BHP BHP Group Limited

   By Rhiannon Hoyle 
 

SYDNEY--BHP Group Ltd. (BHP.AU) reported an 87% rise in first-half net profit and kept its midyear payout unchanged as the company generates solid cash flow from its mines and oil fields.

BHP, the world's largest listed miner by market value, said it made a profit of US$3.76 billion in the six months through December. Net profit in the year-earlier period was US$2.02 billion, weighed down by one-off items totaling US$2 billion mainly because of large expenses linked to the U.S. tax overhaul.

Underlying profit from continuing operations was down 8% at US$4.03 billion, below the US$4.21 billion median of eight analyst forecasts compiled by The Wall Street Journal. During the period, BHP sold most of its U.S. onshore shale division to BP PLC (BP.LN) in a more-than US$10-billion deal.

The company kept its interim dividend unchanged at US$0.55 a share. It had paid a US$1.02 special dividend to shareholders late last month funded from the sale of the shale operations.

Earnings were aided by stronger petroleum markets. BHP's average price for oil was up 29%, while natural gas increased by 12% and liquefied natural gas by 36%.

BHP is different from global miners because of its large oil-and-gas division, which typically accounts for one-fifth of earnings.

BHP faced some operational setbacks in other divisions during the half. The miner recorded a productivity hit totaling US$460 million because of disruptions to operations that included a train derailment in a remote part of Australia. BHP had also reported an acid-plant outage at its Olympic Dam copper mine in Australia and a plant fire at its Spence mine in Chile.

The company said unplanned outages meant it now expected productivity to be broadly flat in the current fiscal year.

"A strong second half is expected to partially offset the impacts from operational outages in the first half, with unit costs across our business forecast to improve," Chief Executive Andrew Mackenzie said.

BHP last month reported mixed first-half production of its main commodities. It produced 2% more iron ore on a year earlier. That commodity accounts for roughly two in every five dollars it earns.

The price it sold iron ore for during the period fell, however, by 2%. Underlying earnings before interest, tax, depreciation and amortization from that division rose by US$34 million to US$4.3 billion, the miner said.

Output of steelmaking coal was also slightly higher, although BHP produced less energy coal and petroleum on the year-earlier period.

BHP also produced less copper. The miner's copper division meantime grappled with weakening prices, which fell by 18% on the year-earlier period. Underlying earnings from that division fell roughly 40% year-on-year, the miner said.

Still, the company said it cut net debt by US$1 billion since mid-2018, to US$9.89 billion.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

February 19, 2019 00:57 ET (05:57 GMT)

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