We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
BHP Group (BHP) FY23 Earnings Dip Y/Y on Low Prices
Read MoreHide Full Article
BHP Group (BHP - Free Report) reported underlying attributable profit from continuing operations of $13.4 billion for fiscal 2023 (ended Jun 30, 2023). The figure indicated a year-over-year slump of 37% mainly due to lower prices of iron ore, copper prices and metallurgical coal, as well as inflated costs (labor, diesel and electricity).
Underlying earnings per share came in at $2.65 compared with earnings of $4.71 per share in the prior-year period. Earnings per American Depositary Share (ADS) came in at $5.30 for fiscal 2023 compared with $8.42 in the previous fiscal. The figure was lower than the Zacks Consensus Estimate of $5.45. BHP’s each ADS represent two fully-paid ordinary shares.
In fiscal 2023, BHP’s attributable profit (for total operations) declined 58% year over year to $12.9 billion. The figure included an exceptional loss of $0.5 billion, which took into account the impact of the Samarco dam failure impacts and an exceptional loss related to the impact of Chilean tax reform. Attributable profit was $30.9 billion in fiscal 2022 (including an exceptional gain of $7.085 billion).
Revenues & Margin Performance
Revenues for fiscal 2023 totaled $53.8 billion, which beat the Zacks Consensus Estimate of $53.7 billion. The top line, however, indicated a 17% drop from the prior fiscal year’s revenues. The downfall was mainly due to significantly lower iron ore, metallurgical coal, and copper prices. Higher average realized prices for thermal coal and nickel somewhat dampened the impact. The miner had reported higher sales volumes for copper, iron ore and nickel supported by record production at Olympic Dam, Spence and Western Australia Iron Ore (WAIO).
The Iron ore segment’s revenues dropped 19% year over year to $24.8 billion and revenues in the Copper segment dipped 5% to $16 billion. The Coal segment’s revenues plunged 29.5% to $11 billion.
Underlying earnings before interest, taxes, depreciation and amortization (EBITDA) declined 31% from the prior fiscal to $28 billion in fiscal 2023. For the Iron ore segment, underlying EBITDA plunged 23% year on year to $16.7 billion and the Copper segment was down 22% to $6.65 billion. The Coal segment’s underlying EBITDA was around $5 billion, down 47% year over year.
Profit from operations in fiscal 2023 declined 33% year over year to $23 billion. Despite improved copper, iron ore and nickel sales volumes, and favorable exchange rates, lower prices across major commodities, and higher labor costs, diesel and electricity prices impacted BHP’s profits in fiscal 2023.
Balance Sheet & Cash Flow
Net operating cash flow for fiscal 2023 was $18.7 billion compared with $29.3 billion in fiscal 2022, mainly owning to lower profit from operations. BHP Group reported free cash flow of $5.6 billion in the fiscal year under review, marking a significant decline from $25 billion in fiscal 2022.
BHP’s cash and cash equivalents as of Jun 30, 2023, amounted to $12.4 billion compared with $17.2 billion as of Jun 30, 2022. Capital and exploration expenditure totaled $7.1 billion, down 6% from the prior fiscal year’s level.
As of the end of fiscal 2023, net debt was $11.2 billion, higher than $0.3 billion as of fiscal 2022 end. The increase was mainly attributed to the acquisition of Oz Minerals Ltd in May 2023 and the assumption of $1.1 bn of its interest-bearing liabilities.
BHP has budgeted $10 billion for capital and exploration expenditure in fiscal 2024 and fiscal 2025.
BHP’s board has announced a final dividend of 80 cents per share or a total of $4.1 billion. This translates to a payout ratio of 59%.
Update on Jansen Stage 1
BHP stated that the Jansen Stage 1 project in Canada is 26% complete and is on track for its first potash production in late 2026. The company has accelerated Stage 2 studies and a feasibility study is expected to be completed in fiscal 2024.
FY24 Production & Unit Cost Guidance
BHP’s iron ore production guidance for fiscal 2024 is 254-264.5 Mt. WAIO's production is expected to be between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).
BHP expects copper production within 1,720-1,910 kt in fiscal 2024. Production guidance for metallurgical coal is 28 -31 Mt. The production guidance for energy coal is 13-15 Mt. Nickel production is expected to be between 77 kt and 87 kt.
Unit cost guidance for Western Australia Iron Ore is $17.40-$18.90 per ton. Escondida unit cost is estimated to be $1.40-$1.70 per pound. Spence unit costs are expected to range between $2.00 per pound and $2.30 per pound. BMA unit cost is expected to be between $95 per ton and $105 per ton.
Price Performance
BHP Group’s shares have fallen 4.4% over the past year compared with the industry’s decline of 6.6%.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
BHP Group currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Carpenter Technology Corporation (CRS - Free Report) , PPG Industries, Inc. (PPG - Free Report) and Universal Stainless & Alloy Products, Inc. (USAP - Free Report) . CRS sports a Zacks Rank #1 (Strong Buy) at present, and PPG and BG carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has an average trailing four-quarter earnings surprise of 10%. The Zacks Consensus Estimate for CRS’s fiscal 2024 earnings is pegged at $3.23 per share. The consensus estimate for fiscal 2024 earnings has moved 12% north in the past 60 days. Its shares have gained 56% in the last year.
The Zacks Consensus Estimate for PPG Industries’ fiscal 2023 earnings per share is pegged at $7.47, indicating growth of 23.5% from the prior-year actual. Earnings estimates have moved 3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 7.3%. PPG’s shares have gained 9% in the past year.
