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South32 posts full-year loss; keeps manganese output guidance flat
South32’s first full-year figures since it was spun out of BHP Billiton in May 2015 were hit hard by impairment charges and lower commodity prices that produced a net loss of US$1.62 billion.
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“By optimising our operations and maintaining a core focus on value, we generated free cashflow of $597 million and finished the year with net cash of $312 million”, he said.
Mr Kerr defended the spin-off, saying it had created a “more nimble and agile” company, with assets that “are running better than they have ever run”.
Mr Kerr said South32 would continue to look for opportunities to grow its portfolio, but would be “quite disciplined” in considering investments.
As a effect, the diversified miner – the world’s top manganese producer – continues to look for new assets, including Anglo American’s (LON:AAL) 40% stake in their manganese joint venture – Samancor.
The company will pay a final dividend of USA 1 cent per share (unfranked) on 6 October.
It reported a cash balance of $US312 million at the end of June. South32 mines lesser-known minerals such as manganese ore, used in stainless steel, as well as alumina, coal, nickel, silver, lead and zinc.
It said the deterioration in commodity markets had cut revenue by $US1.5 billion during the year, while selling prices for its products fell by an average 21 per cent.
It expects capital expenditure to remain largely unchanged out to fiscal 2018 at $450 million a year.
“Overall, the result was generally in line with our estimates, with a slight beat on costs flowing through to the adjusted net profit”, RBC Capital Markets analyst Paul Hissey said in a note. “Looking to FY17, we have maintained production guidance for the majority of our upstream operations and will stretch performance to meet cost targets”, Kerr said.
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Shares in South32 are up 130% the January low of 89 cents, closing at $2.05 per share on Wednesday.