SFR +6.01%: Capped off a strong FY26 with earnings more than tripling as stronger copper production, pricing and operating performance flowed through the business – the share price today helped by a strong move in Copper overnight.
Key results:
- Revenue of US$1.65bn, up 41% but ~2% below US$1.69bn expected.
- Earnings (EBITDA) of US$867m, up 64% and broadly in line with US$864m expected.
- Net profit of US$355.8m, versus US$93.3m y/y and in line with US$354m expected.
- Free cash flow of US$491m, ~10% ahead of US$446m expected.
- Final dividend of A35cps, more than double the ~A16cps consensus estimate.
- Net cash of US$316m, better than the ~US$271m expected net cash position.
- FY27 copper production guidance maintained at 99–111kt, with capex of US$299m.
The secret sauce in this result was the balance sheet and cash flow rather than simply the P&L, leading to an incredibly strong dividend, double the consensus estimate. The company has moved into net cash, generated almost US$500m of free cash flow and is now returning more of that cash to shareholders. FY27 capex will rise as SFR accelerates drilling at Kalkaroo and progresses investment at MATSA and Motheo, but management expects only an incremental increase in operating unit costs while maintaining copper production.
MM’s view: This wasn’t an earnings beat that forces upgrades, but we think the quality of the result was better than the headline numbers suggest. SFR is now financially strong enough to fund growth, return capital and retain meaningful leverage to higher copper prices. The setup remains attractive, and we think momentum in copper prices will enable another leg higher, however we are now conscious of the large position size of SFR in the Active Growth Portfolio so may look to trim back to target weight.
MM remains long and bullish SFR
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