BHP Group records lowest annual profit in three years – Kommersant

The world’s largest mining company BHP Group has published results fiscal year ending 30 June. BHP’s net income fell 37% to $13.42 billion, slightly below analysts’ forecasts and the lowest for the company since 2020. EBITDA fell from $40.6 billion to $28 billion, revenue fell from $65 billion to $53 billion, net debt increased from $333 million to $11 billion. The company cut its dividend almost in half, to $1.7 per share.

In its earnings report, BHP warned that its performance is highly dependent on the recovery of the real estate sector in China and the extent of steel production cuts by Chinese companies. BHP supplies significant amounts of iron ore to China, from which steel is used in construction. Meanwhile, China is currently facing serious problems in both sectors and, in addition, high youth unemployment and deflation.

The company’s performance was also negatively affected by falling commodity prices, especially iron ore, which provides BHP with nearly 60% of its operating income. And while BHP increased iron ore production for the year from 253 million tons to 257 million tons, the average selling price fell from $113.1 per metric ton to $92.54. Prices also fell for copper and coking coal, which are also important for BHP’s performance. And the cost of diesel fuel, electricity and labor, by contrast, rose due to inflation.

In its reporting, BHP noted that in the short term, “the situation in developed countries remains uncertain, but we expect China and India to remain relative sources of stability for commodity demand.” Demand from China remains “fairly strong” thanks to the strong development of the automotive industry and green technologies there.

Alena Miklashevskaya