South32 reports profit plunge due to US-China trade war
Geopolitical tension in 2019 as a result of the US-China trade war weighed on some commodities, including manganese
Diversified miner South32 said on Thursday profit in its half-year to end-December plunged 84%, as it battled lower managanese and aluminium prices in the wake of the US-China trade war.
Revenue declined 16% to $3.2bn (R47.7bn) while profit after tax fell 84% to $99m, with the company describing the global economy as “volatile”. The company encountered lower average realised prices for its commodities, including alumina, manganese, mellaturgical coal and energy coal, although this was slightly offset by higher prices for nickel.
“Against a challenging backdrop for our key commodities we delivered another strong operating result with production for the majority of our operations tracking on or ahead of schedule,” said CEO Graham Kerr. “Our operating costs trended down in the half and we have lowered our cost guidance across most of our operations.”
South32 has also seen a higher effective tax rate as a result of its agreement to sell its SA coal business, which has resulted in tax assets in that business being derecognised. In November, the miner announced it had entered into an agreement to sell its SA coal business to Mike Teke’s Seriti Resources.
In morning trade on Thursday South32’s share was up 4.36% to R40.93