Stock of the day: BHP Group Limited
BHP reinforces its production and cost outlook with record copper output, despite trading pressures and higher steelmaking coal costs.
(AI video summary)
This video was created on 17 April for IG audiences by ausbiz.
ASX code: BHP
BHP reaffirms production and cost guidance
BHP Group Limited has reaffirmed its production and cost guidance following record copper and iron ore production over the past nine months. Copper production reached 1.5 million tonnes, driven by a 20% increase at Escondida, Chile.
However, third-quarter (Q3) iron ore production dropped 7% from the previous period, and nickel production fell over 70%. BHP may separate its iron ore and coal businesses and aims to cut greenhouse gas emissions by at least 30% by the 2030 financial year. BHP has also flagged higher costs for its steelmaking coal project due to weather and geotechnical issues.
Trading patterns and analyst views
BHP's share price is in a downtrend, trading around A$36, below the typical A$40 – 50 range. Analysts see value at the current price, with a price-to-earnings (P/E) ratio of approximately 10, placing it in the bottom quartile of its historical range. BHP's size and cost position offer a competitive advantage.
Commodity outlook and strategic positioning
Nickel output decreased 88% year-on-year (YoY), while copper production rose 10%. Copper, a strategic metal, benefits from current price strength, influencing some contractors to switch to aluminium or plastic. Despite global concerns, iron ore prices hold around $100, with BHP's costs at $25 – 28 per tonne.
China remains a key market for Australian commodities and benefits from a weakening US dollar, aiding BHP's outlook amid expectations of a global economic slowdown.
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