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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  South32 Limited    S32   AU000000S320


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South32 : Australia's South32 profit plunges, defers share buyback decision

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08/19/2020 | 08:25pm EDT

* Results broadly in line with analyst expectations

* Miner to delay share buyback decision to Sept 2021

* Analysts see scope for recovery as commodity prices recover

* Shares fall by 1.6%

MELBOURNE - Aug 20 (Reuters) - Australian miner South32 Ltd on Thursday reported an 80.5% slump in full-year underlying profit on low prices for its key commodities and delayed a share buyback decision given uncertainty in global growth due to the COVID-19 pandemic.

Prices of South32's top three commodities — metallurgical coal, aluminium and manganese — slumped in 2019 amid a trade dispute between China and the United States and remained weak as the pandemic disrupted businesses and hit production this year.

That crunched underlying net profit to $193 million for the year ended June 30, in line with analyst expectations, compared with $992 million a year earlier.

"It's hard not to note that volatile markets and weak prices had an impact on our underlying profitability," Chief Executive Graham Kerr told a media briefing.

As a result, the world's biggest manganese miner has pushed back its decision around a share buyback by 12 months to September 2021, after it announced the suspension in March, and posted a final dividend of 1 cent per share, down from 2.8 cents last year.

Shares fell by 1.6% to A$2.11 by 0221 GMT against a 0.9% drop in the broader Australian market.

"We are very conscious of making sure that we have a strong balance sheet... As soon as we start building excess cash on the balance sheet again, we will return that to shareholders," Kerr said.

Cost cutting and a nascent recovery in some commodity prices suggest the miner is well positioned to recover from here, analysts said.

"Given signs of life are emerging in several of the key business units, S32's post-COVID trajectory looks interesting," said Peter O'Connor of broker Shaw and Partners in a note.

The company said it expects to increase production at most of its operations next year and forecast broadly lower operating costs, as it reins in expenses.

The company, spun off from global mining giant BHP Group in 2015, posted annual revenue of $6.08 billion, down from $7.27 billion a year earlier. (Reporting by Melanie Burton in Melbourne, Shashwat Awasthi and Shruti Sonal in Bengaluru; Editing by Devika Syamnath, Shounak Dasgupta and Shailesh Kuber)

Stocks mentioned in the article
ChangeLast1st jan.
BHP GROUP -2.21% 34.94 End-of-day quote.-10.23%
SOUTH32 LIMITED -2.26% 2.16 End-of-day quote.-20.00%
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Sales 2021 8 420 M 6 014 M 6 014 M
Net income 2021 573 M 409 M 409 M
Net cash 2021 995 M 711 M 711 M
P/E ratio 2021 17,3x
Yield 2021 2,65%
Capitalization 10 405 M 7 434 M 7 433 M
EV / Sales 2021 1,12x
EV / Sales 2022 1,05x
Nbr of Employees 13 624
Free-Float 98,8%
Duration : Period :
South32 Limited Technical Analysis Chart | MarketScreener
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Technical analysis trends SOUTH32 LIMITED
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 13
Average target price 2,73 AUD
Last Close Price 2,16 AUD
Spread / Highest target 52,8%
Spread / Average Target 26,2%
Spread / Lowest Target -12,0%
EPS Revisions
Graham Kerr Chief Executive Officer, Executive Director & MD
Karen J. Wood Chairman
Mike Fraser Co-Chief Operating Officer
Jason Economidis Co-Chief Operating Officer
Katie Tovich Chief Financial Officer
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