South32 has enjoyed a financial upswing this year despite continued losses at Illawarra metallurgical coal.
The company’s results were bolstered by improved commodity prices and new production records at certain projects.
It achieved production records at its Australian manganese operation (a 10 per cent increase over the 2017 financial year) and Mozal Aluminium.
South 32 delivered a 16 per cent increase to underlying earnings and 8 per cent increase to post-tax profits due to “stronger commodity prices and [company] efforts to mitigate inflationary pressure,” according to South32 chief executive officer Graham Kerr.
“Looking ahead, we are well positioned,” said Kerr. “Group production is expected to rise by 5 per cent in the 2019 financial year, further productivity gains and functional cost savings are expected to mitigate industrywide inflationary pressure and we have added high-quality development options to our portfolio.”
Underlying earnings were up by $US181 million to $US1.3 billion while post-tax profit was also around $US1.3 billion. Total revenue was up 9 per cent to $US7.55 billion.
Cerro Matoso also saw a 20 per cent increase in payable nickel production.
These strong showings helped to partially offset a 40 per cent decrease in metallurgical coal production at Illawarra in New South Wales caused in part by a suspension at Appin colliery that occurred in January 2017 and continued through to October 2017.
The Cannington silver-lead project in North West Queensland also saw a reduction in sales volume over the financial year.
Illawarra is expected to return to its full production potential in the 2020 financial year. The company also plans to reframe its South Africa Energy Coal operation as a standalone business in order to save up to $US50 million a year in FY2020.
Overall, sales volumes were up by $US68 million at Cerro Matoso and $US58 million at Australia Manganese but down $US221 million at Cannington and $US525 million at Illawarra.
In light of the overall increase in performance, however, South32 has paid a dividend of 6.2 US cents per share for the financial year — a total dividend of $US312 million — with a payment date set at October 11.
South32 also announced an update to estimates at its 86 per cent-owned Worsley Alumina site in Western Australia. The company has added an additional 43 million tonnes (43Mt) to its ore reserve related to new ore reserves from the Marradong West area of the project.