The BHP Group Ltd (ASX: BHP) share price is pushing higher on Tuesday morning.
At one stage today, the mining giant's shares were up 3% to $49.88.
The BHP share price has dropped back a touch since then but remains up 2% at $49.33.
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Why is the BHP share price pushing higher?
Investors have been bidding the BHP share price higher this morning after it delivered a half year result ahead of expectations.
BHP reported a 27% increase in revenue to US$30,527 million and a 57% jump in underlying profit to US$9,715 million. This was driven by higher sales prices across its major commodities, near record production at WAIO, and favourable exchange rate movements.
This ultimately led to BHP generating free cash flow from continuing operations of US$8.5 billion, which allowed the Big Australian's Board to declare a record interim dividend. BHP will be paying shareholders a fully franked US$1.50 per share dividend for the period, which represents a 78% payout ratio.
How does this compare?
The team at Goldman Sachs has had a quick look at BHP's results and notes that it was better than both it and the market were expecting. This goes some way to explaining the rise in the BHP share price today.
Goldman commented: "Better than expected result with underlying EBITDA/NPAT (incl Petroleum) of US$21.4bn/US$10.7bn, +7%/+5% vs our US$20.0bn/US$10.1bn estimates (and vs. Visible Alpha consensus of US$19.9bn/US$9.6bn). Headline NPAT of US$9.4bn included a modest US$300mn increase in Samarco liability provision (balance was US$2.8bn mid-CY21). BHP reported an EBITDA margin of 64% and ROCE of 40% for the half."
It was a similar story with the BHP dividend, which at US$1.50 per share, came in ahead of Goldman's estimate of US$1.27 per share and the consensus estimate of US$1.31 per share.
The broker was also pleased with the mining giant's balance sheet and operating cash flow.
It said: "Net debt of US$6.1bn (incl. leases) was well below our US$9.6bn forecast and consensus of US$9.0bn, despite working cap build. BHP has reset the net debt target to US$5-15bn (GSe) ex Petroleum (vs. current US$12-17bn target). Operating cash flow of US$13.3bn, above GSe at US$10.8bn, on the stronger result and lower than expected cash tax. Cash capex and exploration was US$3.7bn vs our US$4.1bn estimate. FCF totaled US$9.7bn compared to our US$6.6bn estimate."
Overall, BHP appear to get a big tick for this half.
