The South32 Ltd (ASX: S32) share price was in the spotlight today as investors digested the company’s half-year FY21 results.
South32 is an ASX mining company that was spun out of BHP Group Ltd (ASX: BHP) in 2015. It produces bauxite, alumina, aluminium, nickel and various other metals through operations in Australia, Southern Africa and South America.
South32 is publicly listed on the ASX and also has secondary listings on the London and Johannesburg stock exchanges.
Cost efficiencies not enough to counteract weak prices
During the half, South32 achieved production records at three of its operations: Australia Manganese, Brazil Alumina and Worsley Australia.
It also delivered operating unit costs in-line or below guidance for the majority of its operations.
However, revenue took a backwards step compared to the prior corresponding period (pcp), falling 8% to US$2.9 billion.
The company remains profitable, reporting net profit after (NPAT) of US$53 million. However, this was down 46% on the pcp as the reduction in its cost base and higher sales volumes weren’t enough to offset weaker commodities prices.
South32 finished the half with US$1.38 billion cash and cash equivalent, and US$1.11 billion of interest-bearing liabilities, putting the company in a net cash position of US$275 million.
Management noted that its net cash position increased to US$452 million at the end of January, putting the company in a strong position to execute its capital management program and efficiently return excess capital to shareholders.
South32 dividend
The ASX miner declared an interim dividend of 1.4 US cents per share, an increase of 27% compared to the pcp.
At the current exchange rate, this translates to around 1.81 cents in Aussie dollars. Annualising this figure would put South32 shares on a dividend yield of around 1.3%.
Management outlook
Looking ahead, South32 chief executive Graham Kerr said:
“We are off to a strong start in 2021, as we continue to build on our recent operating performance . . we are now seeing a rebound in demand from markets outside of China for some of our key commodities, that is underpinning a recovery in prices. With this, our business is well placed to benefit as the global economy recovers, enabling us to deliver value for all our stakeholders.”
The South32 share price finished the day relatively flat, edging 0.4% lower to $2.70. In other news in the ASX resources sector, Origin Energy Ltd (ASX: ORG) released half-year results of its own today, while Woodside Petroleum Limited (ASX: WPL) dropped its full-year results.
To keep up to date throughout February reporting season, check out Rask Media’s ASX reporting season calendar.
