OPINION: BHP’s record profit, dividend and tax payments probably represent a near-term peak as commodity prices fall. But Mike Henry isn’t taking his foot off the gas.
There are many ways to measure the sheer size, scale and quality of BHP’s profit result for the 12 months ended June 30., up 39 per cent on the prior year, is unquestionably impressive. It’s technically the second-biggest in the company’s history, but given BHP’s portfolio today is much smaller than when it posted its all-time record $US21.7 billion profit in 2011, you can make a case that this is the miner’s high point.BHP’s $US16.
But the megatrends that Henry has restructured BHP to take advantage of – population growth, the transition to renewables, the rise of electric vehicles and urbanisation – remain intact and have arguably become stronger. Henry argues, for example, that while themight see coal-fired power production rise in the short term, the eventual result will be a renewed commitment to the energy transition.
, costs didn’t blow out, with BHP’s underlying EBITDA margin steady at a 12-year high of 65 per cent. It’s a sign of the discipline that Henry has instilled in the business, and arguably his ruthless streak, that he sees this as the moment to push even harder on operations. Edgar Basto, previously head of BHP’s Australian mining division, will move to the newly created role of chief operating officer, as Henry hunts for even more operational wins that put a bigger gap between BHP and its competitors.
But that’s not to say the strategic changes he’s made haven’t been important. The collapse of the group’s dual listing and the demerger of petroleum have clearly made it possible for Henry and his team to pursue the next wave of growth projects.They include lifting iron ore production from 290 million tonnes to 300 million tonnes in the medium term, bringing forward stage two of the Jansen project , increasing exploration activity and, as shown with BHP’s recent takeover bid for OZ Minerals.
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