S32 +1.36%: Put together a better-than-expected FY26 result, with EBITDA comfortably ahead of consensus, margins expanding and shareholder returns stepping higher.
Key results:
- Underlying revenue of US$8.11bn, up 6.5% and well ahead of the $7.11bn estimate.
- Underlying earnings (EBITDA) of US$2.46bn, up 28% and ~9% ahead of US$2.26bn estimate.
- Net profit after tax (NPAT) of US$1.09bn, up from US$213m.
- Final dividend of US5.4cps, more than double 2.6cps last year.
The outlook is about reshaping S32 toward higher-quality base metals growth. Sierra Gorda is doing much of the heavy lifting, with copper-equivalent production expected to grow 5% in FY27 and another 2% in FY28, while Australia Manganese remains the obvious operational drag as elevated water levels constrain output. FY27 capex steps up to US$1.50bn, but the balance sheet is strong enough to fund that growth while still returning cash, with another US$209m earmarked under the extended capital management program.
MM’s view: We like the direction S32 is heading and continue to hold it in the Active Growth Portfolio. A near-9% EBITDA beat and expanding margins are good outcomes, but the more interesting part is the gradual reshaping of the portfolio toward commodities such as copper where the structural demand story is far more appealing. Sierra Gorda growth should increasingly matter, while the weak alumina numbers reinforce the decision to part ways with those assets. It’s not all smooth sailing — manganese has operational constraints and US$1.5bn of capex means plenty of cash is still being reinvested — but the balance between growth spending and shareholder returns looks sensible.
MM remains long and bullish S32
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