Australian multinational mining corporation BHP Group Ltd (LSE:BHP, ASX:BHP)’s latest first-half financials have been given a sobering assessment by equities analysts at RBC Capital Markets
Results were “weak across the board”, said analysts, signaling out underlying EBITDA of A$13.2bn coming in 4% lower than RBC’s guidance and earning per share of A$1.28 finishing 5% below guidance.
Free cash flows came in less than 30% of RBC’s projections, while net debt exceeded projections by A$4.8bn.
BHP’s first half was “surprisingly poor”, said RBC’s analysts, yet a strong indicator of the challenging inflationary environment engulfing the mining sector.
Even though inflation rates are predicted to fall in the second half of BHP’s financial year, RBC expects a “relatively large hurdle to meet cost guidance”.
On the plus side, coal prices are expected to rise sharply.
“At 1.8-times net asset value, we view the risk/reward increasingly skewed negatively, especially considering commodity prices have run ahead of what remains a tepid Chinese recovery”, said RBC.
Analysts rated BHP a ‘sector perform’ stock at a A$38 (2,300p) target price.