BHP Group Ltd (ASX: BHP) shares will be on watch this morning.
That's because the mining giant has just released its highly anticipated full year results.
Let's see what the Big Australian reported for FY 2024.
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BHP shares on watch following full year results release
- Revenue up 3% to US$55.7 billion
- Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) up 4% to US$29 billion
- Underlying attributable profit up 2% to US$13.7 billion
- Free cash flow up 111% to US$11.9 billion
- Fully franked full year dividend down 14.1% to US$1.46 per share
What happened in FY 2024?
For the 12 months ended 30 June, BHP's revenue increased US$1.8 billion or 3% year on year to US$55.7 billion. This was driven largely by higher realised prices and sales volumes across iron ore and copper. This was partially offset by lower energy coal and nickel prices, and lower steelmaking coal volumes following the divestment of Blackwater and Daunia.
BHP revealed that it experienced a global inflation rate of ~4%. This was predominantly driven by higher labour costs, which was somewhat offset by lower commodity linked raw materials such as diesel and acid. Furthermore, its productivity initiatives and cost discipline allowed the miner to mitigate these ongoing cost pressures with unit costs only ~2.9% higher across major assets.
This ultimately led to the Big Australian's underlying EBITDA increasing 4% and its underlying EBITDA margin remaining at 54%. Management notes that this is the eighth consecutive year that it has achieved a margin greater than 50%.
And with free cash flow coming in strong, BHP was able to declare a fully franked final dividend of 74 US cents per share. This represents a return of US$3.8 billion.
For the full year, this brings its total dividends to US$1.46 per share fully franked, which means total cash returns to shareholders of US$7.4 billion.
How does this compare to expectations?
The consensus estimate was for BHP to report total revenue of US$55,807 million, underlying EBITDA of US$28,835 million, and a fully franked full year dividend of US$1.46 per share.
As you can see above, BHP has delivered a result largely in line with these expectations. This could bode well for its shares today.
Management commentary
BHP's CEO, Mike Henry, was pleased with the company's performance. He said:
BHP delivered a strong set of results in FY24 on the back of solid operational performance. We delivered record volumes at Western Australia Iron Ore, where we extended our lead as the world's lowest cost iron ore producer. Across our global copper assets, we grew overall copper volumes by 9% for the second consecutive year and expect to deliver a further 4% in FY25.
As a result of this strong performance, combined with our healthy balance sheet, we determined a final dividend of 74 US cents per share, a 53% payout ratio, continuing our track record of delivering robust shareholder returns through the cycle.
Outlook
Henry revealed that BHP's long term outlook remains very positive. However, he did warn of short term volatility in commodity markets. The CEO said:
The longer-term fundamentals that drive demand for our products remain compelling. In the near term, we expect volatility in global commodity markets, with China experiencing an uneven recovery among its end-use sectors. The effectiveness of recently announced pro-growth policies will be an important contributor for the country to achieve its official 5% growth target. India is set to continue as the world's fastest growing major economy. We anticipate developed economies will face gradual relief from the lingering effects of higher interest rates in coming years.
We are energised to build on the positive momentum achieved this year. Our tier 1 assets, track record of operational performance and strong balance sheet allow us to invest in future growth and maintain strong cash returns to shareholders through the cycle.
BHP shares are down 6% since this time last year.
