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Date : 24/02/2023

BHP Group Ltd (ASX: BHP) shares Drop after slashing Dividends in the First Half of 2023

BHP Group Ltd (ASX: BHP) is an Australian multinational mining, metals and petroleum company headquartered in Melbourne, Australia. It is one of the largest mining companies in the world and operates in more than 90 locations globally.

BHP was founded in 1851 and has since grown to become one of the world’s largest diversified resources companies. The company’s operations include mining iron ore, coal, copper, nickel, zinc, oil and gas, and other minerals. BHP has a significant presence in Australia, as well as in other countries, including Chile, Peru, the United States, and Canada.

BHP shares are publicly traded on the Australian Securities Exchange (ASX) and the London Stock Exchange (LSE). The company is also a constituent of the FTSE 100 Index and the S&P/ASX 50 Index. BHP Group Ltd is known for its strong financial performance and commitment to sustainability and has been recognized as one of the world’s most responsible and sustainable companies by various rating agencies.

ASX: BHP 1H23 Results

BHP shares are currently trading at $48.30 and have a market cap of 244.68 Billion AUD. The BHP stock slightly declined when it dropped results for the first half of 2023.

Here’s more of ASX-BHP shares new updates & analysis:

  1. BHP Group Ltd had a 16% drop in revenues to US$25.7 million.
  2. The company’s total operations caused its profit to drop by 32% to $6.46 billion.
  3. The company had a 32% drop in earnings per share (EPS) to $1.275.
  4. BHP’s net operating cash flow fell 41% to US$6.77 billion.
  5. Net debt rose by 13% to $US6.9 billion.
  6. Interim dividends fell 40% to US$0.90 per share, reflecting a 69% payout ratio.

BHP: First-half overview

BHP announced its revenue dropped by 16% to $25,713 million in the first half of 2023. The decrease is due to weaker coal, thermal coal, and nickel prices offsetting the decrease in iron ore, copper, and hard-coking coal prices.

BHP’s underlying EBITDA fell by 28% to US$13,230 million in the most recent quarter. The decrease in copper and iron ore prices significantly impacted the miner’s bottom line.

As a result, the firm saw a 31.4% drop in its iron ore underlying EBITDA to US$7,641 million. Copper, BHP’s second-largest business unit, also saw a decrease in underlying EBITDA of 34.1% to $2,814 million.

Despite worse profitability, the BHP board decided to pay an interim dividend of 90 US cents per BHP share. This is the same as a payout ratio of 69% and a total return of US$4.6 billion.

BHP: CEO’ Remarks

Mike Henry, CEO of BHP, was satisfied with the performance. In his opinion,

BHP declared a first-half dividend of 90 US cents per share today due to the company’s successful operations. We met or exceeded expectations on the output front for the half, with Western Australia Iron Ore achieving yet another record half. As it has been for some time, BHP Group has the lowest production costs of any significant iron ore producer worldwide. Strong advancement was made in the execution of our plan, which included the creation of growth opportunities.

The rainy weather in our coal assets affected production and unit costs, and it took a lot of work to find enough workers. After inventory accumulation during last year’s smelter repair, the scheduled draw-down at Olympic Dam is one example of how inventory movements throughout the half added to expenses. By updated projections, unit prices are projected to decrease in the second half due to these variables easing.

BHP: Outlook

BHP’s full-year production forecast stays intact, which is fantastic.

Moreover, Henry is optimistic about BHP mining prospects in the second half, partly because of China’s reopening. He continues that our confidence in the demand forecast for the second half of FY23 and FY24 is based on the expectation that recent policy choices in China would lead to increased economic activity there. In the face of a continuing downturn in global commerce & the economies of the United States, Japan, and Europe, domestic demand in China and India will serve as stabilizing counterweights. In light of the projected population increase, improving standards of living, and the metals-intensive nature of the energy transition, demand for our commodities, particularly those used in steel production, should continue to rise over the long term.

Conclusion

Are the BHP Group shares on the to hold or to buy list?

After the news of slashing dividends in the first half of 2023, BHP Group Ltd (ASX: BHP) shares drop and continues to worry stockholders.

BHP shares are a good resource, but the current decline in the revenue and Dividend raises concerns for fans of the BHP stock. The company provides a detailed outlook of its plans for FY23 and FY24. It can gain BHP stock investors’ trust if it succeeds in achieving those goals.

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