BHP Billiton Group reported that its first-half underlying profits surpassed expectations, driven by the copper division, whose earnings exceeded those of the iron ore division for the first time, accounting for more than half of the global top miner's profits. BHP Billiton's stock price surged 7%, reaching a record high, as investors praised its dividend, which far exceeded expectations, along with promising future payout prospects.
The strong performance in copper comes amid a surge in demand for the red metal, fueled by rapid growth in electricity consumption for artificial intelligence data centers and the transition to clean energy. This has stimulated intense competition among mining giants for high-quality copper assets. BHP Billiton, the world's largest copper producer, emphasized its own copper growth options and downplayed the need for acquisitions, having abandoned a bid for Anglo American last year. Underlying attributable profit for the first half rose 22% to $6.20 billion, exceeding the Visible Alpha consensus of $6.03 billion. BHP Billiton declared an interim dividend of 73 cents per share, higher than the market expectation of 63 cents, with a payout ratio of 60%.
In the six months ended December 31, copper, including by-products such as gold, contributed $7.95 billion to BHP Billiton's operating profit, surpassing iron ore's $7.50 billion and accounting for 51% of the group's total underlying operating profit of $15.46 billion. This was primarily due to a 32% surge in realized copper prices and soaring prices of precious metals produced as by-products. Iron ore production reached a record high in the first half, while rising prices also boosted the miner's profits.
BHP Billiton CEO Mike Henry stated in a media conference call that, considering the company's organic growth options, BHP Billiton is not in a rush to pursue copper growth through mergers and acquisitions. Rio Tinto, the world's largest iron ore producer, had previously discussed acquiring Glencore, a deal that would have significantly impacted the global copper industry, but abandoned the plan due to disagreements over valuation.