BHP Group Limited (formerly BHP Group)

Basis: IFRS, continuing operations except where noted. FY22 attributable profit and EPS include the Petroleum business (discontinued, merged with Woodside June 2022). Sources: FY26 Release (FY26/FY25); FY25 Release (FY24 comparatives); FY23/FY22 Annual Reports as recalled from BHP filings — FY22/FY23 entries flagged n.v. where not reconfirmed in this research. BHP reports expenses by nature; gross profit is not a reported IFRS line and is therefore "n.d.".

Income statement

Notes: FY25/FY26 PBT derived from FY26 Release footnote (Underlying EBITDA less D&A, impairments and exceptional items of US$9,078M [FY25 US$6,514M] less net finance costs US$1,455M [FY25 US$1,111M]). FY23 and FY24 underlying EPS derived from underlying attributable profit ÷ weighted shares (~5.07bn). Diluted EPS is within ~0.5 cents of basic in each year (n.v.). FY26 DPS = 73c interim + 99c final.

Margins and growth

Revenue CAGR (derived): FY22→FY26 −2.5% p.a. (peak-to-current, distorted by the FY22 commodity peak); FY23→FY26 +3.0% p.a.

Commentary. The five-year pattern is a classic commodity cycle overlaid with portfolio change. FY22 was the super-peak (iron ore and coal prices post-COVID, plus Petroleum), producing attributable profit of US$30.9bn. FY23–FY25 saw normalisation: lower iron ore and coal prices pulled revenue down to US$51.3bn in FY25, and statutory profit was further suppressed by exceptional items — FY24 included the WA Nickel impairment and Samarco provision increases (attributable profit US$7.9bn vs underlying US$13.7bn). The FY26 inflection is copper-driven: average realised copper rose 35% to US$5.74/lb, adding ~US$6.9bn of price impact to Copper EBITDA, while volumes fell 3% on planned Escondida grade decline. The Underlying EBITDA waterfall (FY26 Release) shows +US$7.3bn net price impact, −US$1.2bn volumes, +US$1.2bn controllable cost savings, −US$1.6bn other costs (FX −US$0.8bn, inflation −US$0.7bn, fuel −US$0.2bn). The gap between statutory (US$9.8bn) and underlying (US$13.2bn) FY26 profit reflects a US$2.3bn Jansen impairment and US$1.1bn of Samarco-related charges.

Balance sheet

Notes: FY25 total assets and cash per Kalkine aggregator data (labelled in local units on that page; figures consistent with BHP's FY25 USD balance sheet but not reconfirmed against the Annual Report). Net debt is BHP's non-IFRS definition (interest-bearing liabilities net of cash, including lease liabilities and adjusted for hedges). Net debt target range: US$10–20bn (unchanged). HY26 net debt peaked at US$14.7bn (gearing 20.9%) before the Wheaton proceeds.

Cash flow

Notes: BHP's FCF definition is NOCF less net investing cash flows (therefore includes acquisitions/disposals such as the Vicuña investment in FY25). FY26 additional liquidity: Antamina silver stream US$4.3bn and asset sales US$0.8bn; Samarco settlement cash outflow US$2.0bn (US$1.6bn net of FX hedges). BHP has not conducted an on-market buyback in the period; capital returns are via dividends under the Capital Allocation Framework (>US$115bn returned since 2016 including FY26 final).

Capital expenditure mix (USD bn, FY26 Release).

Ratios

Notes: Payout ratios: FY25 per market reporting (60c final ≈ 55% full-year); FY26 total dividends US$8.7bn = 66% of underlying attributable profit (StockTitan); the final dividend alone represents a 72% payout of H2 earnings (FY26 Release). Escondida ROCE 53%, WAIO 41%, Copper segment 26% (FY26 Release). BHP does not disclose a cash conversion cycle; ROE/ROA not reconfirmed.

