Company Interview / BHP upbeat despite lowest profit since pandemic

Key Points:

BHP (ASX:BHP) reports lowest profit since 2020 due to iron ore price pressure and China demand Record copper production boosts proportion of group earnings and drives increased investment focus Flexible capital expenditure and strong balance sheet underpin growth strategy and shareholder returns - Structural demand growth in India and emerging uses for copper in artificial intelligence anticipated

BHP’s underlying profit has dropped 26% to $10.16 billion USD, marking the company’s weakest performance since 2020 amid iron ore price declines and softening demand from China.

CFO of BHP Vandita Pant highlights that despite the lower profit, operational performance remains robust, with record iron ore and copper production, and industry-leading margins at 53%. The final dividend has been set at 60 US cents per share, down from previous years but still exceeding the minimum payout ratio of 50%. The company maintains a strong balance sheet with $12.9 billion in net debt, providing flexibility and resilience in volatile markets.

Pant states that cost discipline across all major assets—especially in iron ore and copper—has helped to lower unit costs by 4.7% from last year and drive margin strength. Copper has become an increasingly significant contributor, now accounting for 45% of BHP’s EBITDA, with volumes rising 28% over three years. Capital expenditure is forecast to reach $11 billion USD over the next two years, with a focus on organic growth in copper and potash, as well as ongoing investment in projects like Jansen and Vicuna.

Demand from India is expected to be a key structural growth driver, while commodity exposure remains resilient despite economic volatility and trade protectionism. Pant sees the growth in artificial intelligence driving additional demand for key metals such as copper, supporting BHP’s forward outlook.