BHP figures hit by inflation and weak commodity costs

BHP blamed inflation and weak commodity costs for decrease income within the second half of final yr, however stated ‘strengthening exercise’ in China gave room for optimism for the approaching yr.

The Australian miner’s income fell 16% to $25.7 billion and attributable revenue fell 32% within the six months to December 31 in comparison with the identical interval a yr earlier.

“Commodity costs are falling – it is a cyclical trade in any case,” chief govt Mike Henry instructed the Monetary Instances. “However the underlying efficiency of the enterprise is admittedly sturdy,” he added, citing elevated copper manufacturing for instance.

Inflation added about $1 billion to its prices as a consequence of elements corresponding to rising diesel costs.

On the identical time, costs for iron ore, which usually accounts for greater than half of BHP’s income, had been down about 25% within the interval from a yr earlier.

Inflation and labor shortages have pushed the worth of Western Australian iron ore mining as much as $18.30 a tonne from $16.15 in 2021.

Nonetheless, the corporate was optimistic about its outlook for China, declaring boosting exercise there now that the pandemic restrictions had ended.

Demand from China and India will act as “stabilizing counterweights” to the slowdown in the USA and Europe, Henry stated.

“It will likely be one other yr of a billion tonnes extra, for Chinese language metal manufacturing, probably a rise from final yr,” he added.

Iron ore costs have risen practically 30% since November as Chinese language factories started to restock and exercise resumed.

Henry additionally welcomed current information that China had eased an unofficial ban on Australian coal imports. “We’re very inspired by the improved enterprise relationship,” he stated, including that BHP was “prepared to have interaction with Chinese language prospects.”

BHP introduced a dividend of $0.90 per share, or $4.6 billion, the fifth-highest semi-annual dividend in its 138-year historical past.