BHP Group Limited and BHP Group Plc — FY2021 Form 20-F
Period note: The request specifies “2020 Q4,” but the supplied filing is BHP’s annual report for the fiscal year ended 30 June 2021. It does not provide a clear standalone Q4 financial summary. Results below are for FY2021 versus FY2020, in US dollars unless stated otherwise.
Business context
BHP is a global resources group operating through a dual-listed-company structure. Its major businesses include iron ore, copper, coal, petroleum, nickel and potash development. The consolidated financial statements are audited and prepared under IFRS.
Key financial metrics
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | US$60.8bn | US$42.9bn | +42% |
| Profit after tax attributable to BHP shareholders | US$11.3bn | US$8.0bn | +42% |
| Underlying attributable profit | US$17.1bn | US$9.1bn | +88% |
| Underlying EBITDA | US$37.4bn | US$22.1bn | +69% |
| Net operating cash flow | US$27.2bn | US$15.7bn | +73% |
| Free cash flow | US$19.4bn | US$8.1bn | +140% |
| Capital and exploration expenditure | US$7.1bn | US$7.6bn | −7% |
| Net debt at year-end | US$4.1bn | US$12.0bn | Down US$7.9bn |
| Gearing | 6.9% | 18.8% | −11.9 percentage points |
| Underlying return on capital employed | 32.5% | 16.9% | +15.6 percentage points |
| Dividends determined for the year | US$3.01 per share | US$1.20 per share | +151 cents |
Cash and cash equivalents were US$15.2bn against interest-bearing liabilities of US$21.0bn. BHP reported working capital was sufficient for its present requirements and had an undrawn US$5.5bn revolving credit facility. Moody’s rating was A2/P-1, stable; S&P changed its outlook to CreditWatch negative in August 2021.
FY2021 statutory attributable profit included exceptional losses of US$5.8bn after tax, compared with US$1.1bn in FY2020. Continuing-operations profit after tax was US$13.5bn; the difference to attributable profit reflects non-controlling interests.
Material changes versus FY2020
- Revenue growth was driven mainly by higher realised prices for iron ore, copper, nickel, oil, natural gas and thermal coal. Underlying EBITDA benefited from a US$17.0bn sales-price impact.
- Iron Ore revenue rose to US$34.5bn from US$20.8bn and segment underlying EBITDA to US$26.3bn from US$14.6bn. WAIO achieved record production.
- Copper revenue rose to US$15.7bn from US$10.7bn, while production fell 5% to 1.636Mt, mainly from lower grades and COVID-related workforce constraints in Chile.
- Coal revenue declined to US$5.2bn from US$6.2bn and underlying EBITDA to US$0.3bn from US$1.6bn, reflecting weaker metallurgical coal prices, lower energy coal production and adverse exchange movements.
- Petroleum revenue declined slightly to US$3.9bn; production fell 6% to 103MMboe, while underlying EBITDA increased to US$2.3bn from US$2.2bn.
- Exceptional items included impairments for NSW Energy Coal, Cerrejón and potash, COVID-19 costs, and Samarco-related charges. Tax expense increased to US$11.2bn from US$4.8bn, mainly on higher profits and withholding tax.
Outlook, strategy and material risks
- FY2022 production guidance: copper 1.590–1.760Mt; WAIO iron ore 246–255Mt (278–288Mt on a 100% basis); metallurgical coal 39–44Mt; energy coal 13–15Mt; petroleum 99–106MMboe. Guidance reflects continuing operational, grade, weather and COVID-19 uncertainty.
- Cost guidance: WAIO US$17.50–18.50/t; Queensland Coal US$80–90/t; NSWEC US$62–70/t; petroleum US$11–12/boe; Escondida US$1.20–1.40/lb. Medium-term WAIO unit costs were revised to below US$16/t. BHP did not provide medium-term coal volume or unit-cost guidance given uncertainty around Chinese import restrictions.
- The Board approved a US$5.7bn investment in Jansen Stage 1 potash in August 2021. First ore is targeted for 2027; expected capacity is 4.35Mtpa after construction and ramp-up.
- BHP and Woodside announced a proposed all-stock merger of BHP’s petroleum business with Woodside, expected to complete in the first half of calendar 2022, subject to approvals and definitive agreements. The transaction’s full financial reporting effects were still under assessment.
- BHP proposed unifying its dual-listed structure under BHP Group Limited, with shareholder votes expected in the first half of 2022. Estimated one-off costs are US$400–500m.
- BHP agreed to sell its 33.3% Cerrejón interest for US$294m, subject to regulatory and competition approvals. Processes to divest BMC and NSW Energy Coal were ongoing.
- Major risks include commodity-price volatility, geopolitical and trade restrictions, operational incidents, climate transition and physical risks, cyber threats, regulatory and permitting changes, and social, environmental and Indigenous-rights impacts.
- Samarco remains a significant contingency. The Group reported a US$2.6bn provision for the dam failure and US$232m for Germano dam decommissioning at 30 June 2021. Extensive Brazilian proceedings and settlement negotiations continued; management said a reliable estimate of potential exposure for many claims was not possible.
- The Board’s three-year viability assessment found BHP could continue operating and meet liabilities. In its most severe combined stress scenario, estimated net debt reached about US$48bn before mitigating actions; management identified actions including deferring discretionary capital expenditure and asset divestments, with a potential net debt limit of about US$30bn.
Most important facts for investors to verify
- Confirm the intended reporting period: this filing covers FY2021, not standalone 2020 Q4.
- Review the exceptional-item reconciliation, particularly the potash and coal impairments, COVID-19 costs and Samarco provisions, and distinguish statutory from underlying results.
- Check subsequent approvals, terms, timing and financial effects of the Woodside merger, Jansen investment, corporate unification and planned divestments.
- Assess whether commodity prices, exchange rates, production volumes, cost inflation and Chinese coal trade restrictions support the stated outlook.
- Monitor Samarco litigation, settlement negotiations, funding requirements and any changes to provisions or contingent liabilities.
- Review liquidity and credit-rating developments, including the S&P CreditWatch negative status, and confirm dividend payments and future capital allocation.