South32 Limited is one of the ASX Top 50 Companies, which seem ready for a turnaround. The stock has impressed the investors with its Financial Performance.
This ASX mining stock, while exhibiting potential for growth is also dividend ready. It will become ex dividend on 19 September 2024. So investors looking for Companies to Invest in ASX can take this added advantage too.
South32 Limited (ASX: S32)
South32 Limited in its FY24 annual results for the period ended 30 June 2024, delivered a strong performance in the second half of FY24, reporting an Underlying EBITDA of US$1.8 billion and Underlying earnings of US$380 million.
Despite these positive results, the Group faced a net loss after tax of US$203 million in FY24, largely due to impairment expenses for Worsley Alumina (US$388 million post-tax) and Cerro Matoso (US$248 million post-tax), partially mitigated by an impairment reversal for Illawarra Metallurgical Coal (US$139 million post-tax). Revenue fell by 8% to US$8.3 billion, driven by lower commodity prices and reduced production volumes.
In FY24, South32 Limited achieved 98% of its revised copper equivalent production guidance, setting records at Hillside Aluminium and South Africa Manganese, and increasing Cannington's production by 10% despite weather challenges.
For FY25, the company plans to boost low-carbon aluminium production by 17% and copper output by 15%, driven by improvements at Brazil Aluminium, Mozal Aluminium, and Sierra Gorda. Australia Manganese will restart mining in phases, with wharf operations expected to resume in Q3 FY25. Capital expenditure is set to decrease by $52 million to $990 million, mainly due to lower sustaining costs following the Illawarra Metallurgical Coal divestment, though growth capital at Hermosa will rise significantly. Material EAIs are projected to increase by $70 million to $385 million, focusing on infrastructure repairs and expansions.
South32 is among ASX Growth Shares, actively reshaping its portfolio to focus on base metals and growth opportunities. The sale of Illawarra Metallurgical Coal is a strategic move to simplify the portfolio and strengthen the balance sheet, allowing for increased capital management, including a US$200 million on-market share buy-back. The company is channelling investments into critical development projects, notably the Taylor zinc-lead-silver deposit at Hermosa and expanding copper production at Sierra Gorda. These initiatives align with South32’s goal of enhancing base metals exposure and advancing growth projects through rigorous study phases and exploration in promising regions. The expected decrease in capital expenditure for FY25, coupled with increased growth capital investment, underscores the Group’s commitment to strategic development and future expansion.
South32’s recent performance underscores its resilience and adaptability in a challenging market. The company’s strategic focus on high-value base metals and key investments, such as the Hermosa project, reflects a well-calibrated plan for future growth. Despite facing revenue pressures and profitability challenges in FY24, South32's proactive measures, including portfolio simplification and targeted capital deployment are commendable. The anticipated increase in low-carbon aluminium and copper production aligns with global demand trends, potentially enhancing its competitive edge in the mining sector.
Source: Company’s Report
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