South32 profit plunges on weak commodity prices
Australian miner South32 Ltd on Thursday reported a 80% plunge in half-year underlying profit due to a temporary tax increase and lower prices across key commodities.
Prices of South32’s top three commodities – metallurgical coal, aluminium and manganese – slumped in 2019 as a bruising trade war between the United States and China crimped demand.
The diversified miner reported an underlying profit of $131 million for the six months ended Dec. 31, down from $642 million a year earlier. It, however, beat an RBC estimate of $109 million.
South32 cited a large temporary increase in its underlying tax rate to 75% from the planned sale of its South Africa thermal coal business. The Perth-based miner is currently also reviewing options for its manganese alloy smelters in the country.
Production from Illawarra project, which accounts for nearly all of the company’s coking coal output, declined in the first half after surging for most of last year.
Alumina and aluminium were the biggest contributors to the firm’s underlying core earnings in fiscal 2019, but realised prices at the key Worsley Alumina project took a whopping 30% hit in the first-half and weighed on its bottom line.
The miner declared an interim dividend of 1.1 cents per share, down from 5.1 cents per share a year ago, and a special dividend of 1.1 cents per share, also lower than a year ago.
(By Anushka Trivedi and Nikhil Kurian Nainan; Editing by Shailesh Kuber)