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Reporting season analysis: South 32 Limited

Reporting season analysis: South 32 Limited

South32 (S32) releases an optimistic FY15 result despite the slowdown in the industry

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By Expert Panel 25.08.2015

REPORTING SEASON: South 32 Limited (S32)

Brought to you by CommSec

 

Figure 1: South 32 Limited 12 month chart

 

South32 (S32) releases an optimistic FY15 result despite the slowdown in the industry

- South32 Limited (S32) reported its first financial result since its successful demerger from BHP Billiton on 25 May 2015. The company has released FY15 pro-forma results which reflect year-on-year (Y/Y) numbers for the business unit which now operates as S32.

- South32’s profit from operations increased to US$519Million. The biggest gain was in its South African energy coal unit which reported earnings of US$94Million while its Columbian nickel mine, Cerro Matoso’s earnings were disappointing and its QLD silver mines in Carrington reported a 31% drop in revenue as expected.

- S32 posted a FY15 Underlying EBITDA margin of 26.2% up 6% (Y/Y) which was better than expected. Its balance sheet is improving and its Net debt of US$402Million was better than expected. South32 is looking to yet again reduce its sustaining capital expenditure (CAPEX) by 9% to US$650Million in FY16.

- S32 stated that the market pricing on metals (which continues to decline) will impact the higher cost producers and therefore believe that the focus on cost-cutting will need to continue. South32 does not intend to pay a dividend for the year ended 30 June 2015

 

You can see all of CommSec's reporting season analysis by clicking here.

Juliana Roadley, Market Analyst, CommSec

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