Why the BHP (ASX:BHP) share price is up on AGM news

The BHP Group Ltd (ASX: BHP) share price was up 2.60% at the time of writing today at $36.96. This came after the company’s 2020 AGM yesterday.

What did the AGM discuss?

BHP chair Ken MacKenzie outlined the resource producer’s financial highlights at the AGM.

In the year to 30 June 2020, BHP had earnings of US$22.1 billion and an earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of 53%. Free cash flow was US$8.1 billion.  Net debt for the group was US$12 billion at 30 June 2020 which, according to the chair, was at the bottom of the group’s target range. Shareholder returns were 120 US cents per share in the 2020 financial year, representing a pay out ratio of 67%. The company had a 17% return on capital employed in FY2020.

Mr MacKenzie pointed to the issues facing the world over the year to 30 June 2020 including social unrest in Chile, bushfires in Australia and the COVID-19 pandemic. However, he said that BHP had performed “solidly” over the period despite global adversity.

He described BHP’s products as essential for global economic growth and for a transition to a lower carbon world. He said the company’s priorities remained the same as they had been over the last 3 years. These were safety, portfolio, capital discipline, capability and culture and social value.

Mr MacKenzie reiterated the company’s push toward copper and nickel and its plan to divest a number of coal assets currently held by BHP.

BHP CEO Mike Henry also addressed the AGM and highlighted that BHP was committed to a 30% reduction in operational emissions over the next decade with a plan to reduce these emissions to a net zero by 2050.

Mr Henry said the company was currently moving toward ‘future facing’ commodities including copper, nickel and potash. This would take place as growth in demand for iron ore, metallurgical coal and oil and gas slowed.

The CEO added the company was investing in long-term growth while maximising the value of its current assets. He said while the outlook for commodities was uncertain, there was some optimism from the “strength and consistency” of the economic recovery underway in China.

About the BHP share price 

BHP is a major resources producer with interests in iron ore, coal, copper, nickel, potash, oil and gas. BHP has been listed on the ASX since 1961 and has a history dating back to 1885.

Earlier this month, BHP announced that it would acquire an additional 28% interest in the Shenzi oil asset from Hess for US$505 million.

The BHP share price is up 53.43% since its 52-week low of $24.05, however, it has fallen 5.26% since the beginning of the year. The BHP share price is up 2.27% since this time last year.

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Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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