BHP Group PLC Updates
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Britain’s blue-chip FTSE 100 index will lose its largest holding after mining company BHP said it would unify its dual-corporate structure and move its primary stock exchange listing to Australia.
The move was announced when BHP unveiled a deal on Tuesday to exit oil and gas by merging the company with Australia’s Woodside Petroleum. It also announced a record final dividend of $10.1 billion as profits soared on rising commodity prices.
The unification of the company’s complex dual-listed structure – which consists of BHP Ltd listed in Sydney and BHP Plc listed in London – coupled with the exit from petroleum are some of the most radical corporate changes in its history.
They come as chief executive Mike Henry tries to shift BHP’s focus to metals like copper and nickel, as well as green commodities. The company also said Tuesday that the board had approved plans to develop Jansen, a $5.7 billion potash project in Canada.
Henry told the The Washington City Times that now was the right time to move to a simpler corporate structure that would allow the company to grow.
“One of the reasons I’m in the UK is that I don’t want people to misinterpret the unification as an indication that we are withdrawing from the UK. We have another [secondary listing here]Henry told the The Washington City Times.
“I hope shareholders will see the wisdom for the company in terms of simplifying the corporate structure”. . . and what that means for long-term growth.”
Shares in BHP rose 8.3 per cent to £24.71 in early trading in London on Tuesday.
“The big news is the unification and the hoped-for narrowing of the 16 percent discount that the LSE line is trading against against the ASX line, which we believe is driving outperformance,” Berenberg analysts said, referring to the share price rise.
BHP is the largest company on the London Stock Exchange by market value and the unification of its dual-listed structure will mean shifting its primary listing to the Australian Stock Exchange.
Under the existing rules, this will mean that BHP will be removed from the blue-chip FTSE 100 index and due to their investment mandates, many UK shareholders will be forced to sell. The unification requires shareholder approval.
BHP said underlying attributable profit, a measure tracked by analysts, was just over $17 billion for the year to June, up $9 billion from the prior 12-month period, on revenue of nearly $61. billion.
Strong cash generation allowed the company to pay a final dividend of $2 per share, or $10.1 billion, bringing the total payout for the year to $15 billion. Last year, BHP announced total dividends of $1.20 per share or $6.1 billion.
Net debt was $4.1 billion, up from $11.8 billion at the end of 2020. Steel production commodities iron ore and copper were the main driver of earnings.
BHP is the latest major miner to report results in what has been a stellar earnings season as the industry has emerged as one of the biggest beneficiaries of China’s rapid economic recovery from the coronavirus pandemic. Stimulus measures in major economies have also contributed to strong demand for commodities, pushing prices up sharply.
The merger of BHP’s oil business with Woodside comes as major mining companies come under pressure to reduce their exposure to fossil fuels and align them with the goals of the Paris climate accord. BHP is also looking for a buyer for its latest thermal coal mine.
“The merger of our petroleum businesses with Woodside will create a top 10 global independent energy companies, unlocking value for BHP’s shareholders, including through synergies, and a stronger, more resilient combined company that will be better positioned to continue growing in value as it navigates. the energy transition,” says Henry.