BHP posts largest dividend in four years on copper boom

Booming copper prices have buoyed BHP to pay its largest dividend in four years, with shareholders to receive a total $A12.24bn.

The mining giant posted full-year financial results on Tuesday, delivering a profit of $US9.8bn and dividends up 57 per cent on the previous year.

“We delivered record iron ore production and shipments at WAIO (Western Australia Iron Ore), ~2 Mt of copper for a second year running and a stronger result in coal,” new chief executive Brandon Craig said.

“We met or beat guidance across much of the portfolio and achieved industry-leading cost positions.

“Copper is the engine that is driving BHP’s growth. For the first time, Copper contributed more than half our underlying EBITDA and generated significant free cash flow, which means our copper growth is self-funding.”

Profits for the year rose 9 per cent (to $US9.8bn). Alongside the fattened dividend, BHP had the budget to lift capital expenditure and exploration spend by 5 per cent, to $US10.3bn.

Shareholders get a $US0.99 ($1.39) final dividend next month, bringing total dividends for the year to $US1.72 a share, up 57 per cent on last year; totalling $US8.7bn in returns for the year ($A12.24bn).

The results point to China, India and the US increasing their demand for BHP’s resources.

“Demand for what we mine is building. Copper demand alone is set to grow from about 34 Mtpa (million tonnes per annum) today to more than 50 Mtpa by 2050.

“We expect China to continue producing ~1 Btpa of steel this decade while it also invests heavily in its power grid, the United States is investing in copper-intensive technology, and India is importing more of the raw materials it needs as the fastest growing major economy.”

IG analyst Tony Sycamore points to realised copper prices rising 35 per cent and unit costs falling 6 per cent despite inflationary pressures as key drivers of the results.

“After a tough run of earnings misses over the past week or so, BHP has stepped up and delivered a solid, if not perfect, set of numbers that should steady the ship,” he said of other major firms’ financial results.

“Tight cost control, copper now contributing more than half of group earnings, and total shareholder returns hitting a four-year high are the standout features – and should be enough to see the Big Australian retest its mid-June record high of $65.98 in the sessions ahead.”

Shares was trading up 3.6 per cent at $64.45 shortly after the ASX opened on Tuesday.