South32 annual profit tanks 65%, dividend misses estimates

Diversified miner South32 Ltd on Thursday reported a 65% slump in full-year profit that slightly missed analyst expectations, hit by softer prices for its key commodities of manganese, aluminum and metallurgical coal and rising costs.

The miner declared a final dividend of 3.2 cents for the year ended June 30, missing a consensus estimate of 3.5 cents and well below the 22.7 cents a year ago.

The Perth-based miner reported underlying earnings of $916 million, lower than $2.60 billion for fiscal 2022. That compares with Visible Alpha consensus estimate of $930 million.

It posted an annual statutory loss of $173 million, as it recognized a $1.3 billion one-off charge for its Taylor sulphide deposit at the Hermosa project, which had been impacted by operational hazards as well as Covid-19 restrictions.

Meanwhile, costs climbed, in line with a broad trend seen across the mining industry but also partly because the miner trimmed production estimates across some of its commodities for next year.

“FY24 cost guidance at key assets higher than estimates and likely to lead to consensus earnings downgrades in our view,” Sydney-based investment bank Barrenjoey said.

Shares of South32 dipped 2.4%, set for their biggest intra-day drop since May 25.

South32 now expects to produce 5 million metric tons (mmt) of coal from its Illawarra mine in fiscal 2024, down from a prior estimate of 5.3 mmt. For 2025, output is expected at slightly above 5.5 mmt.

South32 also raised costs next year’s forecast for most of its mines.

Prices of South32’s key commodities – metallurgical coal, aluminum and manganese – all fell, partly as energy prices retreated following the Ukraine war.

Earlier in the day, a trade union comprising workers at South32’s Appin mine said they had failed to reach an agreement with the company over an industrial dispute.

(By Poonam Behura, Navya Mittal and Melanie Burton; Editing by Maju Samuel and Rashmi Aich)