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BHP first-half profit drops 8 per cent

AAP  |  19 Feb 2019Text size  Decrease  Increase  |  
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BHP

BHP Group (ASX: BHP), the world's biggest miner, has reported a drop in first-half 2019 profit as a decline in copper earnings and a series of output disruptions boosted costs and resulted in missed opportunities for cost savings.

Declining ore quality at Escondida in Chile, the world's largest copper mine, led to higher costs as the miner had to process more ore, while falling prices also stunted copper earnings.

Underlying profit from continuing operations for the six months ended December 31 fell to $US4.03 billion ($A5.66 billion), down 8 per cent from the year before. That missed consensus estimates of $4.209 billion.

The company cut its guidance for a second time on the amount of cost savings it expected to generate during the 2019 financial year because of higher productivity.

In August 2018, BHP had outlined productivity gains of $US1 billion during the financial year, down from an earlier forecast of $US2 billion.

However, on Tuesday, the company cut its forecast for productivity gains to flat for the financial year.

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The guidance cut was mainly because of $US460 million in savings not achieved because of unplanned production outages at Olympic Dam, Western Australia Iron Ore, Spence and Nickel West.

Last month, BHP said its second-quarter iron ore production fell 9 per cent after it was forced to derail an iron ore-cargo train after it ran away en route to a key shipping hub.

Earnings before income tax, depreciation and amortisation from copper fell nearly 40 per cent in the first half.

BHP declared an interim dividend of $0.55 per share, the same as last year.

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