BHP reports solid Q2, copper shines amid coal weakness

Investing.com -- BHP (LON:BHPB ) reported solid second quarter operational results, largely meeting analyst expectations. Key segments performed well, though challenges remain.

BHP's iron ore production for the quarter reached 66.3 million tonnes, consistent with expectations. 

Western Australia Iron Ore operations produced 64.8 million tonnes, reflecting the company’s resilience in maintaining steady output. 

For copper , quarterly production stood at 511,000 tonnes, a 7% increase from the previous quarter, driven by robust output at Escondida. 

However, South Australia's copper guidance was slightly reduced due to power-related disruptions earlier in the fiscal year, which have since been resolved.

Metallurgical coal production reached 4.4 million tonnes, a slight dip of 2% compared to forecasts, while energy coal production of 3.7 million tonnes saw a modest 3% rise. 

Additionally, while coal shipments exceeded estimates, realized prices for thermal coal underperformed, trailing BMO's forecasts by 10%.

Analysts at BMO Capital Markets revised its full-year EBITDA forecast for FY2025 to $27.3 billion, a slight upward adjustment. 

However, analysts noted that recent investments, including the completion of the Filo acquisition and Vicuña joint venture, are likely to push net debt toward the upper end of the company’s $5-15 billion target range, potentially curbing near-term dividend payouts. 

A minimum dividend of $0.48 per share is anticipated for February, contributing to a projected annual yield of 4.3%.

BHP faced a mixed commodity price environment. While WAIO iron ore prices averaged $81.1 per tonne, slightly exceeding forecasts, thermal coal prices underperformed.

Copper pricing remains favorable, helping offset weaker performance in coal. Analysts emphasized the company's strength in diversification, particularly its exposure to copper, which is seen as a mitigating factor against price fluctuations in other segments.

BHP reaffirmed its production guidance, with minor adjustments reflecting operational realities, such as higher coal production targets. 

BHP's diverse portfolio, including high-quality assets, positions it favorably compared to iron ore-focused peers. 

However, volatile commodity prices and rising costs, especially in coal operations, present challenges.

Source: Investing.com