South32 Share Price Declines Following Disappointing December Update

3 min read | January 22, 2024 03:04 PM AEDT | By Team Kalkine Media

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South32 Share Price Declines Following Disappointing December Update — Image source: shutterstock

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The South32 Ltd (ASX: S32) share price experienced a 3% decline following the release of the company's update for the period ending on December 31, 2023, which included its production figures.

Production Performance:

South32 provided insights into its production performance for various commodities in the second quarter of FY24 and the first half of FY24 (HY24).

Alumina Production: In the second quarter, alumina production remained flat at 1,284kt, while HY24 witnessed a 1% YoY decrease to 2,574kt.
Aluminium Production: The second quarter saw aluminium production at 287kt, consistent quarter over quarter. HY24 aluminium production reached 575kt, up 1% YoY.
Payable Copper Production: In the FY24 second quarter, payable copper production decreased by 3% quarter over quarter to 15.6kt. HY24 copper production was 31.6kt, reflecting a 17% YoY decline.
Payable Silver Production: The FY24 second quarter recorded a 7% QoQ increase in payable silver production to 3,624kt. HY24 silver production reached 6,999k ounces, marking a 20% YoY increase.
Payable Lead Production: Payable lead production in the FY24 second quarter increased by 6% QoQ to 30.3kt. HY24 lead production reached 58.8kt, up 12% YoY.
Payable Zinc Production: FY24 second-quarter payable zinc production witnessed a 20% QoQ increase to 15.8kt. HY24 zinc production decreased by 5% YoY to 29kt.
Payable Nickel Production: In the FY24 second quarter, payable nickel production increased by 20% QoQ to 10kt. HY24 nickel production amounted to 18.3kt, reflecting a 10% YoY decrease.
Metallurgical Coal Production: FY24 second-quarter metallurgical coal production declined by 29% QoQ to 744kt. HY24 coal production was down 35% YoY to 1,787kt.
Manganese Ore Production: FY24 first-quarter manganese ore production was 1,272k wet metric tonnes (wmt), down 16% QoQ. HY24 manganese ore production was 2,790k wmt, marking a 5% YoY decrease.

Guidance and Costs:

South32 reduced its FY24 group copper equivalent production guidance by 3%, citing revised guidance for Brazil Alumina, Mozal Aluminium, and molybdenum output from Sierra Gorda. However, the company expressed optimism about capturing higher margins in the second half of FY24 through expected production growth of 7% and ongoing cost management.

Management Comments:

South32 CEO Graham Kerr stated, "As we enter the second half, strengthening market conditions for many of our commodities, our planned 7 per cent production growth and ongoing cost management focus, position us well to capture higher margins." Kerr also highlighted the company's investments in commodities critical to a low-carbon future and progress on projects like Hermosa and Sierra Gorda.

Despite this, the South32 share price faced a decline, underscoring the market's reaction to the production figures and guidance provided by the company.

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