Why the South32 Ltd share price climbed higher today

Billiton Limited (ASX:BHP) spin-off South32 Ltd (ASX:S32) is to slash more than 770 jobs.

| More on:
a woman

It’s been a horrible nine months for BHP Billiton Limited (ASX: BHP), and its spin-off South32 Ltd (ASX: S32), since the company listed in May last year.

As you can see from the chart below, BHP is down over 47%, and South32 is down 42%, dropping from $2.05 on its first day of trading to its current price of $1.19.

(Source: Google Finance)

Diversified miner, South 32 today announced a half year net loss of US$1.75 billion (A$2.43 billion), hurt by large write-downs at its manganese business in Australia and energy coal operations in South Africa.

“The majority of our commodities have suffered a slump in prices,” chief executive Graham Kerr said.

“We don’t see prices rebounding in a dramatic way for the next 12 to 18 months,” he told an analysts’ call.

The company flagged write-downs of US$1.7 billion earlier in February after revising down its commodity price forecasts. It also announced the loss of 620 jobs at its troubled South African manganese business after slashing production there.

Today, it said it would cut another 772 jobs at its Australian operations, reducing employee and contractor numbers at the Worsley Alumina facility in Western Australia, Illawarra Metallurgical Coal operations in NSW and GEMCO manganese mining operation in the Northern Territory.

It will cut another 350 jobs at the Cerro Matoso nickel mine and smelter in Colombia.

The reductions, to be completed by June end, are part of the company’s efforts to reduce its per unit costs amid tough market conditions.

The restructuring will result in savings of US$160 million in FY17, and cut capital expenditure by US$275 million, it said.

Shares in the company jumped on the news. By 2pm, the share price was up 5.3% to $1.19.

South32, listed in May 2015 after demerging from mining giant BHP Billiton, it is the world’s largest producer of manganese ore and a global producer of manganese alloy, used in making steel and aluminium products.

It also has significant interests in alumina, silver, nickel and coal.

The company has slashed its debt and cut production at several high-cost mines and smelters, after announcing in August it would strip out US$350 million in costs by the end of its 2018 financial year.

It now expects to significantly exceed that target.

The company has also cut capital expenditure forecast for the current financial year by another US$150 million, to $550 million. It has, however, maintained its production guidance for the full year.

South32 had reported a net profit of US$339 million for the year ago period.

Underlying earnings, excluding non-cash impairments and the impact of foreign exchange, slumped 94% to US$26 million in the most recent period.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor John Hopkins has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

The share price of ASX infant products retailer Baby Bunting Group Ltd (ASX:BBN) has been a solid performer so far …

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

A new landmark report by the Intergovernmental Panel on Climate Change (IPCC) was released earlier this week. It provided a …

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest …

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos Limited (ASX: AMS) share price has been on a tear this past week, rising 15% on the back …

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

Online furniture retailer Temple & Webster Group Ltd (ASX: TPW) had a breakout year in 2020, moving from relative obscurity …

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

Shares in ASX healthcare company Polynovo Limited (ASX: PNV) almost doubled in price last year. And, despite a shaky start …

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

Investing in other geographic markets has become a popular way to diversify a portfolio. The risks associated with being exposed …

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

Despite the News Corporation (ASX: NWS) share price getting a 31% bump between November last year and today, News Corp …

Read more »