BHP share price falls despite yearly profit increase

BHP share price falls despite yearly profit increase

BHP Group (LON:BHP) saw its share price drop during today’s morning session on the London Stock Exchange, even though the company announced its largest annual profit in five years and a record final dividend.

The Anglo-Australian miner earlier today published its financial results for the year ended June 30. The report showed that the miner’s underlying profit for the one-year period had risen to $9.12 billion (roughly £7.54 billion), from $8.93 billion in the previous financial year. The company also announced a final dividend of $0.78 per share, or $3.9 billion. BHP’s chief executive officer Andrew Mackenzie noted that the dividend was “on top of a record $17 billion already returned to shareholders in the financial 2019 financial”. The returns to shareholders were bolstered by the sale of its shale gas business and by surging iron ore prices following supply outages in Brazil and Australia.

However, these results failed to meet analyst expectations. As noted by Reuters, a Vuma consensus of 18 analysts had forecast $9.4 billion in annual underlying profit.

“Most people were thinking around this level on dividends, but a lack of any additional returns may disappoint some,” UBS analyst Glyn Lawcock said, as quoted by the newswire.

Commenting on the company’s performance, Mackenzie acknowledged that the company had faced certain challenges during the 2019 financial year.

“Over the 2019 financial year, underlying improvements in our operational performance were offset by the impacts of weather, resource headwinds and unplanned outages in the first half of the year,” Mackenzie said in a statement.

In today’s trading, the BHP share price stood at 1,757.80 GBX, as of 12:01 BST. The company’s stock has lost just over 1.3% since the start of the session, according to data from the London Stock Exchange. The company’s total market capitalisation currently stands at £96.7 billion.

Featured image: Emil O /

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.

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