BHP shares dip as profits near a decade low; dividend cut

Australia’s biggest stock, miner BHP (ASX:BHP) has seen its profits hit an 8-year-low on low nickel prices and a soft China.

BHP shares were down -1.00 per cent at 10.30am AEDT on Tuesday according to CBOE live pricing.

Profits tumbled 86 per cent to US$927 million – despite revenue climbing six per cent to US$27.3 billion.

The company has also cut its dividend for 1HFY24 to US72 cents vs US90 cents pcp – however, by some estimates, this cut wasn’t as dramatic as anticipated.

Still, SAXO Asia Pacific Senior Trader Junvum Kim tied the lower dividend and inflationary pressures together.

“The interim dividend of USD 0.72 is the lowest since 2020, as the company battles lagged inflationary pressures on labour and unit costs,” Kim said.

Despite BHP’s Tuesday numbers obviously screaming red flags, the company described its position as “strong” and mentioned “disciplined cost control.”

You’d surely hope so in the current climate.

“The period also had its challenges, with adjustments relating to Nickel West, West Musgrave and Samarco offsetting an otherwise solid operational performance and overall healthy commodity prices,” BHP CEO Mike Henry wrote.

Iron ore prices do remain near the US$130/tn mark for the time being after experiencing some weakness in recent history, but, pretty much every other commodity is tanking.

Clearly, the nickel price isn’t very healthy at all.

In fact, nickel prices are so bad, BHP had to warn the market last week of an A$5B writedown in its nickel assets.

So, if you wanted to ask “what the hell is Mike Henry even talking about?,” well, you’d probably be forgiven by most.

Then again, it’s BHP, after all. It’ll probably be fine in the long run – that’s where Henry’s view on overarching mega-trends are probably more reliable.

Notably, BHP referred to India as a “bright spot” – its share markets overtook the value of China’s earlier this year and the country’s economy overtook the UK’s in recent history to rank world #4.

BHP shares last traded at $46.04.