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BHP Group (BHP) Earnings Up Y/Y in First Half of Fiscal 2021
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BHP Group (BHP - Free Report) reported underlying attributable profit of $6.04 billion in the first half of fiscal 2021 (ended Dec 31, 2020) up 16% year over year, reflecting higher prices and strong operational performance. Underlying earnings per share came in at $1.19 compared with the $1.03 earned in the prior-year period. Earnings per American Depositary Share (ADS) came in at $2.39 for the reported period. Notably, BHP’s each American Depositary Shares represents two fully-paid ordinary shares.
Including an exceptional loss of $2.2 billion that consisted of impairments at its New South Wales Energy Coal business, COVID-19 costs as well as impact of the Samarco dam failure, BHP Group’s attributable profit came in at $3.9 billion in the six-month period ended Dec 31, 2020. The figure underlines a 20% slump from the prior year.
Revenues for the first half of fiscal 2021 totaled $25.6 billion, up 15% year on year. The Iron ore segment’s revenues soared 36% year over year to $14 billion on higher prices and record production achieved at Western Australia Iron Ore (WAIO). Revenues in the Copper segment rose 26% to $7 billion, reflecting higher prices and record average concentrator throughput at Escondida. Revenues in the Petroleum and Coal segments were both down 34% year over year to $1.6 billion and $2 billion, respectively, on lower prices and dismal volumes.
Underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 21.5%, year over year, to $14.7 billion. This was driven by higher iron ore and copper prices, record iron-ore production volumes and concentrator throughput at Escondida, benefits from cost-reduction actions, softer fuel and energy costs, and lower deferred stripping depletion at Escondida. However, unfavorable impacts of stronger Australian dollar, planned maintenance, natural field decline at petroleum, copper grade decline, adverse weather and inflation played spoilsports.
Underlying EBITDA was up 44% year on year to $10.2 billion for the Iron ore segment and 59% to $3.7 billion for the Copper segment. The Petroleum segment suffered a 50% drop in underlying EBITDA to $789 million. The Coal segment’s underlying EBITDA incurred a loss of $201 million as against the positive $898 million witnessed last year.
Financial Position
As of Dec 31, 2020, BHP Group had cash and cash equivalents of $9.3 billion, down from $13.4 billion as of Jun 30, 2020. In the half year ended Dec 31, 2020, the company generated $9.4 billion of net operating cash flow compared with the $7.4 billion registered in the prior year’s comparable period. Net debt was $11.8 billion as of Dec 31, 2020, lower than $12 billion as of Jun 30, 2020. BHP’s board has announced to pay a record interim dividend of $1.01 per share or a total of $5.1 billion. This translates to a payout ratio of 85%.
Fiscal 2021 Cost Guidance
Conventional Petroleum unit cost is projected at $11-$12 per barrels of oil equivalent (boe). Escondida unit cost is estimated to be $1.00-$1.25 per pound. The Queensland Coal unit cost for the fiscal is expected at $69-$75 per ton. WAIO unit cost guidance is projected at $13-$14 per ton.
Fiscal 2021 Production Guidance
BHP Group anticipates producing between 245 and 255 Mt of iron ore. The petroleum production guidance is 95-102 million barrels of oil equivalent (MMboe) and copper production is projected to be between 1,510 kt and 1,645 kt. Production guidance of Metallurgical coal for fiscal 2021 remains at 40-44 M and for energy coal, at 21-23 Mt. Nickel production is expected between 85 kt and 95 kt.
In the ongoing year, strong demand in China and ongoing recovery in the rest of world will drive steel demand and consequently for iron ore. Copper prices have also been gaining on the recent pick-up in industrial activities, demand in China and supply concerns in Chile. Nickel prices have also been gaining on supply uncertainty and solid demand. The roll-out of vaccines instills optimism regarding the overall global economy for the near term.
Price Performance
BHP Group's shares have gained 21.4% over the past six months compared with the industry’s rally of 17.9%.
Other top-ranked stocks in the basic materials space include Impala Platinum Holdings Limited (IMPUY - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and Cabot Corporation (CBT - Free Report) . While Impala Platinum currently sports a Zacks Rank #1, Fortescue Metals and Cabot Corporation carry a Zacks Rank of 2.
Impala Platinum has an expected earnings growth rate of 189.4% for the current fiscal year. The company’s shares have rallied around 59% in the past six months.
Fortescue has a projected earnings growth rate of 78.4% for the current fiscal year. The company’s shares have surged roughly 44% in six months’ time.
