Big hike in BHP’s dividend payout

Iron ore lifts result

BHP will pay a record $US1.01 ($1.30) a share interim dividend on the back of the surging iron ore price, beating analyst expectations and returning a massive $US5.1bn to shareholders after a strong start to the financial year.

BHP shares rose 2.7 per cent to $47 on Tuesday even though it booked a 20 per cent slide in interim net profit to $US3.88bn.

Underlying net profit of $US6bn was up 15.4 per cent.

Operational profit of $US9.8bn was up from $US8.3bn the previous comparable period, on the back of high iron ore prices, record production from its Pilbara mines and the rising copper price at the end of the period.

But the company sounded a warning on rising costs, saying measures to combat the spread of the pandemic had added US56c a tonne to costs of production at its West Australian iron ore operations and $US1.42 a tonne in Queensland coal.

It also added to costs in petroleum and copper, for a total of $US436m in the first half of the year.

BHP’s half-year results underscored the impact of the pandemic and China’s coal bans on the company’s coal division, which booked a more than $US1.1bn reversal from the same period the previous financial year, to record a $US601m interim loss.

All of BHP’s coal arms lost money in the six months to the end of December, with its Queensland metallurgical coal operations booking a $US270m loss, before interest and tax, after revenue plunged almost $US1bn for the half to $US1.86bn.

Its Mt Arthur thermal coal mine in NSW, which BHP is preparing to sell, lost $US208m and its share of the Cerrejon thermal coal mine in Colombia lost $US52m.

Chief executive Mike Henry said BHP’s strong operational performance, on top of rising commodity prices, had helped cash flows.

“Our operations generated robust cash flows, return on capital employed increased to 24 per cent, and our balance sheet remains strong with net debt at the bottom of our target range,” Mr Henry said.

“Our outlook for global economic growth and commodity demand remains positive, with policymakers in key economies signalling a durable commitment to growth and signalling ambitions to tackle climate change.”

He said these factors would help drive continued growth in demand for energy, metals and fertilisers.