The nation’s largest mining company delivered its highest annual profit in more than a decade on Tuesday,and unveiled record dividends for its shareholders following a year of booming prices for many of the commodities it extracts and sells across the globe.
BHP chief executive Mike Henry.Arsineh Houspian
BHP’s balance sheet puts it in a strong position to seize on potential acquisitions to reshape its portfolio and push deeper into what Henry terms “future-facing” minerals – those standing to benefit from accelerating global efforts to curb greenhouse gas emissions and electrify transport.
BHP last year offloaded its petroleum business and stakes in several coal mines while seeking to grow its exposure to copper,an essential ingredient in electric wiring,and nickel,which is used in lithium-ion batteries.
Earlier this month,it lobbed an $8.4 billion offer to buy Adelaide-based copper and nickel producer Oz Minerals,but the bid was swiftly knocked back.
Henry on Tuesday said he was disappointed with Oz Minerals’ decision to reject BHP’s offer and refusal to open its books,insisting the $25-a-share proposal was “fair and compelling”.
“In the face of that level of premium and compelling nature of the offer,it was pretty disappointing,I have to say,that the board has chosen not to engage,” Henry said.
While investors and analysts have flagged the likelihood of BHP returning with a more attractive offer,Henry said the miner would remain “so disciplined” when it came to decisions around potential acquisitions. He said Oz Minerals would be “nice to have” but was not essential to BHP’s copper and nickel growth strategy as the company had significant internal options to expand its existing resources.
BHP’s share price climbed 4 per cent on Tuesday as it revealed its underlying attributable profit had soared 40 per cent to a better-than-expected $US23.8 billion ($34 billion) for the year to June 30. Earnings were boosted by a period of high prices for BHP’s copper and coal,even as prices for its biggest cash-earner,the steel-making material iron ore,eased from record highs of $US230 a tonne in the first half of 2021.
Shareholders would receive a final dividend of $US1.75 a share,the board said,bringing full-year dividends to $US3.25 a share.
Don Hamson of Plato Investment Management,a BHP shareholder,said the impressive result was second only to BHP’s 2011 financial year,when the group still incorporated the oil and gas business now owned by Woodside,and the minerals assets that now sit within South32.
“I must admit,I thought last year we might have seen the maximum dividend,” he said. “Iron ore has come off a lot,but now coal has filled that hole.”
With net debt of $300 million,BHP was in an enviable position,Hamson said,ahead of significant challenges including global economic uncertainty,higher operating costs and the risk of further falls in commodity prices.
He supported BHP in taking a “disciplined” approach to its pursuit of Oz Minerals,as it did when it bowed out of a bidding war against Andrew “Twiggy” Forrest last year for Canadian nickel miner Noront Resources.
“You don’t want to pay over the top on these things,” Hamson said. “I think the company is doing the right thing by shareholders.”
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