BHP Group FY24 Earnings & Revenues Improve Y/Y on Higher Prices

BHP Group BHP reported a 2% year-over-year increase in underlying attributable profit from continuing operations at $13.7 billion for fiscal 2024 (ended June 30, 2024). The growth was attributed to higher prices and sales volumes in BHP's iron ore and copper operations, productivity initiatives, cost discipline and favorable raw material costs. This offset the impact of lower energy coal and nickel prices and higher labor costs on profits.

BHP's underlying earnings per share were $2.70 compared with $2.65 in fiscal 2023. Earnings per American Depositary Share were $5.39s, higher than $5.30 in the previous fiscal year. The metric missed the Zacks Consensus Estimate of $5.52. BHP's each ADS represents two fully-paid ordinary shares.

BHP's FY24 Revenues Up 3%

Revenues for fiscal 2024 totaled $55.7 billion, which beat the Zacks Consensus Estimate of $54 billion. The top line was 3.4% higher than the prior fiscal year. The improvement was due to higher prices and sales volumes for iron ore and copper compared with the prior fiscal.   This was offset by lower energy coal and nickel prices, and lower steelmaking coal volumes following the divestment of Blackwater and Daunia on April 2, 2024.

The Iron ore segment's revenues rose 13% year over year to around $28 billion and revenues in the Copper segment increased 16% to $18.6 billion. Both segments benefited from higher volumes and prices. The Coal segment's revenues plunged 30% to $7.7 billion.

BHP Delivers Solid Production Numbers for Iron & Copper

The company's total iron ore production for fiscal 2024 was a record 260 Mt, up 1% year over year. Western Australia Iron Ore (WAIO)  delivered a record iron ore production of 255 Mt (287 Mt on a 100% basis). This reflects solid supply-chain performance with increased capacity unlocked by the record production at South Flank. These gains helped offset the impacts of the continued tie-in activity for the Rail Technology Program 1.

Copper production rose 9% year over year to 1,865 kt, the highest in 15 years. Nickel production was up 2% to 81.6 kt

BHP Witnesses 4% Rise in EBITDA

Underlying earnings before interest, taxes, depreciation and amortization (EBITDA) increased 4% from the prior fiscal to $29 billion. Higher revenues and lower diesel and acid prices were offset by higher labor costs. Productivity initiatives and BHP's efforts to control costs offset higher labor costs. The underlying EBITDA margin was 54%, flat with the prior fiscal.  

For the Iron ore segment, underlying EBITDA was up 13% year on year to $18.9 billion while the Copper segment's underlying EBITDA increased 29% to $8.6 billion. The Coal segment's underlying EBITDA plunged 54% year over year to $2.3 billion.

Profit from operations (including exceptional items of $6.1 billion) declined 24% year over year to $17.5 billion. 

In fiscal 2024, BHP's attributable profit (for total operations) declined 39% year over year to $7.9 billion, which included an exceptional loss of $5.8 billion. The figure of $5.8 billion includes a $2.7 billion impairment of Western Australia Nickel and a $3.8 billion charge related to the Samarco dam failure, offset by a gain of $0.7 billion on disposal of the Blackwater and Daunia mines.

BHP's Cash Flow Improves, Debt Down

Net operating cash flow for fiscal 2024 was $20.7 billion compared with $18.7 billion in fiscal 2023. The improvement was attributed to lower tax and royalty-related taxation finalization payments compared with the prior fiscal. BHP Group reported a free cash flow of $11.9 billion, a significant improvement from $5.6 billion in fiscal 2023. 

The company invested $9.3 billion in line with its Capital Allocation Framework. This included $5.9 billion in organic development and $3 billion in maintenance and decarbonization.

BHP's cash and cash equivalents as of June 30, 2024, amounted to $12.5 billion compared with $12.4 billion as of June 30, 2023. Capital and exploration expenditures totaled $9.3 billion, up 31% from the prior fiscal year.

Backed by its solid cash flow, BHP continued to repay debt and as of the end of fiscal 2024, net debt was $9.1 billion compared with $11.2 billion as of fiscal 2023 end.

BHP has budgeted capital and exploration expenditures in fiscal 2024 and 2025 to be $10 billion and $11 billion, respectively. 

BHP's board has announced a dividend of 74 cents per share or a total of $3.8 billion. This translates to a payout ratio of 53%.

BHP's Production & Unit Cost Guidance for FY25

BHP's iron ore production guidance for fiscal 2025 is in the range of 255-265.5 Mt. WAIO's production is expected to be between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).

The company expects copper production to be within the range of 1,845-2,045 kt. Production guidance for metallurgical coal is in the band of 16.5-19 Mt while the guidance for energy coal is in the range of 13-15 Mt.

Unit cost guidance for WAIO is in the range of $18.00-$19.50 per ton. Escondida unit cost is estimated to be in the band of $1.30-$1.60 per pound. Spence unit costs are expected to be between $2.00 and $2.30 per pound. Copper South Australia's unit cost is anticipated to be between $1.30 and $1.80 per pound. BMA unit cost is expected to be between $112 and $124 per ton.

BHP Stock's Price Performance

BHP Group's shares have fallen 18.4% year to date compared with the industry's 10.1% decline.

Image Source: Zacks Investment Research

BHP's Zacks Rank & Other Key Picks

BHP Group currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, IAMGOLD Corporation IAG and Eldorado Gold Corporation EGO. CRS, IAG and EGO sport a Zacks Rank #1 (Strong Buy) at present.

The Zacks Consensus Estimate for Carpenter Technology's fiscal 2025 earnings is pegged at $6.06 per share. The consensus estimate for  earnings has moved 17% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS shares have gained 102.5% year to date.

The consensus estimate for IAMGOLD's 2024 earnings is pegged at 39 cents per share. The consensus estimate for earnings has moved 44% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG shares have gained 104% so far this year.

The Zacks Consensus Estimate for Eldorado Gold's 2024 earnings is pegged at $1.32 per share. The consensus estimate for earnings has moved 22% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 430%. EGO shares have gained 37% year to date.

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