Mining giant BHP (ASX:BHP) has announced a significant final dividend for its shareholders despite a slide in profits for the fiscal year 2024. The company will distribute a final dividend of $0.74 per share, which totals a generous payout of US$5.6 billion. When combined with previous distributions, the total dividends for FY2024 amount to $10.9 billion.
The BHP share price reacted to the news positively, with an upside gain of 1.25% on the day. This marks a solid 5 day turnaround of 3.53% as the company fights back from recent 52 week lows.
This reward to shareholders comes against a backdrop of decreased profits. BHP reported a notable 39% drop in profit, with figures standing at US$7.9 billion for the year. This substantial decrease has been attributed to impairments related to the planned shutdown of its Nickel West business in Western Australia and provisions for the Samarco Dam failure.
Operational challenges have been reflected in BHP’s increased capital expenditures, which rose by 31% to US$9.3 billion, while profits from its operations saw a decrease of 24%, winding down to US$17.5 billion. Despite these financial pressures, BHP is doubling down on its future, revealing plans to invest US$500 million in exploration in FY25. The company anticipates capital expenditures to reach US$10 billion in FY25 and signals further investments in the years following 2026.
In alignment with its long-term strategy, BHP intends to ramp up its copper production significantly. The goal is to boost output from the current range of 310,000-340,000 tonnes to more than 500,000 tonnes per annum by the early 2030s, with an aspirational target of 650,000 tonnes per annum by the mid-2030s. BHP’s CEO Mike Henry underscored that organic growth is the prime goal in the copper sector, with mergers and acquisitions (M&A) activities not being considered for copper as well as for coal.
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The broader mining sector also presented a mixed bag of financial outcomes. Woodside Energy Group (ASX:WDS) disclosed a 19% slump in half-year revenues, hitting US$5.99 billion. The company also reported a 14% cut in its interim dividend and a 15% reduction in earnings before interest and tax (EBIT). Meanwhile, West African Resources (ASX:WAF) announced a robust after-tax profit of approximately $92 million sourced from its Sanbrado mine in Burkina Faso.
As BHP navigates through the complex interplay of operational challenges and ambitious growth objectives, the company remains committed to delivering shareholder value. The focus on expanding copper production reflects a strategic move to anticipate the raw material demands of the future, particularly in the context of the global green energy transition. While the current financial year brought challenges characterized by profit declines and increased expenses, BHP’s decision to substantially reward shareholders alongside assertive growth investments suggests a confident long-term outlook and a vision to secure its market leadership in the mining industry.
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