- FY25 profit $10.16 bln misses estimates
- FY dividend of $1.10/share lowest since 2017 but better than expected
- Demand for commodities resilient despite tariff uncertainty, BHP says
- Net debt target raised to between $10 billion and $20 billion
Aug 19 (Reuters) - BHP said annual profit fell to the lowest in five years as sluggish demand from China weighed on iron ore prices and flagged a cut in capital and exploration spending but declared a bigger-than-expected final dividend, sending its shares higher.
The world's largest listed miner also raised its debt target and said it would consider acquisitions in commodities such as copper and potash.
It posted a $10.16 billion underlying profit for the year ended June 30, down 26% from last year, and below the Visible Alpha consensus of $10.22 billion.
BHP cut its final dividend but by less than analysts had forecast. It said it will pay shareholders $0.60 per share, from $0.74 a year earlier, taking the year's total to $1.10, its lowest since 2017, but well ahead of a Visible Alpha consensus of $1.01.
The Sydney-listed company's shares were up 1% in early trading, compared to a 0.7% dip on the broader market, as investors welcomed the payout.
"Inflationary pressures across the cost base have largely normalised, although pockets of pressure persist in some areas and overall cost levels remain materially higher than pre-pandemic benchmarks," said Citi analysts. "We expect the higher div payout ratio to be taken as a modest positive."
A combination of more product being shipped from Australia, Brazil and South Africa and lower steel production in top consumer China, pressured iron ore prices for much of the financial year, affecting earnings for top miners including BHP and Rio Tinto.
BHP's average realised price for iron ore fell by 19% during the year, though that was partly offset by stronger prices for copper, its second-biggest profit driver.
Still, the miner said it expects demand for its commodities to remain resilient even as the global economy faces an uncertain environment due to "shifting trade policies".
"Policy uncertainty, particularly around tariffs, fiscal policy, monetary easing, and industrial policy, has been elevated and continues to influence investment and trade flows. Despite these dynamics, commodity demand remained resilient," Chief Executive Mike Henry said in a statement.
BHP raised its net debt target range to between $10 billion and $20 billion, from between $5 billion and $15 billion, saying the decision was a result of technical analysis and not a sign of increased appetite for mergers and acquisitions activity.
The company would consider acquisitions in target growth areas like copper and potash but only of assets which were reasonably-priced and high quality, and "the overlap between those factors is a rare thing", Henry said on a call with reporters.
BHP said it plans to spend $11 billion on growth projects and exploration over the next two years, up from $9.79 billion in fiscal 2025. However, it said the spending will slow down to an average $10 billion each year between 2028 and 2030.
In July, the mining giant flagged a delay and a cost overrun of up to $1.7 billion at its key Jansen potash project in Canada, and also exited its interest in the $942 million Kabanga nickel project in Tanzania.
On Tuesday, it said it had agreed to sell copper assets in Brazil for up to $465 million.
Reporting by Sameer Manekar and Roushni Nair in Bengaluru; Editing by Maju Samuel and Sonali Paul
Source: Reuters