South32 reported an underlying profit of $US131 million for the six months ended December 31. Image by PR HANDOUT IMAGE PHOTO

Energy

South32 posts 80% fall in H1 profit

2020-02-14 11:34:22

South32 has reported an 80 per cent plunge in half-year underlying profit due to a temporary tax increase and lower prices across key commodities

Prices of South32’s top three commodities – metallurgical coal, aluminium and manganese – slumped in 2019 as a bruising trade war between the United States and China crimped demand.

The diversified miner reported an underlying profit of $US131 million ($A194 million) for the six months ended December 31, down from $US642 million a year earlier. It, however, beat an RBC estimate of $US109 million.

South32 cited a large temporary increase in its underlying tax rate to 75 per cent from the planned sale of its South Africa thermal coal business. The Perth-based miner is also reviewing options for its manganese alloy smelters in the country.

Production from Illawarra project, which accounts for nearly all of the company’s coking coal output, declined in the first half after surging for most of last year.

Alumina and aluminium were the biggest contributors to the firm’s underlying core earnings in fiscal 2019 but realised prices at the key Worsley Alumina project took a whopping 30 per cent hit in the first-half and weighed on its bottom line.

The miner declared an interim dividend of 1.1 cents per share, down from 5.1 cents per share a year ago, and a special dividend of 1.1 cents per share, also lower than a year ago.