What is pushing up the BHP share price today?

Posted: 15 February 2022 12:46 pm
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Shares in iron ore miner BHP have climbed 8% over the last 12 months.

Mining giant BHP (ASX: BHP) is among the best performers on the ASX and the mining sector. At the time of writing, the stock had jumped 2.3% to $49.38 even though rivals like Rio Tinto (ASX: RIO) and Fortescue Metals Group (ASX: FMG) were down 0.4% and 1.5% respectively.

Why has the BHP stock price rebounded?

BHP on Tuesday reported its profit for the 6 months to 31 December had more than doubled from a year earlier to US$9.44 billion, helped by stronger pricing in iron ore, coal, oil and copper.

The world's biggest miner booked better than expected underlying earnings of US$18.46 billion, despite a cutback in demand from top metals consumer China. That allowed it to pay a record interim dividend of US$1.50 per share, up from US$1.01 previously.

"We mitigated the impacts of COVID-19 and significant adverse weather events to turn in a solid operational performance, particularly from our flagship Western Australian Iron Ore business," CEO Mike Henry said.

The strong result follows a transformative year for the mining giant after it agreed to divest its oil and gas assets worth $13 billion to Woodside Petroleum and shareholders voted to end BHP's decades-old dual-listed structure.

Solid performance

BHP's dominant iron ore division booked underlying earnings of US$11.15 billion. It came despite iron ore prices nearly halving from record levels earlier in 2021, and was mainly helped by a lift in shipments to 144 million tonnes.

BHP received an average US$113.54 a tonne for its iron ore in the first half, up 9% from a year ago.

Its coal division recorded underlying earnings of US$2.64 billion, compared to a loss a year ago. Copper earnings rose to US$4.27 billion. BHP's petroleum division, which is being sold, booked a higher underlying EBITDA of US$2.9 billion.

The company expects commodity price volatility to continue for some time, but says the broad outlook for commodity demand and pricing remains strong. It also expects that the headwinds that buffeted China will diminish as the 2022 calendar year proceeds.

"The key driver is demand-led inflation ... we see that as more enduring," CEO Henry said.

The company said on Tuesday it has lowered its net debt target to US$5 billion-$15 billion from US$12 billion-$17 billion, which will allow it to facilitate shareholder returns and fund future deals. BHP had a net debt of US$6.1 billion as of 31 December.

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