South32 (LSE:S32) reported underlying earnings of $1 billion for the year ended 30 June, up 55% on the prior year, as its base metals business captured higher commodity prices.
The diversified miner, which produces copper, zinc, silver, alumina and aluminium across the Americas, Australia and Southern Africa, said Group underlying EBITDA rose 28% to $2.5 billion.
Cash flow from operations increased by $352 million to $610 million, after South32 invested $711 million at its Hermosa project in Arizona to expand future base metals production.
The company ended the year with net cash of $283 million and returned $327 million to shareholders during the period.
"Strong operating performance coupled with commodity price tailwinds underpinned one of the best financial results in our history", said chief executive Matt Daley.
The Board declared a fully-franked final dividend of 5.4 US cents per share, equivalent to $242 million, and extended its capital management program to September 2027, with $209 million still to be returned to shareholders.
South32 is also proceeding with the sale of its aluminium value chain assets, including Worsley Alumina and Hillside Aluminium, to Alcoa Corporation for an implied enterprise value of up to $5.6 billion, a deal expected to complete in the second half of the 2027 financial year.
Sierra Gorda, South32's Chilean copper operation, increased its ore reserve estimate by 61% to approximately 1.1 billion tonnes, with production growth of 5% guided for the 2027 financial year.
News Intelligence what this means for the company
South32 reported underlying earnings of $1 billion for FY26, up 55% year-on-year, driven by higher base metals prices and strong operational performance at Cannington and Sierra Gorda. The result is anchored by a 28% rise in group EBITDA to $2.5 billion and $610 million in operating cash flow, though the company invested $711 million in its Hermosa project and returned $327 million to shareholders, leaving net cash of $283 million—a modest buffer for a diversified miner of this scale.
- The $5.6 billion Alcoa sale of aluminium assets, expected to complete in H2 FY27, will materially reshape South32's capital structure and free up cash for base metals-focused growth, particularly at Hermosa and Sierra Gorda.
- Sierra Gorda's 61% ore reserve increase to 1.1 billion tonnes underpins the company's guidance for 5% production growth in FY27 and supports the case for sustained copper exposure as commodity tailwinds persist.
The earnings beat and cash generation validate South32's pivot toward base metals in a rising commodity cycle, but the $283 million net cash position is tight relative to the $711 million Hermosa capex spend and ongoing shareholder returns, making the Alcoa proceeds critical to funding growth without balance-sheet strain.
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