How are South32 (ASX:S32) shares reacting to its Q4 update?

July 25, 2022 11:50 AM AEST | By Ashish

How are South32 (ASX:S32) shares reacting to its Q4 update? — Image source: © Tomas 1111 | Megapixl.com

Highlights

South32 expects to meet its cost guidance for the financial year 2022.

The company attributes its robust sales numbers in the June quarter of 2022 to strong coal prices.

South32 also said that it spent US$128 million in buying back 46 million shares over the year.

Mining and metals firm South32 Ltd (ASX:S32) on Monday said that it expects to meet its cost guidance for the financial year 2022 despite extreme weather, supply chain disruptions and reduced labour availability due to COVID-19.

South32 expects the operating unit costs for the financial year 2022 at most of its operations to be in line with the earlier updated guidance. It is due to “anticipated producer currencies providing a benefit in the June 2022 quarter.”

The ASX-listed copper, coal and aluminium explorer attributed record annual production at Worsley Alumina and an all-time high quarterly production at South Africa Manganese for delivering another strong operating performance in the June quarter.

As a result, the share price of South 32 rose 2.12% to AU$3.60 by 10:20 AM (AEST).

The company said that robust sales in the June quarter of 2022 captured the benefit of high prices. South32 expects higher volumes at some of its operations and benefit of lower producer currencies to deliver partial relief from the current effect of industry-wide challenges and rising costs.

South32 also said that it would report underlying depreciation and amortisation of US$790 million for the 12-month period, which includes US$110 million at its manganese business. The company also said that it spent US$128 million in buying back 46 million shares over the year.

How South32 fared in the fourth quarter

Image Source: ©Kalkine Media®

What did South32's management say?

South32 CEO Graham Kerr was upbeat about the company’s performance in the June quarter.

“We achieved further significant milestones as we reshape our portfolio towards the metals critical for a low carbon future. In May, we completed the acquisition of an additional shareholding in the hydro-powered Mozal Aluminium smelter,” Kerr said.

“We also completed our acquisition of an additional interest in the MRN bauxite mine and delivered first production from the restart of our Brazil Aluminium smelter, powered by 100 per cent cost efficient renewable power,” he added.

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