a record interim dividend of $2.10 per share (a 4.26% yield). This was substantially above the forecasted $1.74 mark – and is the third consecutive year that BHP has paid a record interim dividend.

“Our record interim dividend was supported by our reliable operating performance and continued strong markets for a number of our products,” says CEO Mike Henry. 

China headwinds to ease in 2022

“In terms of the near term outlook for commodity demand, while growth slowed in China more than we anticipated in the second half of calendar year 2021, we see the headwinds easing over the course of 2022,” says Henry.

Henry noted that the start of China’s new 5 Year Plan will boost infrastructure spending, and direct limitations on heavy industry are expected to ease.

“For the fourth year in a row, our mid-case is for Chinese steelmaking to exceed one billion tonnes in 2022, supporting demand and pricing for our iron ore.”

Inflation to benefit BHP

While BHP is seeing severe global inflationary pressures, Henry has noted that “it is important to differentiate between the drivers of this.”

The first driver is supply chain bottlenecks. The company expects to still struggle with these for another 1-2 years.

However, BHP has a rosier outlook when it comes to inflation that is demand led, which Henry expects to be more enduring.

“This latter driver is positive for commodities demand and pricing,” says Henry. 

BHP share price chart over the last year
BHP's share price over the last year.

 

Written By

Jed Herne

Content & Strategy

After graduating with a 99.4 ATAR, Jed won 3 scholarships to Curtin University, where he earned his Bachelor's degree and served as a Student Ambassador. He is primarily interested in long-term passive index funds as a vehicle for financial independence. Outside of covering financial news, Jed is a published author, podcaster, and has an unhealthy obsession with bouldering.

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