South32 (S32) H1 2025 earnings summary

Executive summary

• Net profit after tax rose to US$360M in H1 FY25, up 579% year-over-year, driven by higher aluminium and copper sales, improved commodity prices, and strong operations.

• Underlying EBITDA increased 44% to US$1,018M, with underlying earnings at US$375M and a 28% operating margin.

• Portfolio transformation included the sale of Illawarra Metallurgical Coal for up to US$1.65B, simplifying the business and unlocking value.

• Net debt reduced by US$715M to US$47M, with BBB+/Baa1 credit ratings reaffirmed.

• Interim fully-franked dividend of US$154M (US 3.4c/share) declared, with US$171M remaining under the capital management program.

Financial highlights

• Underlying EBIT reached US$663M, up 181% year-over-year; underlying earnings increased 838% to US$375M.

• Group operating margin improved to 28%; underlying EBITDA margin at 47% for the group.

• Free cash flow from operations improved by US$361M, despite a US$267M working capital build.

• Capital expenditure (excl. EAI) decreased by US$106M to US$478M, with growth capex at Hermosa up US$60M.

• Dividend payout ratio at 41% of underlying earnings.

Outlook and guidance

• FY25 production guidance maintained across most operations, except Mozal Aluminium revised to 350kt due to civil unrest in Mozambique.

• Lower operating unit costs expected for most operations in H2 FY25.

• FY25 group capital expenditure guidance revised down to US$895M, with Hermosa growth capex re-phased to FY26.

• Working capital unwind anticipated to boost cash generation in H2 FY25.

• Construction of the Taylor project at Hermosa progressing, with first production expected in H2 FY27.