BHP Group on Tuesday said it expects most major world economies except China to bear the brunt of a coronavirus-led downturn this year, reporting a 4% drop in annual profit that missed analysts' estimates.
While miners have seen green shoots emerge from an economic pickup in the world's top metals user, as well as a boost in infrastructure spending, the risk of new virus outbreaks around the world threatens to undermine growth, BHP said.
The warning came as BHP reported underlying profit attributable from continuing operations for the year ended June 30 that fell to $9.06 billion below estimates of $9.42 billion, according to Refinitiv IBES data.
"With the exception of China, the world's major economies will contract during the 2020 calendar year as a result of the Covid-19 pandemic," Chief Executive Mike Henry said in a statement.
Henry added that the potential for fresh waves of coronavirus infections in key markets was weighing on the demand outlook for 2021 at the world's largest listed miner.
"Not too many surprises in there," said portfolio manager Andy Forster of Argo Investments in Sydney. "Maybe a touch under expected, and the dividend a bit below."
Shares fell by as much as 1.3% before trimming the drop to 0.3% at A$39.75 ($28.72) by 0203 GMT, compared with a 1% rise in the broader index
The profit miss was in contrast to rival Rio Tinto, which last month rode its iron ore-rich portfolio to beat profit estimates and touted "a very steep V-shaped" recovery in China.
It declared a final dividend of 55 cents per share, down from 78 cents a year earlier, but still in line with its payout ratio.
BHP also announced asset divestments and executive leadership changes - that will see top management evenly split by gender - as Henry, who officially took the reins in January, puts his stamp on the business.
The miner said it is looking at options including a demerger or sale of thermal coal assets, as it favors energy-rich metallurgical coal in its portfolio given a lower-carbon future.
These include its Australian Mount Arthur operations, 80% of its BHP Mitsui Coal joint venture, and one-third of the Cerrejón mine in Colombia. Japanese trading house Mitsui had no immediate comment.
It also said it was looking to sell off its Bass Strait oil and gas stake, though that was not down to any environmental agenda, Henry told an analyst call.
He said BHP was bullish on oil because it has profitable prospects for at least the next decade and is open to acquisitions near existing assets.