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BHP Group (BHP) Reports Y/Y Flat Earnings in First Half of FY24
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BHP Group (BHP - Free Report) reported underlying attributable profit from continuing operations of $6.6 billion in the first half of fiscal 2024 (ended Dec 31, 2023). The figure was in line with the year-ago comparable period as gains from higher revenues (reflecting improved iron ore and copper prices) and disciplined cost control were offset by higher input and labor costs.
Underlying earnings per share were $1.29 in the first half of fiscal 2024 compared with $1.30 in the prior-year period. Earnings per American Depositary Share (ADS) were $2.59 for the first half of fiscal 2024 compared with $2.60 in the first half of the previous fiscal. BHP’s ADS represents two fully-paid ordinary shares.
In the period under discussion, BHP’s attributable profit (for total operations) slumped 86% year over year to $927 million. The figure included an exceptional loss of around $5.6 billion. This included a $2.47 billion impairment of the carrying value of the Nickel West operations and West Musgrave project (Western Australia Nickel) and a $3.17 billion charge related to the Samarco dam failure. BHP had reported an attributable profit of $6.5 billion in the first half of fiscal 2023.
BHP Group Limited Sponsored ADR Price, Consensus and EPS Surprise
Revenues in the first half of fiscal 2024 totaled $27.2 billion, up 6% year over year. Results benefited from higher iron ore and copper prices and contribution from new mines, Prominent Hill and Carrapateena. These were partially offset by weaker results at New South Wales Energy Coal (NSWEC) owing to a 65% plunge in realized prices that offset a 43% improvement in sales volumes.
The Iron ore segment’s revenues were up 18.9% year over year to $14.1 billion driven by higher iron ore prices. The Copper segment reported revenues of $7.7 billion, up 18.5% year over year on higher copper prices. Revenues in the Coal segment slumped 32% year over year to $3.8 billion, reflecting lower prices.
Profit from operations was $4.8 billion in the first half of fiscal 2024compared with $10.8 billion in the last fiscal year’s comparable period. The 56% downfall was mainly attributed to higher input and labor costs.
Underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) from continuing operations improved 5% year over year to $13.9 billion. The underlying EBITDA margin was 53.3% compared with 53.5% in last year’s comparable period.
For the Iron ore segment underlying EBITDA increased 26.5% year on year to $9.7 billion and the Copper segment’s underlying EBITDA was up 23% to $3.5 billion. The Coal segment’s underlying EBITDA was $0.97 billion, which marked a substantial drop from $2.6 billion in the first half of fiscal 2022.
Financial Position
As of Dec 31, 2023, BHP Group had cash and cash equivalents of $10.3 billion, down from $12.4 billion as of Jun 30, 2023. In the half year ended Dec 31, 2023, the company generated $8.9 billion of net operating cash flow, higher than the $6.8 billion recorded in the prior-year comparable period. The improved results were attributed to higher underlying EBITDA and lower income tax and royalty-related taxation payments, partially offset by an increase in working capital. Free cash flow for the period under discussion was $3.8 billion.
Net debt was $12.6 billion at the end of the first half of fiscal 2024, higher than $11.2 billion at the beginning of the period. Despite the increase, the figure remains within BHP’s targeted range of between $5 and $15 billion.
BHP’s board has announced an interim dividend of 72 cents per share, which is equivalent to a total payout of $3.6 billion (payout ratio of 56%).
Capital and exploration spending was $4.7 billion in the first half of fiscal 2024, which was 57% higher year over year reflecting the company’s stepped-up investment in growth. This includes expenditure for Jansen and Copper South Australia. BHP has earmarked capital and exploration expenditure of $10 billion for both fiscal 2024 and fiscal 2025 and $11 billion per year thereafter.
FY24 Production 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 had been earlier lowered to 23-25 Mt from the previously stated 28 -31 Mt. The company expects energy coal production to be near the upper end of its range of 13Mt to 15 Mt. Nickel production is expected to be between 77 kt and 87 kt.
Cost Guidance for FY24
Unit cost guidance for WAIO 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 $110 per ton and $116 per ton. This is higher than the company’s previous projection in the range of $95 per ton and $105 per ton.
Price Performance
BHP Group's shares have fallen 9.4% over the past year compared with the industry’s 0.7% decline.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 33.8% in a year.
The Zacks Consensus Estimate for Ecolab’s 2024 earnings is pegged at $6.39 per share, indicating an increase of 22.7% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.7%. ECL shares have gained 36% in a year.
Alpha Metallurgical Resources has an average trailing four-quarter earnings surprise of 9.6%. The Zacks Consensus Estimate for AMR’s 2024 earnings is pegged at $43.05 per share. Earnings estimates have moved 48% north in the past 60 days. AMR shares rallied 122% last year.
