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Mining group South32 says half-year earnings down 44% on lower commodity prices and higher inflation

Kitco News

(Kitco News) - Globally diversified mining group South32 (ASX / LSE: S32) said yesterday that its statutory profit after tax for the half year ended 31 December 2022 (H1 FY23) decreased by 34% to US$685M, while underlying earnings decreased by 44% to US$560M.

The company explained that the decline in profitability was due to the combination of a decline in commodity prices from record levels in many markets and higher inflation and uncontrollable costs, which more than offset the benefit of the company's strong operational performance.

South32 added that group copper equivalent production increased by 12% in H1 FY23 as the company "delivered strong production results and realized the benefit of investments in Sierra Gorda and the expanded low-carbon aluminium capacity."  

The company expects to increase production by a further 6% in H2 FY23, supported by embedded improvement projects and the ramp-up of the Brazil Aluminium smelter to nameplate capacity. FY23 production guidance is unchanged.

South32 said that underlying EBITDA decreased by US$507M to US$1,364M, for a group operating margin of 32% "due to the aforementioned commodity price and uncontrollable cost impacts."

The company also announced that its Board has resolved to pay an interim dividend of US 4.9 cents per share (fully-franked) for the half year ended 31 December 2022.

"We returned a record US$927M to shareholders in H1 FY23, paying US$784M in fully-franked ordinary and special dividends in respect of H2 FY22 and returning US$143M via our on-market share buy-back. We have today announced a fully-franked interim ordinary dividend of US$224M (US 4.9 cents per share), reflective of our continued strong operating performance and disciplined approach to capital management," the company said.

South32 is a globally diversified mining and metals company producing bauxite, alumina, aluminium, energy and metallurgical coal, manganese, nickel, silver, lead, copper and zinc in Australia, Southern Africa and South America.

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