Published On: January 22nd, 2024
BHP Group Ltd (ASX: BHP), commonly known as “The Big Australian,” is now in the spotlight, but not for palpable reasons. The company saw its share prices decline on Thursday morning.
Investors witnessed the shares drop by 1.5% to $45.85 after BHP Australia shared its performance updates for the second quarter. The anticipation was high; however, the figures revealed failed to hit the mark set by market expectations.
Iron Ore Shows Stability but Misses the Mark
The iron ore production of BHP Australia increased by 4% compared to the previous quarter, reaching 65.8 Mt. However, a slight decline was noted over the half-year period with a 2% decrease (129Mt). Nonetheless, BHP is steering its course to meet the FY 2024 guidance, which remains unchanged between 254Mt and 264.5Mt.
Iron Ore Shipments and BHP Share Price ASX Rise
BHP’s Western Australian Iron Ore (WAIO) operation shipped a commendable 70.3Mt during the quarter at an average BHP share price of US$109.47 per wet metric tonne, marking a 12% price increase from the first quarter.
Although this is positive news, the shipment volume fell short of market expectations, which had predicted a modest rise to 72.5Mt.
Copper Production Disappoints After Strong Start
Copper operations did not maintain the momentum from an exceptional start to the year, with production witnessing a 4% drop over the quarter, landing at 437.4Kt.
Despite the downturn this quarter, half-on-half figures were up 7%, totalling 894.4Kt, keeping the company in an excellent position to achieve its annual guidance for FY 2024.
Metallurgical Coal Production Stumbles
The mining giant’s metallurgical coal production grew by 2% ( 5.7Mt) in the recent quarter but suffered a significant 17% reduction (11.3Mt) over the half-year period. This prompted BHP Australia management to revise its FY 2024 guidance downwards from 28Mt to 31Mt, now aiming for 23Mt to 25Mt.
Energy Coal and Nickel: A Mixed Bag
On a brighter note, energy coal production saw a promising 7% increase for the quarter and a 36% surge for the half-year.
As for nickel production, there was a 3% dip in the second quarter, but it managed an overall increase of 4% for the half-year period. BHP’s guidance for both commodities remains untouched, with energy coal production now expected to hit the higher end of the forecast range.
Tracing the Contrast Between Expectations and Reality
Expectations were higher for BHP’s output, with analysts predicting 72.5Mt of iron ore shipments, 454Kt of copper, and 6.9Mt of metallurgical coal.
The actual numbers, however, fell short, leading to a dip in share prices as the market reacted to these unmet forecasts.
Leadership’s Perspective on the Quarter
BHP CEO Mike Henry expressed contentment with the company’s performance in the year’s first half. He acknowledged a solid output, with highlights including a 5% increase in WA Iron Ore production and a record half for copper production at Spence.
He also noted that the NSW Energy Coal division achieved its best results in five years, while the BMA coal operation faced challenges.
Henry also emphasized the advancement of BHP’s growth agenda, mentioning the ongoing construction of the Jansen potash mine in Canada and the exploration successes under the Olympic Dam that unveiled high-grade copper mineralization.
Investment Opportunities on the Horizon: BHP Share Price ASX Prediction
BHP Group (BHP), a leading global metals mining company headquartered in Australia, specializes in extracting commodities, including iron ore, coal, oil and gas. Known for innovation at cost reduction and automation, BHP prioritizes sustainability and social responsibility. BHP shares currently trade at A$45.85. Research forecasts show a potential peak of A$51.98 by the end of 2024 and an estimated increase of A$78.76 by the end of 2029. Technical analysis shows strong selling for one hour (1H) and one day (1D). When considering long-term potential, investors should consider BHP’s global presence, commitment to innovation and sustainability efforts.