South32 crowns strong 2022 with special dividend taking payout to $1.3bn

Graham Kerr, CEO, South32

THE tailwind of elevated commodity prices enabled South32 to achieve record underlying earnings of $2.6bn and a free cash flow of $2.6bn for the full year ended June 2022.

The company will also return cash to shareholders with an interim and special dividend worth a combined $1.3bn for the 2022 financial year.

South32 CEO Graham Kerr attributed this record windfall, constituting 10% of the company’s market capitalisation, to the “strong financial performance and disciplined approach” to capital management.

Shareholders will receive an interim dividend of 14 US cents per share and a special dividend of 3 US cents per share.

Basic underlying earnings per share was 56 US cents per share – an increase of 444% compared to the 10.3 US cents per share achieved during the corresponding period of the 2021 financial year.

South32’s profit after tax increased by $2.9bn to a new record of $2.7bn, compared to a loss of R195m in 2021. It also reported a net cash balance of $538m after funding new investments during the year.

Underlying revenue increased by 45% to $10,6bn, translating into an operating margin of 47% (26% in 2021). The group delivered a 30.1% return on invested capital.

South32 continued its share buy-back programme, allocating $128m which comprised of 46 million shares purchased at an average price of 3.89 Australian dollars per share.

“Looking forward, we are well positioned to navigate the current economic uncertainty,” said Kerr. A 14% increase in production across its operations will help mitigate the cost inflation the mining industry is facing, he added.

In addition, South32 has reshaped its portfolio to favour metals critical for a low-carbon future. “We already established a pipeline of high-quality development options,” Kerr said.

These include acquiring a 45% interest in the Sierra Gorda copper mine in Chile, acquiring an additional 16,6% in Mozal Aluminium in Mozambique and completing a pre-feasibility study for a zinc-lead-silver Taylor Deposit as part of the Hermosa Project, located in the Patagonia Mountains near Tuscon, Arizona.

South32’s Hermosa operations supported its plans to expand its move to increase its exposure to base metals for a low carbon future.

The group will also continue its investment in greenfield exploration across the Americas, Australia and Europe with plans to increase its investment to $44m in the 2023 financial year.