BHP Group Limited American Depositary Shares (Each representing two Ordinary Shares) 2026 H2 Earnings Call

Welcome to today's presentation of BHP's results for the 2026 financial year. My name is Brandon Craig, and I am joined by our Chief Financial Officer, Vandita Pant. As Chief Executive Officer, it is a pleasure for me to host this call with all of you this morning. Let me begin by saying that BHP is in great shape. Mike has left us a strong platform with a Tier One portfolio, an operating system that continues to improve, and a balance sheet that allows us to invest through the cycle. I intend to build on this strong foundation by adding even greater pace, improving our operational practices, and focusing on our customers and markets. Today, we have great momentum, which you will see in our operational and financial results.

The opportunity now is to accelerate performance, to lift safety, productivity, and growth to the next level, while maintaining the discipline that has served shareholders well over many years. That is the agenda I am focused on as Chief Executive Officer, accelerating performance, delivering programmatic growth, and strengthening our foundations for the future. None of that matters if our people don't go home safely. So let me start with that. Only a few weeks ago, a colleague of ours working for a contracting partner never made it home. His loss is deeply felt across BHP, the mining community in the Bowen Basin, and in particular, at Peak Downs Mine. Our thoughts are with his loved ones. As a leader, this is deeply personal, and speaking for BHP, we are committed to learning from this and improving safety further.

Our teams are working through the investigation, and leaders across our global operations are reverifying our critical controls for higher-risk activities. We have made significant progress over recent years, strengthening our safety culture and our systems to meet our aspiration to eliminate fatalities and high-potential injuries from BHP. Progress is not the measure. The only acceptable number is zero, and we are not there yet. We will continue to embed the BHP Operating System, which underpins safe operations. We will invest more and move faster on technology, and we will continue to enhance safety standards and work together to implement them. Turning now to our results. BHP's 2026 financial year performance consolidates our position as the world's leading mining company.

We are the world's largest copper producer, and for the second consecutive year, we produced around 2 million tons of copper, which contributed more than half of our annual EBITDA for the first time. Our commitment to operational excellence also delivered record production at Western Australia Iron Ore. This strong operating performance, along with proceeds from the Antamina silver streaming transaction, has enabled the board to determine a dividend for the June half of $0.99 per share. This takes our full-year dividend to $8.7 billion. The world has always relied on mining, and today is no different. Yet despite this, mining now represents a much smaller share of global equity markets than it did just 15 years ago. A lot of capital is flowing into artificial intelligence, data centers, and the energy transition.

Countries and companies are increasingly focused on energy and food security, supply chain resilience, and industrial capacity. This means demand today for commodities such as copper is much more broad-based than during China's boom in the late 2000s. If global progress develops along these pathways, as we expect, mining will be required more than ever. As the world's biggest miner, this provides significant opportunities for BHP. It is also why we have been so deliberate in our portfolio choices over decades. It is central to value creation. BHP commodities must benefit from global mega-trends and have sufficiently diverse demand drivers for resilience through the cycle. They must have large global seaborne markets. Value must be captured upstream in line with our capabilities. They must have steep cost curves so we can apply our operational expertise to deliver leading margins.

Within those commodities, we seek the best possible assets, very large, long life, low cost, and expandable. Assets that we can operate for decades and that generate robust margins and returns. The takeaway, BHP has Tier One assets in commodities the world needs. This is a truly differentiated portfolio and provides a meaningful and durable competitive advantage. As good as BHP's position is today, we have always challenged ourselves to do better. That means focusing on three priorities, accelerating performance, leveraging the BHP Operating System and technology to unlock the next horizon of safety, productivity, and capability. Delivering disciplined, programmatic growth, and developing the next generation of growth options in future-facing commodities. Strengthening our foundations across safety, social value, and talent, and deepening partnerships to further increase our resilience. Greater ambition, more velocity, but the same discipline. Let me explain this briefly.

It has been seven years since we implemented the BHP Operating System. BOS creates a safer and more productive workplace and enables continuously improving performance. It is about culture, systems, and behaviors, as much as underlying operational disciplines and practices. The more we embed BOS, the better we perform. Vandita will talk to some examples of where we have seen improvements shortly. Few companies have been able to stick consistently to a system of this nature, which matters because these systems won't just generate results overnight. You need to keep at it for years and decades. We assess BOS maturity through an Operational Excellence Index, or OEI, and since 2020, we have increased our score from 36 to 52. Over this period, we have actioned around 7,000 initiatives right across the business, and in their first year of implementation, these delivered cost savings of more than $5 billion.

