BHP announces 8% drop in profits in last six months of 2018

JP Casey 19 February 2019 (Last Updated February 19th, 2019 15:43)

Mining giant BHP has released its financial results for the second half of 2018, reporting that its attributable profit in the six months to 31 December 2018 reached $3.8bn, 8% lower than the same period the previous year.

BHP announces 8% drop in profits in last six months of 2018
BHP’s Nickel West integrated operations. Credit: © BHP.

Mining giant BHP has released its financial results for the second half of 2018, reporting that its attributable profit in the six months to 31 December 2018 reached $3.8bn, 8% lower than the same period the previous year.

Underlying profit from continuing operations fell from $4.4bn to $4.03bn over the period, lower than estimated profits of $4.2bn, while profits from closing operations tumbled 15% compared to figures from the same period in 2017.

BHP claimed that unplanned closures and disruptions were a key reason for the company’s poor production and profit totals. The company claims that $460m of potential profits were lost due to “a negative movement in productivity”, and cites a number of incidents, including the failure of boiler tubes at its Olympic Dam in Australia and mechanical and human errors that led to a train travelling 92km without a driver, as contributors to the poor production figures.

“A strong second half is expected to partially offset the impacts from operational outages in the first half, with unit costs across our business forecast to improve,” said BHP CEO Andrew Mackenzie.

BHP and Mackenzie remain optimistic about the company’s future, with a separate report published today outlining BHP’s “attractive long-term fundamentals”, ensured by population growth and increasing living standards that will ensure global demand for metals remains high.

“We have a portfolio of attractive development opportunities and have recently approved the West Barracouta and Atlantis Phase 3 projects in petroleum and had early success in our oil and copper exploration programs,” said Mackenzie.

“We are confident in our plans to increase shareholder value and returns.”

BHP reported some positive financial news for the last six months, with its net debt falling to $9.9bn, down $1bn from June 2018, and $5.5bn lower than in December 2017. The company also completed the sale of its onshore US oil and gas assets to BP for $10.8bn, and returned what it calls a “special dividend” to its shareholders of $1.02 per share.