© Reuters.
By Amber Warrick
Investing.com–Shares of BHP Group Ltd (ASX:) fell on Tuesday after the Anglo-Australian miner posted a sharp drop in half-year profit on slowing demand in China and weakening mineral prices. iron, although it postulated a positive outlook for the coming months.
BHP fell 2.2% to A$47,390, nearing its lowest level since early January. The miner’s underlying attributable profit for the six months to December 31 was $6.6bn, compared with $9.7bn a year earlier.
Total revenue from continuing operations also plunged 16% to $25.7 billion. The profit decline was mainly due to lower realized prices for iron ore and coking coal, as demand in the main market of China slowed substantially.
An economic slowdown in developed Europe and the Commonwealth also weighed on demand, and is expected to continue to do so in the meantime.
Even so, the world’s largest miner expects demand to improve in the coming months, especially as the Chinese economy recovers after the lifting of anti-COVID measures. India is also expected to be a key source of demand for coal.
“We are optimistic about the outlook for demand in the second half of FY23 and into FY24, with strengthening activity in China on the back of recent policy decisions as the main driver. We expect domestic demand in China and India to provide stabilizing counterbalances to the ongoing slowdown in global trade and in the US, Japanese and European economies,” BHP Chief Executive Mike Henry said in a statement.
BHP declared an interim dividend of 90 cents per share, down from $1.50 a year ago but higher than some market expectations.
Disruptions in commodity markets, due to the Russia-Ukraine war, saw BHP enjoy stronger prices in early 2022. But this trend was quickly reversed as a series of anti-COVID measures weighed heavily on demand. China.
Commodity markets, mainly copper, iron ore and oil, are banking on a Chinese recovery to boost demand this year. But while the world’s biggest importer of basic goods relaxed most anti-COVID restrictions in January, the country’s economic readings have so far painted a mixed picture of recovery.