South32 shares jump as miner sets special dividend on profit boost

Image courtesy of South32.

South32 Ltd flagged a boost in production across its global operations in the current year and pledged to pay a special dividend after annual profit jumped more than fivefold, sending the Australian miner’s shares up 5% on Thursday.

South32, which was spun off from BHP in 2015, declared a special dividend of 3 cents per share and a final dividend of 14 cents, up from 3.5 cents a year earlier, taking shareholder returns to a record $1.3 billion for fiscal 2022.

The company forecasts its copper equivalent production to increase 14% in fiscal 2023, and said it has been able to contain cost inflation across its operations through the year.

The miner has also resolved to further expand its capital management programme by $156 million to $2.3 billion, leaving $250 million to be returned to shareholders by Sept. 1, 2023.

Western sanctions on Russia over the invasion of Ukraine have squeezed an already-tight supply of commodities such as coking coal, pushing up prices of materials that South32 mines.

That helped the company overcome the hit from a labour shortage and torrential rains in the key producing area of New South Wales that had also impacted the operations of BHP Group and Rio Tinto.

“We are well-positioned to navigate the current economic uncertainty … while our ongoing focus on cost management and an expected 14% increase in production will mitigate industry-wide cost inflation,” said Chief Executive Officer Graham Kerr.

Shares of the Australian diversified miner scaled to their highest level since June 16.

“The company has provided very positive forward guidance with commentary from the CEO suggesting that the company is well-positioned to navigate the current economic uncertainty,” CMC Markets analyst Azeem Sheriff said.

“The company has a very strong net cash position of $538 million for additional capital expenditure and also expects group production to rise in FY23, which will mitigate any inflation headwinds reducing any material effects on their future expenses,” Sheriff said.

The company provided a capital expenditure forecast of $1.2 billion for fiscal 2023.

The world’s biggest producer of manganese said its underlying earnings for the year ended June 30 rose to $2.60 billion, from $489 million a year ago. The figure came in higher than the $2.55 billion expected by analysts, according to Refinitiv data.

On a statutory basis, the miner posted a profit after tax of $2.67 billion, versus a loss of $195 million last year.

Currently, South32 is in pay-related negotiations with its Appin coal mine workers following their threat to stage a partial strike for a week, the miner said on Wednesday.

(By Riya Sharma and Tejaswi Marthi; Editing by Aditya Soni and Sherry Jacob-Phillips)


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