South32 saw a 17-percent increase in profit for the half year ended December 31, 2018 on the back of strong operational performance.
South32 (ASX:S32,LSE:S32,JSE:S32) saw a 17-percent rise in profit for the half year ended December 31, 2018 on strong operational performance and record production at Australia Manganese.
Alongside growth in profit after tax, South32’s revenue was up 9 percent to US$3.8 billion from the same period last year, with underlying earnings up 18 percent to US$642 million.
The company also saw a 106-percent increase in production to 3.8 million tonnes (Mt) at its Illawarra metallurgical coal operation in New South Wales.
South32 pointed to strong performances from Illawarra’s Dendrobium and Appin longwalls, along with the establishment of metallurgical coal stockpiles, for the production boost, adding that operating unit costs decreased by 42 percent to US$87 per tonne.
The decrease in operational costs come from a “substantial” US$327-million increase in sales volumes; the company has now increased the project’s production guidance for the 2019 fiscal year by 7 percent, to 6.5 Mt.
Record ore production of over 1.8 million wet metric tonnes was also reached at the company’s Australia Manganese operations, which consist of Groote Eylandt Mining Company (GEMCO) in the Northern Territory and Tasmanian Electro Metallurgical Company (TEMCO) in Tasmania.
This came as the primary circuit continued to see high utilization rates and the premium concentrate ore circuit operated at 120 percent of its design capacity, contributing 9 percent of total production.
Despite the record results, production guidance for the 2019 fiscal year will remain the same at Australia Manganese as the wet season is expected to impact H2 2019 production.
South32 is also putting forth improvement initiatives at its Worsley Alumina asset in Western Australia to support production ramp up to nameplate capacity of 4.6 Mt, which is expected to push sustaining capital expenditure to US$60 million in the 2019 fiscal year.
“We are well positioned for the second half of the year, with a net cash balance of US$678 million and an improving outlook for production and costs,” South32 CEO Graham Kerr said in a statement.
“This strong position has allowed us to return US$511 million to shareholders in respect of the period with today’s declaration of a US$258 million fully franked interim dividend and a US$86 million fully franked special dividend,” he added.
South32’s share price was up 3.54 percent at the end of trading on the ASX on Thursday (February 14), ending the day at AU$3.80.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.