South32 Limited reported a robust turnaround in FY25 with a 17% revenue increase and a return to profitability, driven by higher commodity prices and strategic divestments. The company also declared a fully-franked dividend and outlined a focused growth outlook.
- Revenue up 17% to US$5.78 billion
- Profit after tax of US$213 million, reversing prior year loss
- 75% increase in underlying earnings to US$666 million
- Divestment of Illawarra Metallurgical Coal completed; Cerro Matoso sale agreed
- Mozal Aluminium to be placed on care and maintenance in March 2026
Financial Turnaround and Portfolio Streamlining
South32 Limited has delivered a strong financial performance for the year ended 30 June 2025, reporting a 17% increase in revenue to US$5.78 billion and a return to profit after tax of US$213 million, a significant turnaround from a loss in the previous year. Underlying earnings attributable to members surged 75% to US$666 million, reflecting the company’s ability to capitalise on improved commodity prices and operational efficiencies.
The company’s strategic portfolio transformation continued with the completed sale of Illawarra Metallurgical Coal in August 2024 and a binding agreement to divest Cerro Matoso, expected to complete in the first half of FY26. These moves align South32’s focus towards minerals critical to the global energy transition, reducing complexity and freeing capital for higher-return growth projects.
Operational Highlights and Challenges
Production growth was notable in key commodities, with copper output rising 20% and aluminium production increasing 6%. The Worsley Alumina operation secured environmental approvals for new bauxite mining areas, supporting future production sustainability. Meanwhile, Australia Manganese successfully completed its recovery plan following disruptions caused by Tropical Cyclone Megan.
However, Mozal Aluminium faces significant challenges due to uncertain electricity supply beyond March 2026. After years of stakeholder engagement, South32 announced plans to limit investment and expects to place the smelter on care and maintenance when the current electricity agreement expires, marking a strategic shift in operations.
Capital Management and Shareholder Returns
Reflecting strong financial discipline, South32 declared a fully-franked final dividend of US 2.6 cents per share, consistent with its policy to distribute at least 40% of underlying earnings. The Board also extended its US$2.5 billion capital management program by 12 months, with US$144 million remaining for shareholder returns. The company’s net cash position improved markedly, supported by divestment proceeds and operational cash flow, underpinning its investment-grade credit ratings.
Sustainability and Safety Progress
South32 reported improvements in safety performance, with lost time injury frequency reduced by 30% and total recordable injury frequency down 27%. The company remains committed to its climate goals, targeting a 50% reduction in net operational greenhouse gas emissions by 2035 and net zero emissions by 2050. While operational emissions increased slightly due to energy supply challenges at Mozal Aluminium, Scope 3 emissions declined significantly following portfolio changes.
Outlook and Growth Focus
Looking ahead, South32 maintains its production guidance for FY26, except for Mozal Aluminium and Cannington, where revised plans reflect operational realities. Capital expenditure is expected to rise, primarily driven by increased investment in the Hermosa zinc-lead-silver project. The company is advancing its pipeline of copper exploration projects and remains focused on delivering growth and returns from its transformed portfolio.
Bottom Line?
South32’s FY25 results underscore a successful portfolio pivot and operational resilience, setting the stage for focused growth amid evolving market and energy challenges.
Questions in the middle?
- How will the Mozal Aluminium care and maintenance impact South32’s long-term aluminium strategy?
- What are the prospects and timelines for the completion of the Cerro Matoso divestment?
- How will increased capital expenditure at Hermosa translate into production and profitability in the coming years?