Full-year results for South32 (S32) suggest that last year's BHP Billiton spin-off has emerged from the sector's ashes faster than several of its larger diversified miner peers. A dearth of major legacy borrowings has certainly helped, but the company's shift to a net cash position 15 months after it listed with $674m (£511m) in net debt displays some reassuring capital discipline.
This was evident in the $386m reduction in controllable costs in the period, as well as a $306m drop in capital expenditure, which helped to bring down operating unit costs in all of South32's major upstream operations. Guidance for capital expenditure remains at $450m for the 2017 period-end, while any spare cash will only go to investments that will not "compromise our strong balance sheet and investment grade credit rating", in the words of chief executive Graham Kerr. Indeed, management sees the balance sheet as sturdy enough to withstand an inaugural, if somewhat token, dividend.
Based on Bloomberg consensus forecasts, the market is asking for full-year pre-tax profits of $502m and adjusted EPS of 6.8¢ in the current financial year, up from $99m and 1.6¢ in the 12 months to June 2016.
SOUTH32 (S32) | ||||
|---|---|---|---|---|
| ORD PRICE: | 114p | MARKET VALUE: | £6.08bn | |
| TOUCH: | 114-114.5p | 12-MONTH HIGH: | 123p | LOW: 41p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | na | |
| NET ASSET VALUE: | 177¢ | NET CASH: | $312m | |
| Year to 30 Jun | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012* | 11.68 | 1.78 | 23.9 | nil |
| 2013* | 9.93 | -1.51 | -29.4 | nil |
| 2014* | 8.34 | 0.15 | 1.93 | nil |
| 2015* | 7.74 | 0.52 | 0.50 | nil |
| 2016 | 5.23 | -1.55 | -30.3 | 1.00 |
| % change | -32 | - | - | - |
Ex-div: 15 Sep Payment: 6 Oct £1 = $1.32 *Pro forma figures, pre-demerger | ||||
