The South32 Ltd (ASX: S32) share price has been a strong performer on Thursday following the release of its half year results.
In morning trade the mining giant's shares are up 4% o $3.82.
What happened in the first half?
For the six months ended December 31, South32 posted revenue of US$3,811 million and profit after tax of US$635 million. This was a 9% and 17% increase, respectively, on the prior corresponding period.
Record production at the Australia Manganese operation, strong operating performances across the board, and higher commodity prices were the key drivers of the company's profit growth.
Earnings per share came in at 12.5 U.S. cents for the half, up 19% on the first half of last year.
The strong performance allowed the South32 board to increase its ordinary dividend by 19% to 5.1 U.S. cents per share and declare a special dividend of 1.7 U.S. cents per share.
What's next?
The strong first half means that management has retained its production guidance for all its operations with the exception of Illawarra Metallurgical Coal. This operation has seen its full year production guidance increase by 7%.
Management also advised that it has lowered its unit cost guidance after maintaining operating discipline and benefiting from a stronger U.S. dollar.
South32's CEO, Graham Kerr, said: "We are well positioned for the second half of the year, with a net cash balance of US$678M and an improving outlook for production and costs. This strong position has allowed us to return US$511M to shareholders in respect of the period with today's declaration of a US$258M fully franked interim dividend and an US$86M fully franked special dividend."
Should you invest?
I thought this was a strong result from South32 and I can't say I'm surprised to see its shares push higher today. And with commodity prices looking favourable right now, I think the second half could be equally strong.
This could make it a great option in the resources sector along with BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).
