BHP’s HY26: Copper takes the crown and margins expand
BHP has delivered a strong first half to 31 December 2025. Underlying EBITDA rose 25% to US$15.5 billion with the Group margin improving to 58.4%. Attributable profit increased 28% to US$5.6 billion and underlying attributable profit was up 22% to US$6.2 billion.
The milestone: Copper is now BHP’s largest earnings driver, contributing 51% of Group underlying EBITDA for the first time. That shift is exactly where the strategy has been pointing – and it’s arriving with copper prices doing the heavy lifting.
Headline numbers investors need to know
| Metric (HY26) | Result | YoY |
|---|---|---|
| Revenue | US$27.9 billion | +11% |
| Underlying EBITDA | US$15.5 billion | +25% |
| Underlying EBITDA margin | 58.4% | from 51.1% |
| Attributable profit | US$5.6 billion | +28% |
| Underlying attributable profit | US$6.2 billion | +22% |
| Net operating cash flow | US$9.4 billion | +13% |
| Free cash flow | US$2.9 billion | +10% |
| Net debt | US$14.7 billion | Up from US$12.9 billion (FY25) |
| Adjusted effective tax rate | 36.6% | 36.4% in HY25 |
| Interim dividend | 73 US cents per share | 60% payout ratio |
Copper now BHP’s growth engine – and why that matters
This is the story of the half. Copper EBITDA jumped 59% to a record US$8.0 billion on a 32% increase in average realised prices to US$5.28/lb and strong cost control. Segment margin was a punchy 66%.
- Group copper guidance lifted to 1.9 – 2.0 Mt for FY26.
- Escondida cut unit costs to US$1.12/lb (down 16%) and delivered US$5.6 billion of underlying EBITDA, up 63%.
- Copper South Australia posted US$1.3 billion of EBITDA (up 69%) with record refined gold output helping by-product credits; unit costs fell 53% to US$0.74/lb in the half.
Strategically, BHP is leaning into a copper market it sees as tight for years. The growth pipeline is muscular: the Escondida New Concentrator (potential 220 – 260 ktpa by CY31-32 pending FID), Copper South Australia phases to >500 ktpa (first phase) and up to 650 ktpa longer term, plus Antamina, Resolution Copper (45%) and the Vicuña district with Lundin Mining. It’s the right commodity, the right assets, at the right time.
Iron ore: still a cash machine, with volume and resilience
Iron ore remains a formidable profit centre. WAIO delivered US$7.5 billion of underlying EBITDA (up 5%) with a 62% margin, helped by record first-half shipments and a resilient supply chain. The average realised price edged up to US$84.71/wmt (+4%).
Costs did tick up: WAIO unit costs rose 7% to US$19.41/t due to record material moved to build inventory. The medium-term plan is to sustain >305 Mtpa (100% basis) from Q4 FY28, supported by the sixth car dumper at Port Hedland, the Western Ridge Crusher project and rail tech upgrades, with a medium-term unit cost ambition of <US$17.50/t.
Coal: tougher going as prices soften and costs bite
Coal was the laggard. Segment underlying EBITDA fell to US$0.2 billion (down 60%), with steelmaking coal prices lower year-on-year and energy coal down more sharply. BMA’s unit costs were broadly flat in the period, but the business is wrestling with Queensland royalty impacts and has moved Saraji South into care and maintenance, removing ~750 roles. Guidance is unchanged but skewed to the lower half of ranges.
Cash discipline, balance sheet and a solid dividend
Cash generation was healthy: US$9.4 billion of operating cash flow and US$2.9 billion of free cash flow, after US$5.3 billion of capital and exploration spend. Net debt rose to US$14.7 billion, comfortably within the US$10 – 20 billion target range; gearing is 20.9%.
The interim dividend is 73 US cents per share (fully franked), a 60% payout reflecting “strong operating performance, disciplined capital allocation and confidence in our outlook”. Dividend reinvestment is operating.
Dividend timetable highlights
- Ex-dividend (LSE/ASX): 5 March 2026
- Record date: 6 March 2026
- Payment date: 26 March 2026
On capital flexibility, BHP has announced two notable deals expected to complete in H2 FY26: a US$4.3 billion silver stream over Antamina silver, and a power agreement linked to WAIO expected to realise US$2 billion. Together they unlock >US$6 billion of cash, with potential to reach up to US$10 billion through further portfolio actions. That gives BHP extra optionality without equity dilution.
Growth pipeline: copper-heavy, potash next
- Jansen Stage 1 (potash) spend updated to US$8.4 billion; first production mid-CY27, then a two-year ramp. Stage 2 is 14% complete, first production expected FY31; capex update due in Q4 FY26.
- Escondida New Concentrator DIA submission targeted for H2 FY26; potential FID by CY27-28.
- Copper South Australia projects advancing across Prominent Hill (PHOX), Carrapateena block cave and Olympic Dam expansions, supporting the >500 ktpa copper first-phase strategy.
- Vicuña JV (with Lundin Mining) released an updated Technical Assessment Report pointing to scale across copper, gold and silver, with ~US$800 million (100% basis) planned in CY26 to advance studies and access. Early-stage, but it reinforces the district potential.
Balanced view: Jansen’s cost increase is a blemish, but schedule is intact. Copper options look progressively shovel-ready, while Vicuña is large but at scoping level and will require careful metallurgy and permitting work in a complex, high-altitude setting.
Costs, tax and legal: the fine print that still matters
- Adjusted effective tax rate is 36.6% (43.0% including revenue/production-based royalties). Expect 36% – 40% for FY26.
- Samarco: US$1.0 billion cash outflow in the half as part of the Brazil Agreement; the provision stands at US$5.3 billion at 31 December 2025. Obligations are expected to decline to ~US$0.6 billion in FY27.
- Inflation is mixed across regions, with Australia running above the RBA target and certain input costs (e.g. sulphuric acid) still elevated. BHP is leaning on productivity and low-cost positions to defend margins.
What could move the share price next
- Completion and cash receipt of the silver stream and WAIO power deals in H2 FY26.
- Copper price momentum – BHP has raised copper guidance and the segment is now the profit engine.
- WAIO maintaining volumes and progressing to >305 Mtpa while executing the cost path.
- Jansen Stage 2 capex update in Q4 FY26 and delivery milestones at Stage 1.
- Escondida New Concentrator permitting/FID progress.
- Samarco cash flows normalising towards ~US$0.6 billion in FY27.
My take: copper-led quality, with smart balance-sheet moves
This was a quality half. BHP’s copper strategy is landing on the P&L with a 66% copper margin, reduced unit costs at key assets and a raised production outlook. Iron ore is quietly doing what it does best – throwing off cash – despite a small cost step-up to build resilience.
There are offsets. Coal earnings are under pressure, Jansen Stage 1 costs are higher, and the adjusted tax take remains chunky. Net debt has risen, albeit within range and largely explained by disciplined capex and shareholder returns – and BHP is actively recycling capital, with >US$6 billion of cash expected from the silver stream and WAIO power agreements.
Overall, this is the BHP you want in a higher-for-longer copper world: low-cost, diversified, cash generative, and with multiple levers to grow in copper and potash. Execution on the growth projects and continued cost discipline are the swing factors from here.
