South32 (S32) +4.62%: delivered a solid finish to FY26, with improved fourth-quarter production across alumina, manganese and Cannington, while several key operations exceeded full-year guidance.
Fourth-quarter alumina production increased 4.6% to 1.29Mt, including a 6.4% lift at Worsley to 943,000 tonnes. Manganese production rose 20% to 1.31Mwmt, while Cannington payable zinc-equivalent production increased 29% to 57,800 tonnes.
Fourth-quarter highlights:
- Alumina production of 1.29Mt, up 4.6% quarter-on-quarter.
- Aluminium production of 216,000 tonnes, down 21%.
- Manganese production of 1.31Mwmt, up 20%.
- Payable silver production of 2.70Moz, up 27%.
- Payable zinc production of 11,400 tonnes, up 25%.
- Cannington zinc-equivalent production of 57,800 tonnes, up 29%.
For FY26, alumina production increased 1.3% to 5.13Mt, while manganese production rose 57% to 5.12Mwmt following the recovery in Australian manganese operations. Aluminium production fell 8.4% to 1.11Mt, reflecting disruption and the transition of Mozal Aluminium towards care and maintenance.
Operationally, aluminium production finished 1% above guidance, while alumina was in line. Sierra Gorda exceeded guidance by 2% and delivered record annual distributions of US$401 million to South32, while manganese production also beat guidance by 2%.
Cannington and both manganese businesses performed ahead of expectations.
Quarterly sales volumes increased 15%, allowing South32 to benefit from supportive commodity prices and release working capital, adding to group cash generation.
The update comes as South32 prepares to sell its bauxite, alumina and aluminium portfolio to Alcoa for consideration of up to US$5.6 billion. The transaction will materially reshape the business towards copper, zinc, silver and lead, where management sees stronger margins and better growth options.
The main exception was Mozal, where South32 expects to recognise US$33 million of transition and separation costs, alongside an US$89 million non-cash inventory write-down. Revised FY27 guidance for Australia Manganese will be provided with the full-year result, while all other FY27 production guidance remains unchanged.
This was a solid operational update, with improved fourth-quarter momentum and several businesses finishing ahead of guidance. However, the bigger investment consideration is the proposed aluminium asset sale, which will simplify South32 and increase its exposure to higher-margin base metals. Execution of that transaction, the outlook for Australia Manganese and the deployment of sale proceeds will be the key drivers from here.
MM remains long & bullish S32 ~$4.00
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