The world’s biggest miner BHP Group Ltd has announced a record interim dividend of $1.01 per share as its half-year profits surged to a seven-year high, buoyed by robust steel demand in China to support its infrastructure push.
Strong results, record dividend
The Australian miner reported that the company’s underlying profit for the six months ended Dec. 31 climbed to $6.04 billion compared to $5.19 billion last year. The company also declared a record interim dividend of $1.01 per share, which is 55% higher than last year’s $0.65 per share.
This company’s profits were driven by robust china demand for iron ore, and the COVID-19 vaccination push brightening the outlook for global trade this year. Iron ore had soared over the past year aided by China’s high demand for raw materials and supply disruptions.
Commenting on the results, portfolio manager Andy Forster of Argo Investments said: “It’s a pretty solid result. Relative to expectations, it looked pretty good, strong cash flows and dividend, projects operationally performing well. Strong iron ore and copper should set it up for a pretty good second half as well.”
However, BHP missed a consensus of $6.33 billion compiled by research firm Vuma Financial based on the opinions of 17 analysts. BHP’s coal business, currently under review for sale or spin-off, had also taken a hit due to a trade dispute between Australia and China which is not expected to be resolved immediately.
Demand for iron ore to remain high
BHP Group said that it anticipates strong Chinese demand to continue in 2021, and recovery in crude steel production across the globe. It may be noted that last month, BHP had forecast record annual iron ore output.
Investments in pipeline
BHP is currently making investment decisions on its $5.3-$5.7 billion Jansen potash project in Canada and the $1.4-1.9 billion Scarborough natural gas project off Western Australia.