There is still so much more we can do. To capture this value, I have tasked our teams to deliver significant sustained improvement towards a company-wide mark of 65. That is beyond what is considered to be world-leading based on external benchmarks. Our aspiration is to pursue the limits of performance and push out the productivity frontier. While BOS creates the foundation for performance improvement, technology accelerates it. Simply, BOS and technology are mutually reinforcing. Technology is already creating value across our business. By the end of 2026, technology initiatives were delivering incremental EBITDA at an annual run rate of almost $500 million. We aim to increase that to beyond $650 million by the end of 2027. Many of our examples to date are single-point applications, just the first wave of value creation.

Applying technology to integrate the entire supply chain from pit to port means we can optimize the whole system more dynamically. That will liberate more productive hours, which means more production, leading then to lower cost. While I am passionate about the potential to accelerate performance improvement, I am also focused on value accretive volume growth. Our world-class portfolio of high-quality growth projects is estimated to deliver 3%-4% per year of growth over 2027 to 2035, including around 5% per year in our copper business. I am focused on ensuring we deliver this on time and on budget. To continue this rate of growth beyond 2035, we need to build the next generation of high-quality options. This means more partnerships and adjacencies like we have with Sierra Gorda in Chile and Rio Tinto in the Pilbara.

More creativity in the way we think about growth, like our investment in Faraday Copper. More ambitious exploration and early-stage investments to secure the next big deposits like Vicuña. While investors understand the quality of BHP's portfolio, we believe there is more value to be recognized in the growth we have ahead of us. For example, many in the investment community model growth of around 2% per year through to 2035, well below our estimates of 3%-4%. We have a track record of doing what we say we will do and meeting our guidance reliably. Our job is clear. Safely accelerate performance, execute our projects well, build the next generation of options, and develop the strategic relationships that build our resilience. With that, I will hand over to Vandita to take you through our financial performance.

Thanks, Brandon. This has been another great year financially. Our portfolio delivered high margins and strong cash flow, which allowed us to invest in our growth and deliver very healthy shareholder returns. Let me take you through the numbers. Underlying EBITDA for the year was $33 billion, up 27%, with a margin of almost 60%. Underlying attributable profit was $13 billion, up 30%, and return on capital employed was 26%. After exceptional items, including a $2.3 billion non-cash impairment relating to Jansen, our total attributable profit increased by 9% to almost $10 billion. Cash flow generation was strong, and our balance sheet strengthened with net debt below $9 billion. Based on the strength of these results and proceeds from the Antamina silver streaming agreement, we determined a final dividend of $5 billion. This brings our full-year dividend to $8.7 billion, the highest in four years.

The earnings waterfall reflects a familiar theme. While higher prices were a clear tailwind, up 35% for copper and 3% for iron ore, our operational performance and cost discipline enabled us to fully capture that benefit. Across the group, unit costs improved over 6% despite currency pressures, inflation, and higher diesel and asset prices. This strong performance was achieved across the portfolio. Our copper business generated a record $18 billion of EBITDA, 54% of the group total, at a margin of 70%. Our operational performance, combined with a $4.5 billion contribution from by-products, saw unit costs improve by 10% at Escondida and over 70% at Copper SA, an impressive result. WAIO achieved record production and shipments. It was another year in which we delivered a real cost decline, with C1 unit costs up just 1%.

In steel-making coal, BMA continues to improve performance with production up 10% over the last two years and the highest stripping volumes in five years. This slide shows the clear correlation between BOS and performance. The higher the OEE, the more stable and more productive our operations. This can be seen across assets, processes, and over time. It's this last point that's very important. As Brandon said, we don't realize these benefits sustainably overnight. At WAIO, steady improvements in rail productivity have supported record shipments. At Copper SA, we have improved operational stability with year-on-year records at the smelter since the last major maintenance campaign. At Escondida, we have delivered record material mined and record concentrator throughput, helping to offset the impact of grade. This has a real impact on the bottom line. Take WAIO as an example.

It has remained the world's lowest cost major iron ore producer for a seventh consecutive year, and it has reduced costs in real terms post-COVID, the only major producer to do so. In 2026 alone, this has compounded to a cost saving of over $100 million on a real basis. Our 2027 guidance suggests that we will maintain our cost leadership. Why are we so focused on operational excellence? Firstly, because it provides resilience through the cycle. In addition, inflationary environments drive higher marginal cost, resulting in higher commodity prices across the industry. This gives reliable operators of low-cost assets, like BHP, the ability to capture higher margins. You can see this in our cash flows. Our diversified portfolio by design is another competitive advantage. It supports resilient cash flow across market conditions. That allows us to invest in growth and deliver strong returns to shareholders.