BHP Posts Big Profit Jump, Expresses U.S.-China Concern -- Update
19 Febrero 2019 - 4:32AM
Noticias Dow Jones
By Rhiannon Hoyle
SYDNEY-- BHP Group Ltd. chalked up an 87% rise in first-half net
profit but sounded a warning over the U.S.-China trade
conflict.
This should be another solid earnings season for global miners,
whose investor returns and stock prices have been helped by
elevated prices for some commodities--but markets have been jumpy,
largely over concerns about the world's two biggest economies.
BHP, the world's largest listed miner by market value, posted a
profit of $3.76 billion in the six months through December, its
best first-half number in four years and up sharply from the
year-earlier $2.02 billion. That figure, though, was weighed down
by $2 billion in one-off items, mainly linked to the U.S. tax
overhaul.
Commodity sales have yet to be directly hit by the U.S.-China
trade conflict, said BHP Chief Executive Andrew Mackenzie, although
the company sees a further rise in protectionist policies as a key
risk to its 3.25%-3.75% forecast for global growth this year. As
negotiations resume this week, the U.S. is seeking broad economic
changes from Beijing and holding up the threat of higher tariffs. A
deepening dispute would likely depress the global economy and hurt
commodity markets over the longer run, Mr. Mackenzie said on a call
with reporters.
"Free trade does tend to lift all boats," he said.
For the U.S. economy, BHP cited concerns after a strong 2018:
"The expansionary impact of tax cuts will progressively fade and
trade policies remain unpredictable."
The miner forecast China's economic growth to slow modestly in
2019, with weaker exports partly offset by easier monetary and
fiscal policy.
Hurt by some production disruptions, underlying profit from
continuing operations fell 8% to $4.03 billion--missing the $4.21
billion median estimate of analysts polled by The Wall Street
Journal. Still, BHP continued to generate solid cash flow from its
mines and oil fields and kept its interim dividend unchanged at 55
cents a share, eclipsing analyst expectations. Late last month it
paid a special dividend of $1.02, funded from the sale of its U.S.
shale operations--mostly to BP PLC, for more than $10 billion.
Miners' improved earnings in recent years have given them
firepower to cut debt, spend on deals and new projects--and boost
dividends. Investors are expecting a continuing cash bonanza as
more reports roll in.
Glencore PLC and Anglo American PLC are due to post 2018
earnings in the coming days, and BHP's Anglo-Australian rival Rio
Tinto PLC next week. Vale SA delayed the release of its earnings
until next month after one of its waste dams burst last month,
killing more than 160 people.
South32 Ltd., the metals- and coal-mining company spun out of
BHP in 2015, last week raised its midyear payout and said it will
hand out another special dividend. Higher commodity prices drove a
17% rise in its first-half profit.
The trend has given mining stocks a lift this year. BHP's stock,
up 8% in 2019, on Tuesday reached its highest price since 2011. The
most recent driver has been a sharp rise in the price of iron
ore--which accounts for roughly two in every five dollars BHP
earns--as an output cut by Vale following the dam disaster spurs
supply concerns.
That won't be reflected in BHP's earnings, though, until it
reports full-year numbers in August. Its first-half engine was
stronger petroleum markets. Crude oil rose sharply during 2018 on
concerns of looming shortages, and BHP said its average first-half
oil price was up 29% from a year earlier.
BHP's large oil-and-gas division, which typically accounts for
one-fifth of earnings, sets it apart from its global mining
rivals.
Some operational setbacks in other divisions capped first-half
profits. Disruptions including a train derailment in a remote part
of Australia, an acid-plant outage at its Olympic Dam copper mine
in Australia and a plant fire at its Spence mine in Chile meant a
productivity hit totaling $460 million.
With those unplanned outages, the company said it now expects
productivity to be broadly flat in the current fiscal year--but
will strive to lift it through technology and automation
improvements, increased equipment utilization and a reduced
reliance on labor hire.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
February 19, 2019 05:17 ET (10:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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