This afternoon BHP Group Ltd (ASX: BHP) reported its half-year results for the period ending December 31 2018. Below is a summary of the results with comparisons to the prior corresponding half (all figures in US$).
- Net profit of $3.76 billion, up 87%
- Underlying profit from continuing operations of $4 billion, down 8%
- Revenue from continuing operations of $20.742 billion, up 1%
- Free cash flow of $3.6 billion from continuing operations
- Underlying basic earnings per share 70 cents, down 8%
- Interim dividend of 55 cents, flat on prior period
- Completed $5.2 billion off market share buy back
- Paid a special dividend of US$1 (A$1.40) per share as a result of onshore US shale assets
- Returned $13 billion in total to shareholders over period
- Return on capital employed of 15%, down from 17%
- Net debt of $9.9 billion, down $1 billion from June 2018
As we can see this is something of a mixed result from the giant miner that also has a primary listing on the London Stock Exchange and depositary receipts exchange traded on U.S. markets. As such UK investors have sent the stock 1.9% lower in the opening skirmishes on the LSE.
The underlying profit falls are likely to disappoint investors and they were partly attributed to "operational outages" over the first half, with the second half expected to see an improved result.
BHP's management has also turned it into something of a shock dividend stock with its generous cash payouts totalling $13 billion over the half, despite the group's debt load and constant need to reinvest capital in new exploration projects.
The dividend bonanza exemplified by the short-term sugar hit of $10.2 billion in buybacks and special dividends dished out over the period after the group sold its onshore US shale oil assets.
Investors also remain leveraged to the mysterious cycles of iron ore, copper, oil, nickel, and coal prices with the stock up around 20% over the past year, but up only 4.2% over the past 5 years.
So while BHP is a low-cost market leader investors may find blue-chip shares with more capital-light attractive economics to buy elsewhere.
Others in the capital intensive mining space to consider include Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO).
