ASX 200: BHP 1H 2023 earnings preview

When will BHP report its latest earnings?

BHP is scheduled to report its 1H 2023 earnings on Tuesday, February 21st, 2023, at 8.30 am AEDT.

What should traders look out for?

BHP is headquartered in Melbourne and is the largest listed company on the ASX with a market capitalisation of US$171 billion. After consolidating its dual-listed structure last year, the company now accounts for 11.1% weight in the ASX 200.

On the 19th of January, BHP reported its Q2 FY23 production and 1H 2023 realised prices and on the production side, highlights included:

• Record production for WA Iron Ore (WAIO) of 146 Mt
• Better than expected numbers for copper production at the Escondida mine despite road blockades in Chile
• Coal production in QLD was “again impacted by heavy rainfall”
• Overall production guidance for the 2023 FY was left unchanged.

Realised prices were lower than expected for iron ore, copper, and energy coal and higher than expected for coking coal and nickel. Guidance was left mostly unchanged and take into account the sharp fall in commodity prices in the second half of 2022.

The recovery in iron ore and copper prices from the end of last year will flow into FY 23 numbers. As will the headwinds of the recent decline in thermal coal prices, which is partially offset by higher coking coal prices.

BHP & OZ Minerals

In December 2022, BHP entered a Scheme Implementation Deed with OZ Minerals Ltd (OZL) to acquire 100% of OZL by way of a scheme arrangement for a cash price of A$28.25 per OZL share.

The scheme’s implementation is subject to satisfaction of certain conditions, including OZL shareholder approval. The OZL Board has unanimously recommended that OZL shareholders vote in favour of the scheme in the absence of a superior proposal and subject to an independent expert concluding that the scheme is in the best interests of OZL shareholders.

BHP earnings – what to expect

After achieving revenues of US$65.1 billion in FY 2022, the market is looking for FY 2023 revenues to fall by 15% to $55.1 billion on lower commodity prices, of which US$25.9 billion will fall in 1H 2023.

Underlying EBITA in 1H 2023 is expected to be US$13.8 billion on FY 2023 EBITA of US$31.56 billion, a 25% fall from last year’s full-year EBITA number.

BHP revenue chart

BHP technical analysis

In late January, the share price of BHP broke above its previous all-time high of $48.57 to make a new all-time high of $50.21. The push to new highs came following the re-opening of the Chinese economy from Covid lockdowns and an expected rebound in growth and commodity prices.

As the initial euphoria around China’s reopening wore off, and as the prices of key commodities, iron ore and copper, entered a holding pattern, the share price of BHP also moved sideways in February.

Providing the share price of BHP remains above the horizontal trendline and breakout point currently at $47.20, the share price is likely consolidating its recent gains. As such, we suggest giving the uptrend time to re-establish itself, looking for the rally to extend towards $52.00.

Aware that should BHP see a sustained break back below $47.30/20, it would warn that the break higher has failed and that a deeper pullback towards $45.00 is underway.

BHP daily chart

Summary

BHP is scheduled to report its 1H 2023 earnings on Tuesdays, February 21st, 2023, at 8.30 am AEDT. The numbers will be lower than the record numbers of FY 2022, reflecting the fall in commodity prices in the second half of last year.