BHP reported stable operating performance, solid free cash flow generation and high margin in its latest quarterly report, including:
- Attributable profit of US$4.9 billion and Underlying attributable profit of US$5.2 billion up 39 per cent from the prior period.
- Profit from operations of US$8.3 billion and Underlying EBITDA of US$12.1 billion at a margin of 56 per cent, with production and unit costs at all our major assets on track to achieve full year guidance.
- Net operating cash flow of US$7.4 billion and free cash flow of US$3.7 billion reflects higher iron ore prices and a solid operating performance.
With regard to safety and sustainability, the company noted, “Safety is our top priority and social value underpins everything we do. There were no fatalities at our operated sites over the last 12 months. Social value is an essential precondition to shareholder value – new agreements for Escondida and Spence to transition towards 100 per cent renewable energy sources will reduce costs and CO2 emissions.”
BHP Chief Executive Officer Mike Henry said, “We delivered a strong set of half-year results, grounded in solid operational performance. Underlying EBITDA was up 15 per cent, to US$12 billion, and return on capital employed increased, to 19 per cent. With solid cash flow, the board announced an interim dividend of 65 US cents per share, our second highest on record. BHP is in good shape. We have passionate and committed people hungry to perform. We have brought together high quality assets in a simple portfolio that allows us to create value at scale. Our balance sheet is strong and we have embedded a Capital Allocation Framework which drives discipline and better decisions.
“From these strong foundations, we will build on our momentum to deliver exceptional performance,” Mr Henry said. “I intend for BHP to be unquestionably the industry’s best operator – safer, lower cost, more reliable and more productive – with our portfolio and capabilities fit for the future. We will be open to new ideas, more connected to those around us and more commercial in our thought and actions.
“Despite near term uncertainty – due to the coronavirus outbreak, trade policy and geopolitics – we remain convinced about the positive underlying fundamentals of our commodities. We see enormous potential to reliably deliver exceptional financial and operational performance, and to grow value and returns,” Mr Henry concluded.
*Article published in the April-June 2020 issue of The Asia Miner