BHP warns ‘trade tensions’ pose risks to growth

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BHP has warned that “potential trade tensions” pose a risk to global economic growth after the world’s largest mining company cut its interim dividend to the lowest level for eight years because of weak Chinese demand.

The Australian company reported an 8 per cent decline in revenue to $25.2bn in the six months to the end of December as a result of lower prices for commodities, including iron ore and steelmaking coal.

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The company’s profit before tax increased to $8.7bn from $4bn but its underlying attributable profit declined 23 per cent to $5.1bn — its lowest since 2020 — due to lower revenue and exceptional losses related to legal settlements and the closure of its nickel operations. 

The miner cut its dividend to 50 cents a share — its lowest payout since 2017 and down from 72 cents in the first half of the financial year. That $2.5bn return to shareholders represented a 50 per cent payout of the cash generated in the half-year period.  

Junvum Kim, a trader with Saxo Asia Pacific, said BHP’s underlying profit decline and lower dividend “highlights the vulnerabilities of relying heavily on Chinese demand”.

Mike Henry, chief executive of BHP, said strong cash generation was “a real hallmark” of BHP, adding that the company had returned $83bn to shareholders since 2016 and more than $100bn when including the demerger of its oil and gas operations which were combined with Woodside. 

Henry pointed to “early signs” of a recovery in demand in China, where weakness in the property sector had reduced demand for commodities such as iron ore. 

The “pro-growth stance” of Beijing’s stimulus policies was driving “green shoots” in the Chinese economy, he said, adding that the country’s property sector had been stabilising, with “momentum building into 2026”.

The company said global demand continued to be soft last year due to “sluggish” industrial activity, but that cuts in interest rates would drive a near-term recovery in steel and copper demand. 

However, it sounded a note of caution over a potential upheaval in global trade. “Potential trade tensions present a risk to the recovery in developed economies and across the globe,” it said in its outlook.

Henry said the US only accounts for 3 per cent of its revenue and that he expected a rebalancing of the global market to reflect the imposition of tariffs by the US under President Donald Trump and other countries.

“It is very, very uncertain. Nobody knows where things are going to land,” he said.

Ahead of Australia’s next election, due by May, Henry argued that the country needed to work to attract investment into its mining sector with governments in the US and Argentina having moved to deregulate.

“This isn’t a static game. Other countries are taking bold steps to be more competitive. There’s an opportunity for Australia to lean into this,” he said.

BHP shares opened 0.5 per cent higher on the Australian market.

Paul McTaggart, an analyst with Citi, said the company’s earnings were in line with expectations and the profitability of the respective divisions had “no surprises”.