BHP has cut its annual dividend to an eight-year low after reporting its worst profit since 2020.
The miner posted a 26% slump in underlying attributable profit to $10.15bn, primarily driven by weaker iron ore and coal prices.
On top of commodity price pressures, shareholder returns were further squeezed by an increased capital and exploration expenditure bill, which rose 6% year on year to $9.8bn.
The group outlined plans to boost capital and exploration spending to $11bn for each of the next two years and then $10bn on average between financial year 2028 and financial year 2030, as it focuses on growing copper output and bringing its Canadian Jansen potash project online by mid-2027.
“We are optimising our growth programme at Escondida in Chile, Copper South Australia has the potential to double production through phased expansions and the Vicuña project in Argentina is advancing towards a multi-decade copper opportunity,” said BHP CEO Mike Henry.
The group declared a dividend of 60c per share, reflecting a 60% payout ratio, well below the 90% ratio returned to shareholders in the 2021 financial year.
Total dividends for the year were at $1.10 per share, the weakest payout since the 2017 financial year, when it distributed 83c per share.
The Australian miner reported headline earnings per share (HEPS) down 7% at 182.4c as revenue slipped 8% to $4.4bn, thanks to falling iron ore and coal prices.
Coal prices have slumped by nearly a quarter in the past year as trade wars, policy uncertainty and investment in renewables weigh on demand.
Meanwhile, US tariffs and retaliatory Chinese tariffs have resulted in uncertain and volatile iron ore markets, with prices up about 3.59% in the past 12 months.
Unlike SA’s platinum group metals, coal, gold, manganese and chrome, iron ore was included in US President Donald Trump’s sweeping tariffs in April, leaving miners such as BHP caught in the crossfire.
Copper prices are expected to rise in the coming years as the metal’s dwindling supply works its way into the market, with demand expected to rise 40% by 2040.
After rallying earlier in the year amid tightening trade restrictions, copper’s price has plunged more than 20% in the past month as traders assess the implications of Trump’s 50% tariff on copper imports, announced in early July.
BHP was hopeful that Chinese policy shifts and the expansion of Asia’s blast furnace capacity would support steelmaking coal prices in the coming year, while iron ore prices may be supported by rising infrastructure investment and manufacturing activity in China.
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