Full Year 2026 BHP Group Ltd Earnings Call (Australia, Asia and US) Transcript
Key Points
- Record copper production of ~2 million tons, contributing over half of annual EBITDA for the first time, with copper EBITDA up 35% to a record $18 billion.
- Strong financial performance: underlying EBITDA up 27% to $33 billion, underlying attributable profit up 30% to $13 billion, and return on capital employed at 26%.
- Operational excellence driven by BHP Operating System (BOS) and technology, delivering over $5 billion in cost savings and a 6% improvement in unit costs despite inflation.
- Robust growth pipeline with 3-4% annual production growth expected through 2035, including ~5% copper growth, supported by projects like Escondida, Copper SA, and Vicuña.
- Strong balance sheet with net debt below $9 billion, enabling a full-year dividend of $8.7 billion (highest in four years) and continued investment in growth.
- WAIO achieved record production and shipments, maintaining its position as the world's lowest-cost major iron ore producer for the seventh consecutive year.
- Jansen potash project on track for first production mid-2027, expected to deliver ~$1 billion EBITDA per stage with margins above 60%, diversifying earnings.
- Technology initiatives are delivering incremental EBITDA at an annual run rate of ~$500 million, with a target to increase to $650 million by end of 2027.
- Capital allocation framework remains disciplined, with $6.3 billion of the $10 billion undervalued capital unlock already executed, and strong free cash flow generation expected.
- Copper South Australia achieved record production and free cash flow, with unit costs down to $0.32 per pound, benefiting from $2.3 billion in byproduct revenue.
- A fatality occurred at Peak Downs Mine, highlighting ongoing safety challenges and the need for continued improvement to achieve zero fatalities.
- Jansen project incurred a $2.3 billion non-cash impairment, reflecting cost overruns and delays, and highlighting project execution risks.
- Unit costs at WAIO increased by 1% due to currency pressures and inflation, with guidance for 2027 showing a 7% increase, partly due to FX and inventory adjustments.
- Escondida's cost guidance for 2027 includes a 40% increase due to input costs like sulfuric acid and diesel, which could pressure margins.
- BMA's returns remain below portfolio average, with medium-term guidance of 43-45 million tonnes and unit costs of $120 per tonne, indicating ongoing challenges.
- The company faces potential market oversupply in potash, with Jansen adding 5% to global supply, which could pressure prices.
- Capital expenditure guidance increased to ~$11 billion per year, partly due to Jansen Stage 2 cost increases and FX changes, which may limit free cash flow.
- The company's growth projections of 3-4% are above consensus estimates of ~2%, suggesting potential for disappointment if targets are not met.
- Vicuña project faces execution risks, including construction at high altitude and environmental factors, with FID still pending.
- The company's strong share price performance may limit upside, as the market may have already priced in much of the positive news.
Welcome to today's presentation of BHP's results for the 2026 financial year. My name is Brandon Craig, and I'm joined by our Chief Financial Officer, Vandita Pant.
As Chief Executive Officer, it is a pleasure for me to host this call with all of you this morning. But let me begin by saying that BHP is in great shape. Mike has left us a strong platform with a Tier 1 portfolio, an operating system that continues to improve, and a balance sheet that allows us to invest through the cycle. I intend to build on this strong foundation by adding even greater pace, improving our operational practices, and focusing on our customers and markets.
Today, we have great momentum, which you will see in our operational and financial results. The opportunity now is to accelerate performance to lift safety, productivity, and growth to the next level while maintaining the discipline that has served shareholders well over many years.
That is the agenda I am focused on as Chief Executive Officer: accelerating performance,
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