BHP reports best profit in nearly a decade, pivots portfolio
Aug 17 (Reuters) - BHP Group reported its best annual profit in nearly a decade and a record dividend on soaring iron ore prices, as the world's biggest listed miner announced an exit from its $13 billion petroleum business as part of a portfolio shake up.
On a day of sweeping changes, BHP also said it was going ahead with its Jansen potash project in Canada and plans to do away with its dual-listed share structure.
The divestment of the assets to Woodside Petroleum Ltd , will allow a new, bigger petroleum company to better navigate the energy transition and will give shareholders greater choice in how they manage their fossil fuels exposure, Chief Executive Officer Mike Henry said.
"We (also) create a better ability to allocate capital within BHP towards investments longer term ... in future facing commodities."
Iron ore prices hit record highs this year supported by Beijing's infrastructure push, although a resurgence of COVID-19 cases in China and its vow to lower emissions by curbing steel output is expected to be a drag on the commodity.
BHP's London-listed shares soared nearly 10% higher. The miner's Australia-listed shares have climbed more than a fifth this year as it posted record iron ore output and earned more than double per tonne for the steel-making ingredient.
The company's underlying profit for fiscal 2021 rose to $17.08 billion, but missed a consensus of $17.46 billion compiled by Vuma.
The miner will pay $2 per share as a final dividend, totalling $10.1 billion, bringing the total payout for the year to $3.01 a share, or $15.2 billion.
"It is also important to think about where to from here ... the backdrop of a declining stimulus pulse in China begs the question 'is this the peak'," said Peter O'Connor, an analyst at Shaw and Partners in Sydney.
BHP said it was going ahead with its Jansen potash project, which is expected to cost $5.7 billion in the first phase, offering the company a route to pivot into new "future-facing commodities".
Jansen is expected to produce 4.35 million tonnes of potash per year from 2027. Potash is a key element in plant nutrition that also makes crops more drought resistant.
On a call following the results, CEO Henry said BHP remains committed to metallurgical coal, which is used in steel making, even as the company looks to exit thermal coal.
BHP took an impairment charge of $1.70 billion in fiscal 2021 related to its thermal coal assets and a $1.3 billion charge for a potash asset.
($1 = 1.3717 Australian dollars)
(Reporting by Nikhil Kurian Nainan and Anushka Trivedi in Bengaluru; Editing by Shounak Dasgupta)
