BHP Group (BHP): Should you buy this mining stock now? - Kalkine Media

February 15, 2022 03:14 PM GMT | By Priya Bhandari
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Highlights

  • BHP Group Plc announced a record US$7.6 billion dividend payout, equivalent to a 78% payout ratio as it looks to increase its exposure to energy transition metals.
  • The global resource company recorded underlying attributable profit from continuing operation of US$9.7 billion, up by 57% as compared to US$6.20 billion for the six-month ending 31 December 2020.

Global resource company BHP Group Plc (LON: BHP) is once again in the spotlight after the company announced a record dividend payout on 15 February 2022 and recorded a strong half-year result ending 31 December 2021, supported by rising commodity prices. This was despite a cutback in demand from top metals consumer, China, which wants to curb emissions. 

Trading update

The world’s biggest miner announced a record US$7.6 billion dividend payout, equivalent to a 78% payout ratio in half-year ended 31 December, as it looks to increase its exposure to energy transition metals. The company had a busy six month as it announced plans to sell its petroleum activities to Australia’s Woodside Power to focus on commodities such as nickel and copper and to reduce its fossil fuels operations and scrapped its dual corporate structure, besides managing disruption caused by pandemic to its operations.

The miner recorded underlying attributable profit from continuing operation of US$9.7 billion, up by 57% as compared to US$6.20 billion for the six-month ending 31 December 2020. The profit from operations stood at US$14.84 billion for the six-month ended 31 December, up by 50% as compared to US$9.89 billion a year earlier. Its interim dividend will stand at US$1.50 per share, bringing its total shareholder returns to over US$22 billion in the last 18 months.

The miner’s net debt stood at US$6.1 billion as of 31 December and said that it has lowered its net debt target between US$5 and US$15 billion from US$12-$17 billion. This will enable it to facilitate shareholder returns and fund future organic and inorganic opportunities.

BHP Group has unified its corporate structure

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Future Outlook

Currently, BHP Group makes most of its revenue from producing steelmaking item, iron ore from mines in Western Australia. It wants its revenue to come back from this in future. BHP Group CEO Mike Henry said the commodity price volatility will continue to stay for the next few months, but the broader outlook for commodity demand and pricing is strong.

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Stock performance

BHP Group used to operate under a dual-listed company corporate structure. On 31 January 2022, it unified its corporate structure from two parent companies: s BHP Group Limited in Australia and BHP Group Plc in the UK with two separate share prices.

The company’s shares are listed on the Australian Securities Exchange on a deferred settlement basis under the ticker BHPN. It is also listed on the Johannesburg Stock Exchange under the ticker BHG and on the London Stock Exchange under ticker BHP. Its new American depositary shares will be admitted on New York Stock Exchange under the ticker BHP.

The current market cap of BHP Group stands at £53,160.85 million, and it has provided its shareholders with a return of 17.21% over the last one year as of 15 February 2022, while its year-to-date return stands at 12.82%. BHP Group Limited’s shares were trading at GBX 2,480.50, down by 1.45%, at 11:00 AM (BST) on 15 February 2022.


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