BHP Posts Record Annual Profit, Sees Chinese Demand Persisting

© Reuters.

By Ambar Warrick 

AiVIF.com-- BHP Group Ltd (ASX:BHP), the world’s largest miner, logged a record underlying profit in fiscal 2022 as steady demand for metals in China drove strong sales of its Western Australian iron ore. 

Underlying profit attributable for the year to June 30, 2022, jumped 26% to a record $21.32 billion, the miner said in a statement. BHP also declared a final dividend of $1.75 per share.

The strong results come on the back of robust demand for iron ore in China- BHP’s largest market. 

The company expects this trend to continue through 2023, with Chinese demand expected to remain robust amid slowing demand for metals in more developed economies. Europe’s energy crisis and rising inflation are two major pain points for the miner. 

“We expect China to emerge as a source of stability for commodity demand in the year ahead, with policy support progressively taking hold. At the same time, we expect to see a slowdown in advanced economies as monetary policy tightens,” said BHP CEO Mike Henry. 

The Anglo-Australian miner expects output at its Western Australia Iron Ore operations to surpass 300 million tonnes of production per annum (mtpa), and is now assessing options to raise production to as high as 330 mtpa in 2023. 

But overall revenue from iron ore declined to $30.63 billion in 2022 from $34.34 billion a year ago, on weaker iron ore prices in the second half of the year. 

The slowdown in commodity prices was driven by weak industrial activity in China- a result of a series of COVID-19 lockdowns imposed this year.

Data on Monday also showed that China’s industrial output is on the lam- a trend that may be damaging for BHP this year. Last month, peer Rio Tinto Ltd (ASX:RIO), which is the largest iron ore producer in the world, reported weaker underlying earnings for the first half of the year, citing a dip in Chinese imports.  

BHP is attempting to diversify its interests beyond iron ore, and had bid $5.8 billion for copper miner OZ Minerals Ltd (ASX:OZL) last week. The offer was rejected.