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BHP Group (BHP) Reports Y/Y Flat Earnings in First Half of FY24
BHP Group (BHP - Free Report) reported underlying attributable profit from continuing operations of $6.6 billion in the first half of fiscal 2024 (ended Dec 31, 2023). The figure was in line with the year-ago comparable period as gains from higher revenues (reflecting improved iron ore and copper prices) and disciplined cost control were offset by higher input and labor costs.
Underlying earnings per share were $1.29 in the first half of fiscal 2024 compared with $1.30 in the prior-year period. Earnings per American Depositary Share (ADS) were $2.59 for the first half of fiscal 2024 compared with $2.60 in the first half of the previous fiscal. BHP’s ADS represents two fully-paid ordinary shares.
In the period under discussion, BHP’s attributable profit (for total operations) slumped 86% year over year to $927 million. The figure included an exceptional loss of around $5.6 billion. This included a $2.47 billion impairment of the carrying value of the Nickel West operations and West Musgrave project (Western Australia Nickel) and a $3.17 billion charge related to the Samarco dam failure. BHP had reported an attributable profit of $6.5 billion in the first half of fiscal 2023.
BHP Group Limited Sponsored ADR Price, Consensus and EPS Surprise
BHP Group Limited Sponsored ADR price-consensus-eps-surprise-chart | BHP Group Limited Sponsored ADR Quote
Revenues in the first half of fiscal 2024 totaled $27.2 billion, up 6% year over year. Results benefited from higher iron ore and copper prices and contribution from new mines, Prominent Hill and Carrapateena. These were partially offset by weaker results at New South Wales Energy Coal (NSWEC) owing to a 65% plunge in realized prices that offset a 43% improvement in sales volumes.
The Iron ore segment’s revenues were up 18.9% year over year to $14.1 billion driven by higher iron ore prices. The Copper segment reported revenues of $7.7 billion, up 18.5% year over year on higher copper prices. Revenues in the Coal segment slumped 32% year over year to $3.8 billion, reflecting lower prices.
Profit from operations was $4.8 billion in the first half of fiscal 2024compared with $10.8 billion in the last fiscal year’s comparable period. The 56% downfall was mainly attributed to higher input and labor costs.
Underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) from continuing operations improved 5% year over year to $13.9 billion. The underlying EBITDA margin was 53.3% compared with 53.5% in last year’s comparable period.
For the Iron ore segment underlying EBITDA increased 26.5% year on year to $9.7 billion and the Copper segment’s underlying EBITDA was up 23% to $3.5 billion. The Coal segment’s underlying EBITDA was $0.97 billion, which marked a substantial drop from $2.6 billion in the first half of fiscal 2022.
Financial Position
As of Dec 31, 2023, BHP Group had cash and cash equivalents of $10.3 billion, down from $12.4 billion as of Jun 30, 2023. In the half year ended Dec 31, 2023, the company generated $8.9 billion of net operating cash flow, higher than the $6.8 billion recorded in the prior-year comparable period. The improved results were attributed to higher underlying EBITDA and lower income tax and royalty-related taxation payments, partially offset by an increase in working capital. Free cash flow for the period under discussion was $3.8 billion.
Net debt was $12.6 billion at the end of the first half of fiscal 2024, higher than $11.2 billion at the beginning of the period. Despite the increase, the figure remains within BHP’s targeted range of between $5 and $15 billion.
BHP’s board has announced an interim dividend of 72 cents per share, which is equivalent to a total payout of $3.6 billion (payout ratio of 56%).
Capital and exploration spending was $4.7 billion in the first half of fiscal 2024, which was 57% higher year over year reflecting the company’s stepped-up investment in growth. This includes expenditure for Jansen and Copper South Australia. BHP has earmarked capital and exploration expenditure of $10 billion for both fiscal 2024 and fiscal 2025 and $11 billion per year thereafter.
FY24 Production 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 had been earlier lowered to 23-25 Mt from the previously stated 28 -31 Mt. The company expects energy coal production to be near the upper end of its range of 13Mt to 15 Mt. Nickel production is expected to be between 77 kt and 87 kt.
Cost Guidance for FY24
Unit cost guidance for WAIO 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 $110 per ton and $116 per ton. This is higher than the company’s previous projection in the range of $95 per ton and $105 per ton.
Price Performance
BHP Group's shares have fallen 9.4% over the past year compared with the industry’s 0.7% decline.
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Zacks Rank & Stocks to Consider
BHP currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Carpenter Technology Corporation (CRS - Free Report) , Ecolab Inc. (ECL - Free Report) and Alpha Metallurgical Resources, Inc. (AMR - Free Report) . Each of these companies currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 33.8% in a year.
The Zacks Consensus Estimate for Ecolab’s 2024 earnings is pegged at $6.39 per share, indicating an increase of 22.7% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.7%. ECL shares have gained 36% in a year.
Alpha Metallurgical Resources has an average trailing four-quarter earnings surprise of 9.6%. The Zacks Consensus Estimate for AMR’s 2024 earnings is pegged at $43.05 per share. Earnings estimates have moved 48% north in the past 60 days. AMR shares rallied 122% last year.