Trend commentary. Balance-sheet capacity improved sharply in FY26: net debt fell 33% to US$8.7bn, below the bottom of the target range, because operating cash flow (+17%) and US$5.1bn of non-dilutive "capital unlock" (streaming, asset sales) more than covered US$9.2bn of dividends (shareholders + NCI) and the Samarco outflow. A further US$2.0bn was received from GIP in August 2026 (post balance date), and management sees ~US$3.5bn more of potential capital unlock toward a cumulative ~US$10bn ambition. Against this, the capex trajectory is rising (~US$11bn p.a. FY27–FY31), driven by Jansen Stage 2's higher cost and copper growth, and WAIO/BMA unit cost guidance for FY27 is higher on AUD strength and diesel.

Management guidance (FY27, FY26 Release).

Consensus growth expectations: FY27 consensus n.v.; volume guidance implies lower copper output (−8% to −15%) offset by price; earnings sensitivity skewed to copper price.

Bull case

1. Copper structural deficit: BHP's own outlook (demand 34 → >50 Mtpa) plus BofA's 20% upgrade to long-term copper (US$13,577/t) imply sustained 70% copper margins on a self-funding growth pipeline.

2. Balance-sheet firepower: net debt US$8.7bn (below US$10bn floor) plus US$2bn GIP proceeds post-period gives capacity to sanction Vicuña, Escondida New Concentrator and Copper SA without dilution.

3. Potash and iron ore optionality: Jansen first production mid-CY27 at ~63–64% margins; WAIO to >305 Mtpa at <US$19/t.

Bear case

1. Volume and cost air-pocket: FY27 copper down to 1.65–1.80 Mt and higher WAIO/BMA cost guidance compress earnings if copper retreats from tariff-inflated levels.

2. Capital intensity creep: Jansen overruns (+47% S1, +41% S2) and Escondida concentrator estimate rise (US$4.4–5.9bn → US$5.4–6.3bn) question returns on the US$11bn p.a. capex program.

3. Legal tail: Mariana liability upheld; a multi-billion-pound damages award (claim ~£36bn) across 2027–2030 is unquantified beyond the US$5.2bn provision.

Key catalysts & monitorables (next 12 months).

Concluding analyst verdict.

BHP enters FY27 in its strongest financial position in four years and with the clearest strategic identity in its modern history: a copper company with a world-class iron ore cash engine and a potash option. FY26 validated the pivot — copper generated 54% of Underlying EBITDA, Underlying ROCE rose to 26.1%, and net debt fell to US$8.7bn even after US$9.2bn of dividends, aided by US$5.1bn of creative, non-dilutive capital unlocks. Operating discipline remains the core differentiator: a 6.1% unit cost reduction across major assets in an inflationary year and seven consecutive years as the lowest-cost major iron ore producer.

The case is not without friction. FY27 is a volume trough for copper as Escondida grades fall toward ~0.70%, unit costs are guided higher, and the most visible blemish on capital allocation — Jansen, now US$15.3bn across two stages with a US$2.3bn impairment — tempers confidence in the much larger copper build-out. Samarco has migrated from a Brazilian settlement problem to an English damages process of uncertain size and long duration. China's centralised buying (CMRG) has demonstrated it can extract pricing concessions.

At ~16.5× underlying earnings and ~6.9× EV/EBITDA, with a ~4% fully franked yield, the market is paying for copper quality but not for perfection. The investment debate therefore hinges on three variables: the durability of copper prices above ~US$5/lb, execution credibility on Vicuña and Escondida's New Concentrator under a new CEO, and the eventual Mariana quantum. Our synthesis: BHP is a high-quality, balance-sheet-protected way to own copper growth, with near-term earnings momentum likely to plateau through the FY27 volume dip and legal headlines. We regard the risk/reward as balanced-to-positive for long-horizon holders, with the Jansen ramp-up and Vicuña FID the most important proof points for the Craig era. Investors should monitor capital intensity disclosures as closely as commodity prices.

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Prepared from public information as of 8 October 2026. Figures marked n.v. should be confirmed against BHP's Annual Report 2026 / Form 20-F before reliance.