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BHP earnings preview: will results help reverse the recent downtrend?

Investors are keen to glimpse the outlook from BHP’s upcoming annual report after rival Rio Tinto disappointed investors due to heightened uncertainties.

Source: Bloomberg

ASX: BHP release date

BHP Group Limited is expected to release its earnings report on Tuesday, August 16, 2022.

BHP earnings expectation:

  • NPAT: US$ 16.4 billion
  • EPS: 5.935 (48% up from FY21)
  • DPS: 4.49 (25% yearly increase)

BHP earnings key watch:

The markets are anticipating that BHP will report an underlying net profit of US$20.4 billion, up 19.3% on the year in 2021. During the first half of the financial year, BHP announced a jaw-dropping margin of 64% thanks in part to higher iron ore, copper, coal, and nickel prices and “near record production at Western Australia Iron Ore (WAIO).”

The operations profit was recorded at US $14.8 billion, an increase of 50% from the same quarter in the previous financial year.

Source: BHP

BHP’s mining exports broke records during the first quarter of 2022 due to the invasion of Ukraine by Russia. By April, the company’s commodity prices had lost steam as the price of iron ore fell 35% and copper fell 25%. It is expected that the fluctuation in prices will impact BHP’s earnings results.

Starting from the second quarter of the year, rising interest rates and the prospect of a recession have weighed heavily on the commodity outlook. This was recently seen when Rio Tinto, BHP’s major rival, declared it would be discounting its dividend pay-out due to an uncertain future ahead. It is due to this reason that BHP investors are keen to get a glimpse of the future outlook from the impending report.

Share price and technical analysis:

BHP’s share price has fallen from the April double top of $47.90 to around $37 in August, losing more than 25% of its value in three months. The break of support at $40.00/$39.00 leaves the share price vulnerable to a retest of the July $35.85 low.

Looking ahead, the price may test the level of $39.95 first (23.6% retracement from the April peak) as it defends the opening range for August, with a move above the 50-day SMA (around $40) bringing the July high to $42 on the radar. On the other hand, the price may find temporary support from the level of $38 if breaching through the moving trajectory.

BHP daily chart

Source: IG

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