The BHP Group Ltd (ASX: BHP) share price is up 5% after the resource ASX share reported its FY22 result, which included a huge dividend.
BHP has a portfolio of resources including iron ore, copper and nickel. It is also working on a potash project called Jansen.
BHP’s FY22 result
Here are some of the financial highlights from the report:
- Profit from continuing operations grew 34% to US$34 billion
- Continuing net operating cashflow rose 13% to US$29.3 billion
- Continuing operations EBITDA (EBITDA explained) grew 16% to US$40.6 billion
- Continuing operations underlying earnings per share (EPS) went up 25% to US$4.21
- Ordinary dividend per share up 8% to US$3.25
- ‘In specie’ dividend due to Woodside (ASX: WDS) petroleum merger of US$3.86 per share
BHP’s petroleum business was sold to Woodside for Woodside shares. The petroleum segment was classified as ‘discontinued’ operations.
The business was able to reduce its net debt by 92% to US$333 million, putting the business in a good position. It said it enters FY23 “in great shape strategically, operationally and financially”.
Potash
One of BHP’s main areas of focus for the future is its Jansen potash project. Potash is a form of fertiliser that is meant to be better for the environment.
BHP said that it has completed the production shafts at Jansen and it’s working to bring forward first production into 2026. It’s also assessing options to accelerate stage 2 of Jansen. It’s also assessing and adding to its options in copper and nickel.
Thoughts on China and the global economy
China is one of BHP’s main customers, so hearing the company’s thoughts on the situation there could be insightful. BHP said:
We expect China to emerge as a source of stability for commodity demand in the year ahead, with policy support progressively taking hold. At the same time, we expect to see a slowdown in advanced economies as monetary policy tightens, as well as ongoing geopolitical uncertainty and inflationary pressures. The direct and indirect impacts of Europe’s energy crisis are a particular point of concern. Tight labour markets will remain a challenge for global and local supply chains.
My thoughts on the BHP share price
It’s impressive how much profit BHP has been able to generate. I’d be happy if I were a shareholder because a massive dividend would be coming my way.
The outlook for iron ore is uncertain, but I’m optimistic about BHP’s other commodities including copper and nickel due to the decarbonisation efforts of the world.
I believe that investing in resource ASX shares is about choosing the right time to invest, when sentiment about the commodity is low. A share price of under $40 could prove to be a decent entry point, but it could get even more attractive if the iron ore price drops noticeably under US$100 per tonne. If I were looking to buy for my own portfolio, I’d want to wait for a lower entry price than today.