BHP(BHP) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company's underlying EBITDA grew by 25%, with an increased margin of 58% [10] - Underlying attributable profit reached $6.2 billion, and return on capital employed was 24%, both significantly up from the previous year [10] - An interim dividend of $0.73 per share was declared, representing a 46% increase half-on-half, with a total half-year dividend of $3.7 billion and a payout ratio of 60% [4][10] Business Line Data and Key Metrics Changes - Copper business generated a record $8 billion of EBITDA, accounting for over half of the group total, with a margin of 66% [11] - Production in copper increased by 2%, while gold production rose by 12% in Copper South Australia, leading to a more than 50% reduction in unit costs [12] - Western Australia Iron Ore achieved record first-half production and shipments, with C1 costs up only 1% to $17.66 per ton, maintaining its position as the lowest-cost major iron ore producer globally [12] Market Data and Key Metrics Changes - Global demand for copper is projected to grow by around 70% between 2021 and 2050, driven by traditional economic growth, energy transition, and increased use of data centers [22] - The company expects to generate around $60 billion in attributable free cash flow over the next five years, even in a prolonged low-price environment [13] Company Strategy and Development Direction - The company's strategy focuses on investing in highly attractive commodities, operating world-class assets, and maintaining disciplined capital allocation [4][8] - Plans to grow copper production by around 40% by 2035, with a capital-efficient, predominantly brownfield growth approach [21] - The company aims to unlock up to $10 billion in capital for reinvestment into higher-returning opportunities and increased shareholder returns [4][16] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the business's ability to deliver strong results amid favorable commodity prices and operational excellence [3][10] - Expectations for global GDP growth in 2026 to be broadly in line with the previous year, supported by policy responses in major economies [18] - The company is well-positioned to thrive through commodity price cycles due to its diversified portfolio [13] Other Important Information - The company has made significant progress in its capital allocation framework, including a valuable silver streaming agreement related to Antamina's future silver production, unlocking $4.3 billion in cash [14][15] - The Jansen Potash asset is expected to become a world-class, low-cost potash producer, contributing significantly to the company's EBITDA [21] Q&A Session Summary Question: What is the outlook for copper production growth? - The company plans to increase copper production by around 40% by 2035, with a clear pathway for growth [21] Question: How does the company plan to manage capital allocation? - The capital allocation framework ensures all users of capital compete to maximize value and return for shareholders, with a focus on unlocking additional value from the capital base [14] Question: What are the expectations for global demand in the coming years? - Global demand for commodities is expected to remain robust, supported by favorable trade outcomes and improved confidence in major economies [18]