The Classy Investors

  /  Stock   /  BHP profit hit by pandemic, warns growth cooling outside China

BHP profit hit by pandemic, warns growth cooling outside China

imageStock Markets12 minutes ago (Aug 17, 2020 09:30PM ET)


(C) Reuters. A tonne of nickel powder made by BHP Group sits in a warehouse at its Nickel West division, south of Perth


MELBOURNE (Reuters) – BHP Group (NYSE:BHP) on Tuesday said it expects most major world economies except China to bear the brunt of a coronavirus-led downturn this year, reporting a more than 4% drop in annual profit that missed analysts’ estimates.

While miners have seen green shoots emerge from an economic pickup in the world’s top metals user, as well as a boost in infrastructure spending, the risk of new virus outbreaks around the world threatens to undermine growth, BHP said.

The warning came as BHP reported underlying profit attributable from continuing operations for the year ended June 30 fell to $9.06 billion – below estimates of $9.42 billion, according to Refinitiv IBES data.

“With the exception of China, the world’s major economies will contract during the 2020 calendar year as a result of the COVID-19 pandemic,” Chief Executive Officer Mike Henry said in a statement.

Henry added that the potential for fresh waves of coronavirus infections in key markets was weighing on the demand outlook for 2021 at the world’s largest listed miner.

“Not too many surprises in there,” said portfolio manager Andy Forster of Argo Investments in Sydney. “Maybe a touch under expected, and the dividend a bit below.”

Shares fell by as much as 1.3% before rebounding to be down 0.9% at A$39.48, compared with a 0.7% rise in the broader index

The profit miss was in contrast to rival Rio Tinto (NYSE:RIO), which last month rode its iron ore-rich portfolio to beat profit estimates and touted “a very steep V-shaped” recovery in China.

It declared a final dividend of 55 cents per share, down from 78 cents a year earlier, but still in line with its payout ratio.

BHP also said it was reshaping its portfolio for a decarbonising world, by seeking to divest its thermal coal operations.

It will look at options including a demerger or sale of the thermal coal assets, which include 80% of the BHP Mitsui Coal joint venture, the New South Wales Energy Coal operations and one-third of the Cerrejon mine in Colombia.

It also said it was looking to sell off its Bass Strait oil and gas stake.

BHP narrowly misses expected profit, warns of slowing growth outside China

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.