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(Bloomberg) -- BHP Group Ltd. said first-half profit slumped 23% as China’s faltering economy dampened demand for iron ore, prompting the miner to trim its interim dividend to an eight-year low.
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The biggest miner posted underlying attributable profit for the six months to Dec. 31 of $5.08 billion, it reported Tuesday. That was below analyst estimates of $5.39 billion. Steelmaking ingredient iron ore remains the company’s biggest earner — but only just — with copper now accounting for 44% of its revenue.
BHP’s move to cut its dividend to 50 cents a share, down from 72 cents the year before, will reinforce speculation the board has a renewed focus on capital management as it pursues growth. Analysts were anticipating a dividend of 53.3 cents.
The slip in profits continues a trend for BHP since it posted record earnings of $33.1 billion for the year to June 2022 as iron ore demand soared. Annual profits have since more than halved, with declining capital returns and rising capital expenditure weighing on its shares.
Still, Chief Executive Officer Mike Henry struck a positive tone in Tuesday’s statement. “The demand for BHP products remains strong despite global economic and trade uncertainties, with early signs of recovery in China, resilient economic performance in the US and strong growth in India,” he said.
BHP’s shares in Sydney were up 0.2% at 3:18 p.m. local time.
Benchmark iron ore prices dipped 5% during the reporting period, while copper fell 9%.
The mining giant’s iron ore mines in Western Australia’s Pilbara were hit by Tropical Cyclone Zelia last week. The company said that while it was maintaining its forecast output of the steelmaking material from the region of between 282 million tons and 294 million tons for the year to June 30, it no longer expects production to be in the upper half of the range due to the impact of the storm.
Analysts from Citigroup Inc. and Jefferies Financial Group Inc. have flagged that this year will be one where major miners’ primary focus will be on capital allocation, with a particular emphasis on expanding portfolios of commodities central to the energy transition, such as copper.
Ongoing capital expenditure pressures will be a key focus of incoming chairman Ross McEwan, who will succeed outgoing Ken MacKenzie after he served in the role since September 2017.