BHP supported its shareholders with a record $US36 billion ($51.3 billion) dividend in the 2021–22 financial year (FY22).
The mining giant generated $US34.1 billion of profit from operations, up 34 per cent from FY21, and record underlying EBITDA (earnings before interest, taxes, depreciation, and amortisation) of $US40.6 billion, which amounted to a record operational margin of 65 per cent.
BHP said the profit increase stemmed from higher coal and copper prices and a strong underlying operational performance – including record sales at its Western Australia iron ore operations (WAIO) and near record concentrator throughput at its Escondida copper mine in Chile.
Disciplined cost control and favourable exchange rate movements also contributed to the strong margins.
BHP said its result was partially offset by COVID-19 restriction and supply constraints, higher inflation affecting diesel, electricity and consumable prices, along with lower copper grades at Escondida and wet weather at its BHP Mitsubishi Alliance (BMA) coal operations in the Bowen Basin.
The total impact of COVID-19 was $US1.5 billion, with $US1.2 billion of lower volumes across BHP’s assets due to COVID-related absenteeism and supply constraints.
The BHP board is set to pay a final dividend of $US1.75 per share (equal to $US8.9 billion), including $US0.60 per share (equal to $US3 billion) above the 50 per cent minimum payout policy.
Total cash dividends for FY22 were $US3.25 per share, equating to a 77 per cent payout ratio.
BHP also generated record free cash flow of $US24.3 billion, paid $US17.3 billion in taxes and royalties across the 12 months and paid shareholders $US19.6 billion following the merger of its oil and gas business with Woodside.
“BHP enters the 2023 financial year in great shape strategically, operationally and financially, and well prepared to manage an uncertain near-term environment,” BHP chief executive officer Mike Henry said.
“During the year, we unified BHP’s corporate structure, merged our petroleum business with Woodside, completed the sales of our interests in the BMC (BHP Mitsui Coal) and Cerrejón energy coal assets, and decided to retain and operate our New South Wales Energy Coal business until mine closure in 2030.
“We have improved our platform for growth through the Jansen potash project, iron ore and copper.”
Henry expects China to emerge as a source of stability for commodity demand in the year ahead as policy support takes hold.
Despite this, the major miner expects to be met with some headwinds.
“We expect to see a slowdown in advanced economies as monetary policy tightens, as well as ongoing geopolitical uncertainty and inflationary pressures,” Henry said.
“The direct and indirect impacts of Europe’s energy crisis are a particular point of concern. Tight labour markets will remain a challenge for global and local supply chains. Waves of COVID-19 infection continue to occur in the communities where we operate, and we are planning accordingly.”