Full Year 2026 South32 Limited Earnings Call Transcript
Key Points
- Group underlying EBITDA increased by 28% to USD2.5 billion, and underlying earnings rose 55% to $1 billion, driven by strong base metals performance.
- Sierra Gorda ore reserve increased by 61% to 1.1 billion tons, extending reserve life by approximately 5 years to 19 years, with production growth expected in FY27 and FY28.
- The sale of the aluminium value chain assets to Alcoa for up to $5.6 billion will reposition South32 as a leading base metals company with a simpler, higher-margin portfolio.
- Strong balance sheet with net cash of $283 million, allowing for a fully franked dividend of $0.054 per share and an extended capital management program to September 2027.
- Hermosa's Taylor project is progressing well, with key processing infrastructure installed, and the Ambler Metals exploration potential in Alaska is advancing with permitting progress.
- A fatality at Worsley Alumina in March 2026 highlighted safety failures, with a commitment to improve working-at-height procedures.
- Australia Manganese (GEMCO) faces ongoing water management issues, with FY27 guidance impacted by uncertainty around wet season weather and permitting delays.
- Manganese is not considered core, and no strategic review progress was reported, with Anglo American still focused on other deals.
- The new capital allocation framework post-aluminium sale will not guarantee a 40% payout ratio, potentially reducing dividend certainty for shareholders.
- Sierra Gorda's FY26 performance was challenging due to lower mill throughput and recoveries, though improvements are expected in FY27.
Thank you for standing by, and welcome to the South32 2026 full-year results investor and analyst conference call. (Operator Instructions)
I will now hand over to Matt Daley, CEO. Please go ahead.
Thanks, Kaley, and good morning, everyone. Thanks for joining us today as we discuss our financial results for FY26, my first as South32 CEO. And of course, on the call today, we have Sandy, our Chief Financial Officer.
So it's exciting time for our business with our positive operating performance and repositioning to base metals driving strong financial results, a clear pathway to substantial value accretive growth in copper and zinc, with 55% production growth expected from projects under construction or approved, and a pipeline of growth and life extension options beyond this that can drive further value and returns for our shareholders.
Before I run through our financial results, I do want to talk about safety. The most important measure of our success as a company is the safety
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