The leading global miner BHP Group (NYSE:BHP) posted its weakest annual result in five years, showing the pressure from lower iron ore prices and China’s softer steel demand. The firm reported underlying attributable profit of $10.16 billion, marking a 26% drop from the prior year.
The weakest performance since 2020 is mainly due to a 19% decline in realized iron ore prices. Fresh supply from Australia, Brazil, and South Africa coincided with sluggish demand in China. Firmer copper prices partially cushioned the drag, as the record output from Chile and Australia helped offset weakness in bulk commodities.
BHP declared a final dividend of 60 cents per share, compared with 74 cents a year earlier, bringing the total payout for the year to $1.10 per share. While that edged above consensus forecasts, it was still the company’s smallest annual distribution since 2017.
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“Policy uncertainty, particularly around tariffs, fiscal policy, monetary easing, and industrial policy, has been elevated and continues to influence investment and trade flows. Despite these dynamics, commodity demand remained resilient,” CEO Mike Henry said in a statement.
Looking ahead, the company will step up near-term spending before pulling back later in the decade. BHP said it plans to allocate $11 billion annually to growth projects and exploration over the next two years, up from about $9.8 billion this fiscal year. But, from 2028 through 2030, investment is expected to average closer to $10 billion a year.
Henry also noted sustainability-related results, reiterating the firm’s commitment to reducing greenhouse emissions by 30% by fiscal year 2030 (from a fiscal year 2020 baseline).
The company is simultaneously expanding its balance sheet flexibility, raising its net debt target range to $10–20 billion, from $5–15 billion previously. The management touted its strong balance sheet and capacity to manage leverage while investing in “high-quality growth projects,” including copper in South America and potash in Canada.
Discussing near-term opportunities, the miner sees strong fundamentals in copper, steelmaking raw materials, and fertilizers, despite near-term volatility. It expects copper demand to remain robust, supported by infrastructure spending in China and India. Fertilizers provide a structural growth opportunity, with the Jansen potash project in Canada set for production start in 2027. Coal markets, meanwhile, face pressure from oversupply, though shifting policy in China and new capacity across Asia could provide some relief.
“The global economic outlook is mixed. Yet demand for commodities remains strong, particularly in China and India,” Henry said.
Berenberg analyst Richard Hatch downgraded BHP last month from Hold to Sell, maintaining a price target of $44.
Price Action: BHP stock is trading higher by 2.58% to $54.81 premarket at last check Tuesday.
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