South32 (S32) H2 2024 earnings summary

Executive summary

• FY24 was marked by accelerated portfolio transformation toward low-carbon commodities, with a focus on safety improvements, despite a rise in lost time injuries and a reported net loss after tax of US$203M driven by impairments at Worsley Alumina (US$388M post-tax) and Cerro Matoso (US$248M post-tax), partially offset by a reversal at Illawarra Metallurgical Coal (US$139M post-tax).

• Underlying earnings decreased by US$536M to US$380M, but improved in H2 FY24 due to stronger operating performance and commodity prices.

• Major milestones included the sale of Illawarra Metallurgical Coal, final investment approval for Hermosa's Taylor deposit, and a simplified, base metals-focused portfolio.

• US$198M returned to shareholders in FY24, with a US$200M share buy-back to commence post-IMC sale.

• Focused on growing copper and low-carbon aluminium volumes, maintaining a strong balance sheet, and disciplined cost management.

Financial highlights

• Underlying EBITDA for FY24 was US$1,802M, with underlying earnings of US$380M and an operating margin of 22.8%.

• Net debt reduced by US$320M in H2 FY24, standing at US$762M at 30 June 2024; pro-forma net cash expected to be ~US$250M after the IMC sale.

• H2 FY24 ordinary dividend of 3.1 US cents/share (US$140M); total US$198M returned to shareholders in FY24.

• Free cash flow from operations excluding capital expenditure was US$1,000M, with a significant uplift in H2 FY24.

• $200M allocated to an on-market share buyback.

Outlook and guidance

• Taylor project at Hermosa progressing to plan, expected to deliver long-term returns and margin uplift; construction underway, first production expected H2 FY27.

• Low-carbon aluminium production expected to grow 17% in FY25 and 8% in FY26; copper production to rise 15% in FY25 and 6% in FY26.

• Capital expenditure guidance for FY25 is US$1,375M, with ~85% directed to base metals.

• GEMCO operations to return to normal production rates in FY26 after cyclone-related disruptions; insurance recoveries expected.

• Worsley production guidance for FY25 and FY26 below nameplate due to mining restrictions and ore quality; cost guidance rising to $280–$300/ton.