It was a series of announcements from BHP on Tuesday with a lot of naughts and a historic, company-changing restructure that will see a long-term boost to the value of the company’s share price.
BHP will pay shareholders a $US2 a share final dividend, sell its oil and gas business to Woodside, start the huge Jansen potash project in Canada as a replacement and end dual listing of the company in London and bring the vastly changed company back under its Australian listing.
The company will sell its oil and gas business to Woodside in a $US17 billion deal (see separate story on that deal and the Jansen go-ahead).
The final dividend is more than three times the 65 cents a share paid for 2019-20 and shareholders can thank booming iron ore and copper prices for that boost, along with an assist from its about to be sold oil and gas business.
The record final dividend takes BHP’s returns to shareholder to more than $US15 billion for the full year to June 30 – that more than $A20 billion.
BHP reported a profit from operations for the year of a record $US25.9 billion, up 80% and underling earnings before interest, tax, depreciation and amortisation of $US37.4 billion.
That was a record gross profit margin of 64% on total revenues for the year of $US60.817 billion.
The attributable profit of $US11.3 billion was not an accurate indication of the bottom line for the company. That’s because that figure includes an exceptional loss of $US5.8 billion predominantly related to the impairments of the potash and energy coal assets, and the current year impact of the Samarco dam failure).
Underlying attributable profit for the year was $US17.1 billion, up 88% from the Covid hit 2019-20 year (especially the June, 2020 half year).
In yesterday’s statement the company said its strategy is to deliver long-term value and returns through the cycle.
“We aim to do this through owning a portfolio of world class assets with exposure to highly attractive commodities which benefit from the mega-trends playing out in the world around us, by operating them exceptionally well, by maintaining a disciplined approach to capital allocation and through being industry leaders in sustainability and the creation of social value.
“As the world continues to evolve, BHP is positioning itself to benefit from the mega-trends and through sustainability leadership,” the company said in the statement.
Besides the Woodside deal, the Jansen go ahead, the higher profit and record dividend, the ending of the dual listing with London is a major development.
BHP says the move will “unify our corporate structure under BHP’s existing Australian parent company to realise simplification and enhanced strategic flexibility benefits.”
That will end 20 years as a dual listed company (along with Rio Tinto). The structure was put in place when BHP merged with the London-based South African focused Billiton.
Shareholders in the Plc company listed in London will be taken onto the Australian register and their shares will be quoted here in Australian dollars. They will get Australian shares on a one for one basis.
Many UK institutions won’t like that because of the currency changes – the London shares are quoted in sterling. London holders will whine in moan through the likes of the Financial Times, and other UK media.
The company had net debt at of just $US4.1 billion, compared to $US12.0 billion at June 2020.
“In light of our announcement to pursue a merger of our Petroleum business with Woodside, we will be reviewing our net debt target and will provide an update with our interim results for the 2022 financial year in February 2022,” BHP said.
Some analysts took that to mean BHP might have further room for more capital management moves next year.
The announcements, led by the ending of the dual listing, saw BHP shares rise sharply in early London trading on Tuesday.
