BHP Group Limited (BHP) Q2 2026 Earnings Call Prepared Remarks Transcript

2026-02-17 03:37:37 ET

BHP Group Limited (BHP) Q2 2026 Earnings Call February 16, 2026 7:00 PM EST

Company Participants

Mike Henry - CEO & Executive Director
Vandita Pant - Chief Financial Officer

Presentation

Mike Henry
CEO & Executive Director ...

Thank you for joining us to hear about BHP's December 2025 half year results. I'm joined by our Chief Financial Officer, Vandita Pant. This has been another good half, both operationally and financially. Our strong performance on production delivery and cost control, coupled with a strong commodity price environment has underpinned continued balance sheet strength and growth in cash returns for the period.

We continue to deliver well against our strategy, and we can see the fruits of our strategy execution evident not only in our continued operational excellence, but also in the fact that just over half of our earnings for the period came from our copper business. That's up 30 percentage points over the past 3 years, and this is the result of our deliberate actions to grow our copper business, including through more reliable operations at Olympic Dam, our focus on grade and sequencing at Escondida and our OZ Minerals acquisition.

This has positioned us well for the strengthening copper dynamics that we have forecast. And we have built a strong pipeline of growth in both copper and in potash. I remember one of my predecessors many years ago talking about how the combination of a strong, stable asset base, operational performance and balance sheet, combined with growth options was the winning formula for value creation.

And in the almost 25 years since the merger of BHP and Billiton, we have delivered the highest total shareholder return of the major diversified miners and around 4x that of the MSCI, World Metals and Mining Index. That formula is as valid today as it was then. Today, Vandita and I will share how we are well placed to continue delivering on our strategy and growing value for shareholders. This half, we set operational records in copper and iron ore at a time of high commodity prices, and we did it safely.

At Escondida, we raised copper production guidance for this year and next, and we remain on track to meet full year guidance across the rest of our business. We advanced our copper growth options, targeting around 2.5 million tonnes of copper equivalent per year, including byproducts by the mid-2030s. And over the past 3 months, we've announced agreements in relation to Western Australia Iron ore's inland power use and Antamina's future silver production.

Across the group, we see potential for up to $10 billion in capital that could be unlocked and reinvested into higher returning opportunities and/or increase shareholder returns. Our performance and our confidence in the business have allowed us to determine an interim dividend of USD 0.73 per share, up 46% half-on-half. Of course, nothing matters more than safety.

Key safety metrics improved during the half with a lower high potential injury frequency and improved hazard identification. Most importantly, no one lost their life on the job. Alongside the improvements enabled by our BHP operating system, we're also using more technology to keep people out of harm's way and detect risks earlier. BHP's strategy remains clear and simple. We invest in highly attractive commodities, operate world-class assets excellently, allocate capital with discipline and offer a distinctive approach to social value.

Our track record is compelling, margins averaging above 50% over 25 years, a strong balance sheet and over $110 billion returned to shareholders over the past decade. We are also progressing organic growth options to deliver compound annual copper equivalent production growth of 3% to 4% through to 2035. Stability plus growth equals value.

Let me delve into a couple of these quickly, starting with operational excellence. At our assets, our prioritization of safety, operational reliability and continuous improvement is enabled through our BHP Operating System, or BOS. BOS empowers our teams to identify opportunities and act on them quickly. It has also been a key factor in our track record of meeting our production and unit cost guidance more reliably than our competitors.

In copper, we've raised production guidance by a cumulative 150,000 tonnes over the next 2 years. We're capturing the current high copper and gold prices. And at Western Australia Iron Ore, we've increased our lead as the world's lowest cost major producer. In fact, we've reduced costs in real terms post-COVID, the only major Pilbara producer to do so. This is a critical advantage as competition in this market intensifies. Why are we so focused on operational performance? Because it's incumbent on us to generate maximum value for the capital we have deployed in the business.

It has also positioned us to derive maximum benefit from this period of higher prices. This delivers value for shareholders now through higher payouts. It also allows us to invest in the future. And this investment will drive growth over both the near and longer term from around 3% per year through to 2030 and accelerating beyond that. Underpinning this is expected growth of around 5% per year on average in our copper business. A significant portion of our growth comes from brownfield expansions or greenfield projects, which we have derisked through partnerships and stage development.

Shareholders can have confidence in our execution. Now of course, not all dollars get reinvested in growth. We have a clear capital allocation framework that has ensured attractive cash returns to shareholders are protected. In doing so, this has ensured better discipline in how we invest through forcing competition for capital. Disciplined capital allocation has been central to BHP's strategy for many years and contributed to our consistently strong shareholder returns.

As I mentioned before, we have returned over $110 billion to shareholders via dividends, share buybacks and demergers over the past decade. This represents over 70% of today's market capitalization. With that, I'll hand over to Vandita to take you through our financial performance.

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