The BHP Group Ltd (ASX: BHP) share price has come under pressure on Thursday.
At the time of writing, the mining giant’s shares are down almost 3% to $50.86.
Despite this, the BHP share price is still up by a sizeable 20% since the start of the year.
Why is the BHP share price falling today?
Investors have been selling down the BHP share price today in response to the release of the Big Australian’s third quarter operational update.
That update revealed that many of BHP’s operations have been impacted by temporary labour constraints due to COVID-19. This led to the mining giant reporting softer than expected quarterly production and forced a downgrade to its guidance for some commodities.
In case you missed it, BHP reported:
- Iron ore production was flat quarter on quarter at 59.7Mt
- Copper production up 1% to 369.7kt
- Nickel production down 13% to 18.7kt
- Metallurgical coal production up 20% to 10.6Mt
- Energy coal production down 13% to 2.6Mt
- Petroleum production dropped 6% to 24.1 MMboe
How does this compare to expectations?
According to a note out of Goldman Sachs, its analysts were expecting a much better performance from BHP.
It had pencilled iron ore shipments of 67.2Mt, copper production of 413kt, petroleum production of 25.7 MMboe, and metallurgical coal production of 9.4Mt. The latter was beaten comprehensively, which is a positive given the sky high prices the steel making ingredient is commanding.
What else?
Also weighing on the BHP share price was management’s outlook.
Although it has reaffirmed its FY 2022 production guidance for iron ore, metallurgical coal, and energy coal, it has lowered its copper and nickel production guidance.
BHP’s full year total copper production guidance has been lowered to between 1,570 and 1,620 kt, reflecting lowered production guidance for Escondida. Whereas its full year nickel production guidance has been lowered to between 80 and 85 kt due to COVID-19 related labour constraints.
Positively, management reaffirmed its full year unit cost guidance for WAIO, Escondida, and Queensland Coal. And while it has increased its guidance for New South Wales Energy Coal, this reflects a targeted increase in the proportion of higher quality coal. This is so BHP can capture more value from the record high prices for higher quality thermal coal.
The post Here’s why the BHP share price is tumbling lower today appeared first on The Motley Fool Australia.
Should you invest $1,000 in BHP right now?
Before you consider BHP, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and BHP wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- ASX 200 midday update: BHP, Megaport, and Zip release Q3 updates
- BHP share price on watch following Q3 update
- 5 things to watch on the ASX 200 on Thursday
- Own BHP shares? Here’s why this week’s operations update could disappoint
- How does the Fortescue dividend compare to its sector?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/A0uFyUv
Leave a Reply