BHP narrowly misses expected profit, warns of slowing growth outside China By Reuters

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© Reuters. A tonne of nickel powder made by BHP Group sits in a warehouse at its Nickel West division, south of Perth

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MELBOURNE (Reuters) – BHP Group (NYSE:) on Tuesday said it expects most major world economies except China to bear the brunt of a coronavirus-led downturn this year, reporting a more than 4% drop in annual profit that missed analysts’ estimates.

While miners have seen green shoots emerge from an economic pickup in the world’s top metals user, as well as a boost in infrastructure spending, the risk of new virus outbreaks around the world threatens to undermine growth, BHP said.

The warning came as BHP reported underlying profit attributable from continuing operations for the year ended June 30 fell to $9.06 billion – below estimates of $9.42 billion, according to Refinitiv IBES data.

“With the exception of China, the world’s major economies will contract during the 2020 calendar year as a result of the COVID-19 pandemic,” Chief Executive Officer Mike Henry said in a statement.

Henry added that the potential for fresh waves of coronavirus infections in key markets was weighing on the demand outlook for 2021 at the world’s largest listed miner.

“Not too many surprises in there,” said portfolio manager Andy Forster of Argo Investments in Sydney. “Maybe a touch under expected, and the dividend a bit below.”

Shares fell by as much as 1.3% before rebounding to be down 0.9% at A$39.48, compared with a 0.7% rise in the broader index

The profit miss was in contrast to rival Rio Tinto (NYSE:), which last month rode its iron ore-rich portfolio to beat profit estimates and touted “a very steep V-shaped” recovery in China.

It declared a final dividend of 55 cents per share, down from 78 cents a year earlier, but still in line with its payout ratio.

BHP also said it was reshaping its portfolio for a decarbonising world, by seeking to divest its thermal coal operations.

It will look at options including a demerger or sale of the thermal coal assets, which include 80% of the BHP Mitsui Coal joint venture, the New South Wales Energy Coal operations and one-third of the Cerrejón mine in Colombia.

It also said it was looking to sell off its Bass Strait oil and gas stake.

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