BHP FY2025 H1 Earnings: Trapped in the Commodity Cycle, but the Diversified Strategy Still Promising?

TradingKey

AuthorViga Liu

Feb 18, 2025 8:23 AM

TradingKey – On February 18th, BHP (BHP.US), the world's largest mining company, released its first-half report for the fiscal year 2025, ending December 31st, 2024. For FY2025 H1, BHP reported disappointing results but is actively pivoting towards growth with strategic investments in copper and potash, aiming to leverage future demand from electrification and urbanization despite challenges in the iron ore market.

Financial Performance:

Revenue: Down 8% to $25.2 billion, due to lower iron ore and coal prices, somewhat mitigated by higher copper prices.
Net Profit After Tax (NPAT): $5.08 billion, a 23% drop, affected by commodity price falls and operational disruptions like Cyclone Zelia.
Dividend: Reduced to 50 US cents per share, a 30% decrease, the lowest since 2017.

Segments:

Copper: Volumes up 10%, EBITDA up 44%, now contributing 39% of group EBITDA. Copper prices are expected to continue the upward trajectory, fueled by ongoing tight supply fundamentals and China's demand for power infrastructure and EVs, aligning with BHP's strategic focus on copper for robust segment growth.

Iron Ore: Still the lowest-cost producer, but EBITDA down 26% from price pressures. Prices expected to stay near US$100/t, driven by oversupply from key producers and a significant decline in China's property sector, not adequately offset by China's infrastructure investments, resilient US demand, or India's growth, signaling a challenging short-term horizon for BHP's iron ore segment.

BHP's performance is closely tied to commodity price fluctuations, reflecting its position in a cyclical industry. The company is strategically shifting towards commodities with higher future demand to diversify its portfolio. This move could make BHP an undervalued opportunity for investors looking beyond immediate market conditions and adopting a longer-term investment horizon.

Disclaimer: The content of this article solely represents the author's personal opinions and does not reflect the official stance of Tradingkey. It should not be considered as investment advice. The article is intended for reference purposes only, and readers should not base any investment decisions solely on its content. Tradingkey bears no responsibility for any trading outcomes resulting from reliance on this article. Furthermore, Tradingkey cannot guarantee the accuracy of the article's content. Before making any investment decisions, it is advisable to consult an independent financial advisor to fully understand the associated risks.

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