The South32 Ltd (ASX: S32) share price has remained relatively flat today, despite the mining giant delivering a mixed bag in its half-year earnings results for the 2020 financial year, reported to the ASX before market open.
South32 shares closed at $2.56 yesterday but opened at $2.60 this morning before trending back lower. At the time of writing, South32 is down slightly to $2.54 a share.
What did South32 report this morning?
It hasn't been a good 6 months to December 2019 (1H20) for South32, compared with the same period last year (1H19).
The company has reported a 16% decline in revenues to US$3.219 billion, down from $3.811 billion in 1H19.
Profits before tax have slumped 72% to US$251 million, down from US$908 million in 1H19. After tax, the numbers don't improve, with a US$99 million profit, down 84% from 1H19's US$635 million.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) came in at US$678 million, down 48% from last year's US$1.305 billion. Pure earnings were US$131 million, down 80% from US$642 million.
This translates into earnings per share (EPS) of US 2 cents, down 78% from 1H19's US 5.1 cents per share.
Disappointingly for the company, South32's return on investment capital metric for the half year was just 1.7%, down from the 13.9% the company managed in 1H19.
In some good news for shareholders however, the number of outstanding S32 shares now stands at 4.9 billion, which is 3% lower than the 5.051 billion that was recorded last year. This is the result of the company's ongoing share buy-back program
South32 has declared a US 1.1 cent dividend per share for the period, which is accompanied by a US 1.1 cent 'special' dividend – meaning shareholders can expect a US 2.2 cents per share dividend to come their way (the Australian dollar exchange rate basis has yet to be determined). However, this represents a 68% drop from the interim dividends paid out last year.
South32 CEO Graham Kerr had this to say about the results:
Against a challenging backdrop for our key commodities we delivered another strong operating result with production for the majority of our operations tracking on or ahead of schedule.
Our operating costs trended down in the half and we have lowered our cost guidance across most of our operations… Investing in exploration to create shareholder value is integral to our Group's strategy as we work to reshape and improve our portfolio.
In some brightening news though, South32 does expect production of most commodities, including alumina, aluminium, manganese and metallurgical coal, to increase going forward into FY21 from FY19 and FY20 levels
