South 32通过Worsley矿山批准，目标是36财年的生产可持续性

Earnings Call Insights: South32 Limited (OTCPK:SOUHY) Q2 2025

Management View

• Graham Kerr, Chief Executive Officer, reported that aluminum production increased by 5% and Sierra Gorda’s copper equivalent production grew 21%. The company maintained production guidance across operations except for Mozal Aluminium, which was impacted by civil unrest in Mozambique.
• South32 received primary environmental approvals for the Worsley mine development, enabling access to new bauxite mining areas to sustain production until at least FY '36. The phased restart of mining activities at GEMCO is expected to increase export sales in the June 2025 quarter, depending on wet season conditions.
• Underlying EBITDA increased 44% to $1 billion, and cash flow from operations improved by $361 million. Net debt was reduced by $715 million to $47 million. The company announced a fully franked interim dividend of $154 million at $0.034 per share.
• Sandy Sibenaler, Chief Financial Officer, emphasized the company’s focus on cost performance, with lower operating unit costs for most guided operations expected in the second half of FY '25.

Outlook

• Management confirmed that unit costs for Worsley Alumina are set at approximately $305 per tonne for FY '25, with a $5 increase attributed to additional administrative costs from new federal approvals. Full production at Worsley is anticipated by FY '27, with unit costs expected to decline as production ramps up.
• The company remains optimistic about significant growth potential in zinc and copper production, supported by ongoing projects like the Hermosa Tailor zinc-lead-silver project and the Clark battery-grade manganese deposit.
• In the aluminum segment, South32’s expectations remain aligned with medium- to long-term fundamentals. Management noted that U.S. tariffs on Canadian aluminum imports are unlikely to significantly disrupt the company’s product placement.

Financial Results

• Underlying earnings rose by $375 million, and a robust balance sheet allowed the continuation of the capital management program with $171 million to be returned to shareholders. The sale of Illawarra Metallurgical Coal for up to $1.65 billion streamlined the portfolio and strengthened financial positioning.
• Phase-wise progress was reported at GEMCO, including repairs following Cyclone Megan. GEMCO’s full-year production is forecasted at 1 million tonnes for FY '25, with a return to 3.2 million tonnes in FY '26.
• Hermosa remains a key growth focus, with recent drilling at the Peake deposit showing high-grade copper results. Exploration and federal approval processes are progressing under the FAST-41 framework.

Q&A

• Paul Young, Goldman Sachs, inquired about Worsley’s cost and production guidance. Graham Kerr responded that production at Worsley is expected to ramp up by FY '27 with costs eventually declining. Administrative costs added $5 per tonne due to new regulatory conditions.
• Rahul Anand, Morgan Stanley, asked about Hermosa’s federal approval timeline. Graham Kerr clarified that Hermosa does not require federal approval for initial operations, and the process under the FAST-41 framework is ahead of schedule.
• James Redfern, Bank of America, raised concerns about aluminum market trends. Graham Kerr commented that declining inventories and U.S. tariffs might impact regional premiums but are not expected to materially affect South32’s placement strategy.
• Mitch Ryan, Jefferies, questioned Cerro Matoso’s future amidst potential divestment. Kerr acknowledged that the asset faces natural grade declines but noted ongoing interest from potential buyers and alternative strategies to extend the operation’s value.

Sentiment Analysis

• Analysts expressed cautious optimism, with questions focused on regulatory impacts, divestments, and production timelines. Their tone was generally neutral, with pressing inquiries on cost management and strategic priorities.
• Management demonstrated confidence, particularly in discussing regulatory approvals and growth projects. Key phrases like "we are confident" and "we have an established growth pipeline" indicated a positive outlook.
• Compared to prior quarters, management maintained a consistent focus on operational performance and cost discipline, though the tone suggested heightened attention to regulatory and market challenges.

Quarter-over-Quarter Comparison

• Guidance for FY '25 remains largely consistent with previous communications, though new administrative costs emerged from Worsley approvals.
• Strategic focus shifted towards medium-term growth in zinc and copper, underscored by Hermosa’s ongoing progress.
• Analysts probed more aggressively into regulatory impacts and divestment plans compared to past quarters, reflecting heightened interest in South32’s strategic adjustments.
• Management confidence remained steady, supported by a strong balance sheet and operational improvements.

Risks and Concerns

• Civil unrest in Mozambique continues to affect Mozal Aluminium, contributing to updated production guidance.
• GEMCO’s production recovery remains weather-dependent, with potential delays from the wet season.
• Regulatory costs and conditions associated with Worsley mine approvals add financial pressure, though manageable.
• Cerro Matoso’s declining grades and dependency on external ore sources pose risks, but divestment discussions are ongoing.

Final Takeaway

South32’s Q2 2025 earnings call highlighted key regulatory approvals, production improvements, and portfolio optimization efforts. The company’s strong balance sheet and focus on cost performance position it well to deliver medium-term growth in zinc and copper production. While challenges such as civil unrest and regulatory costs remain, management’s proactive approach and ongoing growth projects provide a solid foundation for future performance.

Read the full Earnings Call Transcript