ASX-listed BHP Group Limited (AU:BHP) is betting big on generating higher returns from copper after reporting a 2% rise in its profits for FY24. The company’s underlying attributable profit increased to $13.7 billion in FY24 from $13.4 billion a year ago, thanks to higher prices for key commodities and cost control measures. Following the results, BHP shares gained 1.25% today.
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BHP is a global mining company with a diverse portfolio that includes commodities such as iron ore, coal, copper, nickel, and others
BHP Sets Sights on Copper Expansion
BHP is eyeing expanding its copper base to capitalize on the growing demand for this metal due to the focus on energy transition. Additionally, the company is looking to offset the falling returns from iron ore, its largest revenue source. The economic slowdown in China and its sluggish property market continue to weigh on the demand for iron ore, resulting in a less favourable outlook for the key commodity.
In FY24, BHP’s iron ore production increased by 1% year-over-year to 260 Mt (metric tons). Moving forward, the company expects its production to range between 255 and 265.5 Mt in FY25.
Meanwhile, copper production rose by 9% for the second year in a row in FY24 and is projected to grow by an additional 4% at the midpoint of the outlook range for FY25. In South Australia, BHP is exploring ways to boost copper production to over 500,000 metric tons annually by the early 2030s, up from 322,000 tons in FY24. Copper currently contributes around 30% of the miner’s underlying profits, and this share is expected to grow.
BHP Delivers Solid FY24 Performance
In FY24, BHP’s free cash flow grew by 111% year-over-year to $11.9 billion. Meanwhile, the company’s net debt decreased to $9.1 billion from $11.2 billion in FY23.
Driven by its strong balance sheet, the company announced a final dividend of 74 cents per share with a 53% payout ratio. The total dividend for FY24 stood at $1.46 per share.
Is BHP a Good Stock to Buy Now?
According to TipRanks’ consensus, BHP stock has been assigned a Moderate Buy rating, backed by five Buy and nine Hold recommendations. The BHP share price target is AU$43.20, which is 4.19% above the current trading price.
