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South32 ups payout despite 12pc profit dip

Prashant Mehra  |  15 Feb 2018Text size  Decrease  Increase  |  
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SYDNEY - [AAP] South32 (ASX: S32) has lifted its shareholder payout after improving its first-half underlying profit on the back of stronger commodities prices.

The diversified miner has more than doubled the dividend for the half-year to US7.30 cents a share, including an 81-per cent franked special dividend of US3.0 cents.

It has also lifted its capital management program by $US250 million to $US1 billion, meaning it will return another $US540 million to shareholders before April 2019 in the form of dividends or share buybacks.

The company on Thursday posted a first-half profit of $US543 million ($A685 million), down 12 per cent from the corresponding period last year when it had included a gain on non-trading derivative instruments.

However, underlying earnings for the six months to December 31 were up 14 per cent to $US544 million, as the miner benefited from stronger commodity prices.

Chief executive Graham Kerr said the company was well-positioned with cash on its books and volumes expected to increase marginally in the second-half.

"After a challenging start to the 2018 financial year, production for the majority of our operations is tracking on or ahead of schedule," he said.

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South32 said higher realised prices for its commodities increased revenue by $US273 million, despite a significant reduction in coal and metal production at Illawarra Metallurgical Coal and Cannington operations in Australia.

The gains have also come despite the company's recent warning about rising cost pressures. It confirmed that unit costs would be higher than expected at its WA alumina, Illawarra coal, Cannington base metals, Colombian nickel and South African coal operations.

South32, which was spun off from BHP Billiton in 2015, is the world's largest producer of manganese ore, and also operates significant assets in the coal, nickel, alumina, silver, zinc and lead sectors.

The miner kept production guidance for most of its commodities unchanged and said it expects sustaining capital expenditure in the current financial year to reduce by $US5 million to $US465 million.

SOUTH32 HALF-YEAR PROFIT DIPS

* Net profit down 12pc at $US543m

* Revenue up 8.0pc to $US3.49bn

* Interim distribution US7.3 cents (US4.3 fully franked dividend + special partially franked dividend), vs US3.6cps unfranked

 

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