BHP FY26 scorecard: record iron ore, soft copper guidance – and a dividend surprise brewing

Key takeaways from BHP's FY26 Operational Review

• Q4 landed in-line-to-better than expected: Iron ore of 68.1Mt was close to the consensus estimate of 68.3Mt (FactSet StreetAccount), copper's 491.9kt edged past the 490.6kt consensus, and coal beat outright, both met and energy coal running well ahead of forecast.
• FY27 copper guidance was the soft spot: A guide of 1,650–1,800kt is a step-down of more than 150kt on FY26's actual output – the number that dragged an otherwise clean update into the red.
• The balance sheet outperformed: Net debt of roughly US$9bn beat consensus, supporting BHP’s dividend outlook.
• Neutral response: Sentiment among analysts at the major investment banks was neutral, and shares fell 2.3% on the day largely on the FY27 copper number, and are down sharply today.

What management said

New chief executive Brandon Craig framed FY26 as proof of "the power of a disciplined operating system and world-class assets," pointing to record iron ore and a second straight year of ~2Mt copper output, delivered as copper prices ran about 35% higher than a year earlier. Management said cost control held despite inflation, diesel and supply-chain pressure.

On growth, BHP is pushing beyond its traditional iron ore and coal business, and copper is central to that push. In Argentina, its giant Vicuña copper project – still years from production – locked in 40 years of tax and regulatory certainty under the government's new investment incentive scheme, while in Chile, BHP applied to restart the mothballed Cerro Colorado copper mine. In Canada, its new Jansen mine marks BHP's first move into potash, a crop fertiliser ingredient, with first production still on track for next year.

The bad news? Escondida's feed grade is guided to fall from 0.90% to around 0.70% in FY27, an unplanned conveyor failure at Carrapateena will cost up to eight weeks of output, and BHP plans to build anode inventory ahead of a smelter shutdown in FY28 – together explaining most of the step-down.

Expert views

What the brokers liked

• Coal's strong finish, with met coal from BMA – BHP's Queensland coking coal joint venture with Mitsubishi – beating consensus by around 14% on a genuine recovery in stripping and yield after Tropical Cyclone Koji. Balance sheet discipline also stood out – UBS noted net debt undershot its own US$9.5bn estimate, aided by ~US$5bn of divestment proceeds including the Antamina silver stream and strong free cash flow.

What the brokers didn't like

• FY27 copper guidance, roughly 3% below consensus at the midpoint; Ord Minnett now models a 12% year-on-year slide in group copper output, driven mostly by the Escondida grade decline. The Carrapateena outage lands on the asset central to BHP's copper growth pitch, which several brokers said raises execution questions ahead of November's site tour.

What was interesting

• Macquarie called it a "holding year" for WAIO, BHP's Western Australian iron ore business: production was flat at 291Mt and FY27 guidance is flat again, with strike risk, an inventory rebuild and maintenance work clearing the way for a push toward 305Mtpa in FY28, underpinned by Ministers North. Views on relative value diverged, with some brokers favouring Rio Tinto even as copper's medium-term outlook was described as constructive for both.

Earnings forecast changes

• Revisions were mixed, not uniformly negative: Macquarie lifted FY26 EPS 7% on the stronger result but trimmed FY27 by 4% on softer guidance, while consensus FY27 EPS eased about 1.2% to $2.56. Price target changes were modest, generally 1–3%.

Future catalysts

• FY26 results on 18 August, with unit cost and capital guidance alongside the final dividend; the Copper South Australia site tour in November; and the Vicuña final investment decision, targeted for the second half.

Updated BHP broker consensus

Earnings cuts were minor and concentrated in FY27, with FY26 numbers largely intact – a split suggesting brokers see the copper guidance as a timing issue, not a structural dent in the growth thesis. In the end, the operational update yielded no ratings changes from the big brokers and only three small price target adjustments.

With a Broker Consensus Rating of 0.18, BHP is rated at better than a hold, but well off the 0.50 we associate with a consensus buy. BHP’s Broker Consensus Target edged lower from $61.72 prior to the FY26 operational update to $61.44 post. This implies 6.8% upside based on the 17 July closing price of $57.54.