25th Feb 2016 08:48
LONDON (Alliance News) - South32 Ltd on Thursday launched a series of restructuring initiatives across a number of its assets in Australia and Colombia, as it continues to battle lower commodity prices.
The miner, which was spun off from BHP Billiton PLC last year, launched the restructuring plan after reporting a substantial loss in the first half of its financial year following declines in revenue.
South32 reported a pretax loss from continuing operations of USD1.58 billion in the six months to the end of December, swinging from a USD786.0 million profit a year earlier, as revenue declined 27% to USD2.98 billion from USD4.08 billion.
Underlying results, which excludes exceptional items and used to measure the underlying performance of the business, also experienced severe declines in the period.
Underlying earnings before interest, tax, depreciation and amortisation came in at USD542.0 million, less than half the USD1.12 billion reported last year whilst underlying Ebit was down a staggering 80% to USD141.0 million from USD710.0 million. Both Ebitda and Ebit margins shrunk year-on-year.
South32 just about managed to stay in the black in terms of underlying earnings, reporting USD26.0 million by that measure, though still down 94% from the USD460.0 million reported a year ago.
The restructuring plans launched Thursday aim to bring down operating costs at South32's assets in Australia and Colombia. South32 also aims to increase efficiency and productivity at those operations and said it is "well positioned to significantly exceed our cost savings targets, both in terms of quantum and timing".
The operations included in the plan are the Worsley alumina operation, South32's managanese asset and Illawara coal operation, all in Australia, alongside the Cerro Matoso ferro-nickel asset in Colombia. South32 plans to cut jobs at some of those assets and slash sustaining capital expenditure.
South32 retained its full-year guidance for most of its commodities, but lowered its production guidance at its Illawara coal mine in Australia by 7% due to "difficult ground conditions".
South32 shares were up 3.7% to 59.09 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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