South32 earnings rise comfortably in first half

South32 reported growth in earnings in its half-year results for the six months ended 31 December on Thursday, with its reported profit ahead 35% at $908m.

The London-listed firm’s revenue was 9% higher at $3.81bn, while its profit after tax improved 17% to $635m.

Basic earnings per share totalled 12.5 cents for the period, an increase of 19%, while the board confirmed a 19% uptick in ordinary dividends per share to 5.1 cents.

Special dividends per share were down 43% year-on-year at 1.7 cents, however.

“Record production at Australia Manganese, strong operating performance more broadly and higher commodity prices delivered a 17% increase in profit after tax for the half year, while underlying earnings per share grew by 20% as we continued to benefit from our on-market share buy-back program,” said chief executive officer Graham Kerr.

Those underlying earnings per share were 12.6 cents for the six months.

“Our strong start to the year means that our production guidance is unchanged for all of our operations with the exception of Illawarra Metallurgical Coal where we have upgraded guidance by 7%.

“We have also lowered our unit cost guidance as we have maintained operating discipline and benefited from a stronger US dollar,” Kerr explained.

The company continued to reshape its portfolio during the period, by acquiring the high-grade Hermosa resource and a 50% interest in and operatorship of the Eagle Downs Metallurgical Coal project, Graham Kerr said.

“We are also progressing our early stage exploration projects and remain on track to divest South Africa Energy Coal with binding bids expected by 30 June.

“We are well-positioned for the second half of the year, with a net cash balance of $678m and an improving outlook for production and costs.”

That strong position had allowed South32 to return $511m to shareholders for the period, Kerr highlighted, with the declaration of a $258m fully franked interim dividend and an $86m fully franked special dividend.

“Having established a strong track record, we will continue to return any excess capital to shareholders in a timely and efficient manner by monitoring our financial position within the context of the prevailing macro-economic environment and our capital management framework,” Kerr continued.

“This will involve the continuation of our existing $1bn capital management program with the recommencement of our on-market share buy-back following release of our financial results.”