South32 Earnings: Weaker Than Expected, but Much Improved on First Half

No-moat South32’s fiscal 2024 result was materially below our expectations. Adjusted EBITDA fell by 29% to about USD 1.8 billion, driven by lower sales volumes (mainly metallurgical coal and manganese) and prices (driven by the aluminum business and manganese). Its 60%-owned GEMCO manganese operations in the Northern Territory, Australia, temporarily ceased operations in March 2024 due to flooding in the mine pits and damage to infrastructure from Cyclone Megan. Mining has since recommenced. Adjusted NPAT of USD 380 million—USD 8.4 cents per share or AUD 12.4 cps—was 58% lower than last year and 24% less than our estimate. The main difference to our forecast was lower earnings in its aluminum business.