SYDNEY: BHP reported a return to profit on Tuesday as strong commodity prices helped it bounce back from a large loss last year, with the mining giant also flagging the sale of its US shale assets.
The world’s largest miner recorded an annual net profit of $5.89 billion for the year to June 30, just short of forecasts, after a $6.39 billion loss in the previous period.
“Over the last five years, we have laid the foundations to significantly improve our return on capital and grow long-term shareholder value,” outgoing BHP chairman Jac Nasser said.
Underlying profit, which strips out one-off writedowns, was also below forecasts at $6.73 billion.
The Anglo-Australian firm rewarded shareholders with a final dividend of 43 cents, well up from 14 cents last year.
BHP said it had determined its onshore US shale operations were “non-core” to the business and it was “actively pursuing options to exit these assets for value”.
The announcement follows a push by New York-based Elliott Advisors, a significant shareholder in the company, for BHP to restructure the business, including spinning off its US oil and gas operations.
BHP had previously rejected Elliott’s proposals in April.
BHP, like other miners, has benefited from the rebound in key metals prices after a slump caused by supply gluts and a slowdown in growth in the world’s top commodities consumer China.
The price headwinds in recent years had led BHP to tighten its belt, and on Tuesday it said it had achieved productivity gains and cost cuts of $1.3 billion for the reporting period.
“The broad result was under consensus, so a little disappointing, but certainly the absolute numbers compared to 2016 are very good,” Fat Prophets resources analyst David Lennox said.
Shares in BHP rose 1.36 per cent to Aus$26.05 in Sydney on Tuesday, reflecting investors’ support of plans to exit the US shale business, CMC Markets’ chief market analyst Ric Spooner wrote in a note.
“The announcement... has been well received. This is a positive indication for BHP’s future under the chairmanship of Ken MacKenzie who had an excellent record of creating shareholder value at Amcor,” Spooner said. MacKenzie, who joined BHP as a non-executive director last year and was the former chief of Australian packaging giant Amcor, was named as Nasser’s successor in June. — AFP
Oman Observer is now on the WhatsApp channel. Click here
