The South32 Ltd (ASX: S32) share price hit a new 52-week low of $2.59 per share this afternoon after the Aussie miner reported a 25% decline in full-year net profit.
What did South32 announce this morning?
The Aussie miner reported an underlying net profit after tax (NPAT) of US$872 million (A$1,288 million) for the year ended 30 June 2019 (FY19) as profitability fell lower.
Total revenue also slumped for the group, down on the prior corresponding period (pcp) to US$1,440 million (A$2,128 million) as macro conditions softened throughout the year.
South32 also booked a US$504 million impairment, which caused earnings before interest and tax (EBIT) fall to US$1,440 million (from US$1,774 million in FY18).
However, underlying EBIT came in at US$2.2 billion (A$3.25 billion) with a solid operating margin of 34% recorded in FY19.
Underlying earnings per share (EPS) for the year was US$19.7 cents per share, while a big positive was the group's US$1 billion in free cash flow in FY19.
On the balance sheet side, South32 expanded its capital management program by US$250 million to US$1.25 billion (A$1.85 billion) throughout the year as it looks to improve its financial strength while it has the opportunity.
What about South32's FY20 outlook?
South32 expects to see an upward trend in alumina production through to FY21, with 5,295 kilotonnes (kt) in FY20 and 5,335kt in FY2021, while aluminium production is expected to be steady at 993kt in both years.
Metallurgical coal production is expected to increase from 5,350kt in FY19 to 6,800kt in FY21, while management has forecast a decline in nickel production over the next 2 years.
A slowdown in Chinese demand continues to loom as a threat in FY20 and FY21, which may affect both price and volumes for South32 in the years to come.
The alumina market has been a clear example of this in recent times, with prices falling significantly and eating into profits of the likes of Alumina Ltd (ASX: AWC).
Overall, it hasn't been a great reporting season for the Aussie miners and today's result was no exception.
South32's earnings were softer largely due to global macro conditions, but were far from the worst in a mixed bag this August.