Universal Stainless & Alloy Products has a projected earnings growth rate of 160.8% for the current year. The company has a trailing four-quarter earnings surprise of roughly 33.3%, on average. USAP shares are up around 66% in a year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
BHP Group (BHP) FY23 Earnings Dip Y/Y on Low Prices
BHP Group (BHP - Free Report) reported underlying attributable profit from continuing operations of $13.4 billion for fiscal 2023 (ended Jun 30, 2023). The figure indicated a year-over-year slump of 37% mainly due to lower prices of iron ore, copper prices and metallurgical coal, as well as inflated costs (labor, diesel and electricity).
Underlying earnings per share came in at $2.65 compared with earnings of $4.71 per share in the prior-year period. Earnings per American Depositary Share (ADS) came in at $5.30 for fiscal 2023 compared with $8.42 in the previous fiscal. The figure was lower than the Zacks Consensus Estimate of $5.45. BHP’s each ADS represent two fully-paid ordinary shares.
In fiscal 2023, BHP’s attributable profit (for total operations) declined 58% year over year to $12.9 billion. The figure included an exceptional loss of $0.5 billion, which took into account the impact of the Samarco dam failure impacts and an exceptional loss related to the impact of Chilean tax reform. Attributable profit was $30.9 billion in fiscal 2022 (including an exceptional gain of $7.085 billion).
Revenues & Margin Performance
Revenues for fiscal 2023 totaled $53.8 billion, which beat the Zacks Consensus Estimate of $53.7 billion. The top line, however, indicated a 17% drop from the prior fiscal year’s revenues. The downfall was mainly due to significantly lower iron ore, metallurgical coal, and copper prices. Higher average realized prices for thermal coal and nickel somewhat dampened the impact. The miner had reported higher sales volumes for copper, iron ore and nickel supported by record production at Olympic Dam, Spence and Western Australia Iron Ore (WAIO).
The Iron ore segment’s revenues dropped 19% year over year to $24.8 billion and revenues in the Copper segment dipped 5% to $16 billion. The Coal segment’s revenues plunged 29.5% to $11 billion.
Underlying earnings before interest, taxes, depreciation and amortization (EBITDA) declined 31% from the prior fiscal to $28 billion in fiscal 2023. For the Iron ore segment, underlying EBITDA plunged 23% year on year to $16.7 billion and the Copper segment was down 22% to $6.65 billion. The Coal segment’s underlying EBITDA was around $5 billion, down 47% year over year.
Profit from operations in fiscal 2023 declined 33% year over year to $23 billion. Despite improved copper, iron ore and nickel sales volumes, and favorable exchange rates, lower prices across major commodities, and higher labor costs, diesel and electricity prices impacted BHP’s profits in fiscal 2023.
Balance Sheet & Cash Flow
Net operating cash flow for fiscal 2023 was $18.7 billion compared with $29.3 billion in fiscal 2022, mainly owning to lower profit from operations. BHP Group reported free cash flow of $5.6 billion in the fiscal year under review, marking a significant decline from $25 billion in fiscal 2022.
BHP’s cash and cash equivalents as of Jun 30, 2023, amounted to $12.4 billion compared with $17.2 billion as of Jun 30, 2022. Capital and exploration expenditure totaled $7.1 billion, down 6% from the prior fiscal year’s level.
As of the end of fiscal 2023, net debt was $11.2 billion, higher than $0.3 billion as of fiscal 2022 end. The increase was mainly attributed to the acquisition of Oz Minerals Ltd in May 2023 and the assumption of $1.1 bn of its interest-bearing liabilities.
BHP has budgeted $10 billion for capital and exploration expenditure in fiscal 2024 and fiscal 2025.
BHP’s board has announced a final dividend of 80 cents per share or a total of $4.1 billion. This translates to a payout ratio of 59%.
Update on Jansen Stage 1
BHP stated that the Jansen Stage 1 project in Canada is 26% complete and is on track for its first potash production in late 2026. The company has accelerated Stage 2 studies and a feasibility study is expected to be completed in fiscal 2024.
FY24 Production & Unit Cost Guidance
BHP’s iron ore production guidance for fiscal 2024 is 254-264.5 Mt. WAIO's production is expected to be between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).
BHP expects copper production within 1,720-1,910 kt in fiscal 2024. Production guidance for metallurgical coal is 28 -31 Mt. The production guidance for energy coal is 13-15 Mt. Nickel production is expected to be between 77 kt and 87 kt.
Unit cost guidance for Western Australia Iron Ore is $17.40-$18.90 per ton. Escondida unit cost is estimated to be $1.40-$1.70 per pound. Spence unit costs are expected to range between $2.00 per pound and $2.30 per pound. BMA unit cost is expected to be between $95 per ton and $105 per ton.
Price Performance
BHP Group’s shares have fallen 4.4% over the past year compared with the industry’s decline of 6.6%.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
BHP Group currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Carpenter Technology Corporation (CRS - Free Report) , PPG Industries, Inc. (PPG - Free Report) and Universal Stainless & Alloy Products, Inc. (USAP - Free Report) . CRS sports a Zacks Rank #1 (Strong Buy) at present, and PPG and BG carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has an average trailing four-quarter earnings surprise of 10%. The Zacks Consensus Estimate for CRS’s fiscal 2024 earnings is pegged at $3.23 per share. The consensus estimate for fiscal 2024 earnings has moved 12% north in the past 60 days. Its shares have gained 56% in the last year.
The Zacks Consensus Estimate for PPG Industries’ fiscal 2023 earnings per share is pegged at $7.47, indicating growth of 23.5% from the prior-year actual. Earnings estimates have moved 3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 7.3%. PPG’s shares have gained 9% in the past year.
Universal Stainless & Alloy Products has a projected earnings growth rate of 160.8% for the current year. The company has a trailing four-quarter earnings surprise of roughly 33.3%, on average. USAP shares are up around 66% in a year.