South32 have announced a decrease of 25% in their full-year dividend to 7.90 US cents, down from 10.50 US cents. They have also announced a decrease in their special dividend, from 3.0 to 1.7 US cents.
The Group's statutory profit after tax declined by US$943M (or 71%) to US$389M in FY19. Consistent with their accounting policies, various items are excluded from the Group's statutory profit to derive Underlying earnings including: exchange rate loss on restatement of monetary items (US$3M pre-tax); impairment loss (US$504M pre-tax); loss on fair value movements of non-trading derivative instruments and other investments (US$35Mpre-tax); major corporate restructures (US$28M pre-tax); profit associated with earnings adjustments included in their equity accounted investments (EAI) (US$17M); exchange rate gains associated with the Group's non US dollar denominated net debt (US$34M pre-tax), and the tax expense for all pre-tax earnings adjustments and exchange rate variations on tax balances (US$84M).
The Group's Underlying EBITDA declined by US$319M (or 13%) to US$2.2B, for an operating margin of 34%. Lower aluminium and thermal coal prices more than offset stronger prices for alumina, contributing to a US$275M reduction in Revenue, despite higher volumes. While the Group benefitted from weaker producer currencies and cost reduction initiatives across labour, energy and materials usage, total costs rose with higher production and the commencement of several improvement initiatives at Worsley Alumina to support a sustainable increase in production to nameplate capacity. Underlying EBIT decreased by US$334M (or 19%) to US$1.4B as depreciation and amortisation increased by a modest US$15M with the higher production volumes. Underlying earnings declined by US$335M (or 25%) to US$992M as a change in their geographic earnings mix and permanent differences led to an increase in their Underlying effective tax rate (ETR).
