Full-year revenue rose 15% to $58.8bn ($58.1bn expected), with underlying cash profit (EBITDA) rising 27% to $32.9bn ($32.4bn expected). Performance was driven by higher commodity prices and strong cost control, more than offsetting lower copper volumes.
Maintenance and growth capex rose 5% to $10.3bn, and free cash flow rose 83% to $9.8bn.
Net debt fell to $8.7bn, below the group’s $10-20bn target range. A final dividend of $0.99 per share was announced, taking the full-year dividend to $1.72.
Guidance for the coming year points to a 12% drop in copper production at the midpoint, with limited change to iron ore. Capex is expected around $11bn.
The shares were up 1.3% in early trading.
Our view
BHP enters the new financial year with strong momentum. Higher commodity prices and disciplined cost control helped lift profits, free cash flow reached nearly $10bn, and net debt fell below the group’s target range. Copper contributed more than half of earnings for the first time, underscoring progress in reshaping the portfolio. But commodity prices will remain an important driver of near-term performance.
The medium-term strategy increasingly centres on copper. BHP is already the world’s largest producer, and demand is expected to benefit from investment in power networks, electrification and data centres. Its growth pipeline spans Chile, Australia, Argentina and the US, with the potential to lift copper production by about 40% by 2035. We’re supportive of investing while the demand outlook is strong, but major mining projects require significant capital and carry execution risk.
However, near-term production is heading in the opposite direction. Copper output is expected to fall from 1.95Mt to 1.65-1.80Mt in the coming year, largely reflecting planned lower-grade ores at the Escondida mine. BHP is investing in a new concentrator to address that decline, with a potential final investment decision in 2027-2028. The project’s expected returns have improved, but estimated costs have also risen to $5.4-6.3bn.
Iron ore remains a major source of profit and cash. Western Australia Iron Ore delivered record production and shipments and maintained its position as the lowest-cost major producer for a seventh consecutive year. That cost advantage supports margins when prices weaken. BHP plans to lift annual production over the coming years. But Chinese steel production is expected to plateau for the rest of the decade, leaving a more subdued long-term demand backdrop.
Future investment is also weighted towards potash (fertiliser). Delays have been an issue, but Jansen Stage 1 is now 84% complete and remains on track for first production in mid-2027. Potash adds some welcome diversification because demand is tied to food production, rather than the industrial cycle that drives much of BHP’s existing portfolio. But the project still needs to move successfully through commissioning and ramp-up.
The balance sheet is in excellent shape, and strong cash generation leaves plenty of room to fund the growth pipeline and continue to reward shareholders. However, payouts are linked to profits, which in turn are tied to commodity prices, meaning the tides can shift quickly.
All in, BHP’s low-cost, high-margin assets, strong balance sheet and copper growth pipeline remain attractive. There are several long-term growth drivers in the mix, but lower near-term copper output, substantial investment requirements and exposure to volatile commodity prices create risks.
Environmental, social and governance (ESG) risk
Mining companies tend to come with relatively high ESG risk. Emissions, effluences and waste, and community relations are key risk drivers in this sector. Carbon emissions, resource use, health and safety, and bribery and corruption are also contributors to ESG risk.
According to Sustainalytics, BHP’s management of material ESG issues is strong.
BHP demonstrates strong ESG commitment with a dedicated board committee overseeing sustainability goals. They are notably aiming for a 40% female workforce by 2025. BHP is positioning itself for a low-carbon future by actively seeking out copper and nickel deposits, which are crucial metals for green technologies.
BHP recently settled with Brazilian authorities over a 2015 dam spill, bringing an end to most of the uncertainty - but there are still ongoing lawsuits in other regions to monitor. BHP still owns and operates a small thermal coal business, with plans to wind down operations by 2030.
BHP key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember that yields are variable and not a reliable indicator of future income. Keep in mind that key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.