We maintain a neutral rating on BHP Group

Overview

Despite the recent challenges faced by BHP Group, we maintain a neutral rating on the company due to a balanced risk-reward profile. The materialization of Samarco settlement risks and our preference for Rio Tinto’s cheaper valuation and organic growth are key factors in this decision.

Financial Performance

BHP’s H1 2025 results have shown a $2 billion sales decline, an 11% drop in EBITDA, and unchanged production guidance. This is despite strong operational performance and lower unit costs. The company’s net debt is expected to rise to $15 billion, and its dividend payout will be trimmed by 50% due to CAPEX plans and settlement costs.

Impact on Shareholders

Shareholders of BHP Group may feel the impact of the reduced dividend payout, but the company’s efforts to manage debt and invest in growth opportunities may provide long-term benefits.

Effect on the World

The financial challenges faced by BHP Group may have ripple effects on the global mining industry. As one of the largest mining companies in the world, BHP’s decisions and performance can influence market trends and investor confidence in the sector.

Conclusion

In conclusion, while BHP Group faces certain financial challenges, we believe the company’s long-term prospects remain positive. By carefully managing debt and investing in growth opportunities, BHP can navigate through the current uncertainties and emerge stronger in the future.