BHP Group Reported a Decline of 8% in its Underlying Attributable Profit for H1 FY19

BHP

BHP Group Limited (ASX: BHP) is into extraction and processing of minerals, oil and gas. The company sells its products worldwide, with Singapore and Houston, United States paving the marketing. The company is dual listing with two parent companies namely BHP Group Limited and BHP Group Plc. However, it operates as a single economic entity, which is referred to as BHP.

On 19 February 2019, the company announced its results for the half year ended 31 December 2018. For the half year period, the company reported an Underlying attributable profit of US$3.7 billion which is down by 8% from the previous corresponding period (pcp). The company also reported Attributable profit of US$3.8 billion for the half year period. The exceptional gain included in the profit amounted to US$32 million compared to an attributable profit of US$ 2.0 billion, including an exceptional loss of US$2.0 billion, in the prior period. Reversal of provisions for global taxation matters has driven the exceptional gain during the half-year of December 2018. 

Lower depreciation and amortisation charges coupled with favourable impacts of exchange rate movements lead to the increase in profit from continuing operations which stood at US$7.3 billion, as compared to US$7.2 billion in the prior period. The underlying EBITDA was reported to be US$10.5 billion for the period, compared to US$10.8 billion in the prior period. The net debt of the company stood at US$9.9 billion, decreased by US$1.0 billion from 30 June 2018 and reduced by US$5.5 billion from 31 December 2017.

As per the CEO of the company, Andrew Mackenzie the company have reduced debt by US$16 billion since the beginning of 2016 and reinvested US$20 billion in the business to return more than US$25 billion to shareholders. As per the company expectation, a strong second half is on the cards to partially offset the impacts from operational outages in the first half, coupled with unit costs to improve across the business forecast.

Free cash flow for the company stood at US$3.6 billion for the half year. The capital and exploration expenditure of US$3.5 billion during the period included maintenance expenditure of US$0.8 billion, exploration expenditure of US$0.4 billion and onshore US expenditure of US$0.4 billion.

The company decided to pay a special dividend of US$1.02 per share during December 2018, and this was paid on 30 January 2019. The special dividend was however mainly on the back of disbursement of proceeds from the disposal of onshore US.

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On the price-performance front, the stock of BHP Group last traded at $37.885 with an increase of ~2.364% during the day’s trade and with a market capitalisation of $109.03 billion. The stock has generated a YTD return of 14.61% and posted returns of 16.37%, 19.14% and 11.48% over the last six months, three months and one-month period respectively. It has a 52-week high price of $37.805 and a 52-week low price of $26.971 with an average trading volume of ~10.925 million. The stock is trading at a PE multiple of 39.30x with an EPS of AUD 0.942. The stock has an annual dividend yield of 4.3%.


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