Cabot Corporation has an estimated earnings growth rate of 82.7% for the ongoing year. Shares of the company have gained nearly 22% over the past six months.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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BHP Group (BHP) Earnings Up Y/Y in First Half of Fiscal 2021
BHP Group (BHP - Free Report) reported underlying attributable profit of $6.04 billion in the first half of fiscal 2021 (ended Dec 31, 2020) up 16% year over year, reflecting higher prices and strong operational performance. Underlying earnings per share came in at $1.19 compared with the $1.03 earned in the prior-year period. Earnings per American Depositary Share (ADS) came in at $2.39 for the reported period. Notably, BHP’s each American Depositary Shares represents two fully-paid ordinary shares.
Including an exceptional loss of $2.2 billion that consisted of impairments at its New South Wales Energy Coal business, COVID-19 costs as well as impact of the Samarco dam failure, BHP Group’s attributable profit came in at $3.9 billion in the six-month period ended Dec 31, 2020. The figure underlines a 20% slump from the prior year.
Revenues for the first half of fiscal 2021 totaled $25.6 billion, up 15% year on year. The Iron ore segment’s revenues soared 36% year over year to $14 billion on higher prices and record production achieved at Western Australia Iron Ore (WAIO). Revenues in the Copper segment rose 26% to $7 billion, reflecting higher prices and record average concentrator throughput at Escondida. Revenues in the Petroleum and Coal segments were both down 34% year over year to $1.6 billion and $2 billion, respectively, on lower prices and dismal volumes.
Underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 21.5%, year over year, to $14.7 billion. This was driven by higher iron ore and copper prices, record iron-ore production volumes and concentrator throughput at Escondida, benefits from cost-reduction actions, softer fuel and energy costs, and lower deferred stripping depletion at Escondida. However, unfavorable impacts of stronger Australian dollar, planned maintenance, natural field decline at petroleum, copper grade decline, adverse weather and inflation played spoilsports.
Underlying EBITDA was up 44% year on year to $10.2 billion for the Iron ore segment and 59% to $3.7 billion for the Copper segment. The Petroleum segment suffered a 50% drop in underlying EBITDA to $789 million. The Coal segment’s underlying EBITDA incurred a loss of $201 million as against the positive $898 million witnessed last year.
Financial Position
As of Dec 31, 2020, BHP Group had cash and cash equivalents of $9.3 billion, down from $13.4 billion as of Jun 30, 2020. In the half year ended Dec 31, 2020, the company generated $9.4 billion of net operating cash flow compared with the $7.4 billion registered in the prior year’s comparable period. Net debt was $11.8 billion as of Dec 31, 2020, lower than $12 billion as of Jun 30, 2020. BHP’s board has announced to pay a record interim dividend of $1.01 per share or a total of $5.1 billion. This translates to a payout ratio of 85%.
Fiscal 2021 Cost Guidance
Conventional Petroleum unit cost is projected at $11-$12 per barrels of oil equivalent (boe). Escondida unit cost is estimated to be $1.00-$1.25 per pound. The Queensland Coal unit cost for the fiscal is expected at $69-$75 per ton. WAIO unit cost guidance is projected at $13-$14 per ton.
Fiscal 2021 Production Guidance
BHP Group anticipates producing between 245 and 255 Mt of iron ore. The petroleum production guidance is 95-102 million barrels of oil equivalent (MMboe) and copper production is projected to be between 1,510 kt and 1,645 kt. Production guidance of Metallurgical coal for fiscal 2021 remains at 40-44 M and for energy coal, at 21-23 Mt. Nickel production is expected between 85 kt and 95 kt.
In the ongoing year, strong demand in China and ongoing recovery in the rest of world will drive steel demand and consequently for iron ore. Copper prices have also been gaining on the recent pick-up in industrial activities, demand in China and supply concerns in Chile. Nickel prices have also been gaining on supply uncertainty and solid demand. The roll-out of vaccines instills optimism regarding the overall global economy for the near term.
Price Performance
BHP Group's shares have gained 21.4% over the past six months compared with the industry’s rally of 17.9%.
Zacks Rank & Other Stocks to Consider
BHP currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the basic materials space include Impala Platinum Holdings Limited (IMPUY - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and Cabot Corporation (CBT - Free Report) . While Impala Platinum currently sports a Zacks Rank #1, Fortescue Metals and Cabot Corporation carry a Zacks Rank of 2.
Impala Platinum has an expected earnings growth rate of 189.4% for the current fiscal year. The company’s shares have rallied around 59% in the past six months.
Fortescue has a projected earnings growth rate of 78.4% for the current fiscal year. The company’s shares have surged roughly 44% in six months’ time.
Cabot Corporation has an estimated earnings growth rate of 82.7% for the ongoing year. Shares of the company have gained nearly 22% over the past six months.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>