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The Chorus Ltd (ASX: CNU) share price has soared into the green in afternoon trade on Thursday.

Whereas the S&P/ASX 200 Index (ASX: XJO) is 0.56% in the red, Chorus shares are now exchanging hands at $6.83 apiece, a 13% climb from the open.

Today’s gain comes after the New Zealand-based telecommunications infrastructure group provided an announcement earlier. Let’s investigate further.

What did Chorus announce?

Chorus advised that New Zealand’s Commerce Commission has proposed an “initial regulated asset base (RAB) of $5.427 billion” in regards to Chorus’ regulated fibre business.

The Commerce Commission is New Zealand’s equivalent to the Australian Securities and Exchange Commission (ASIC).

Recall that in March, Chorus proposed a “conservative starting RAB of $5.5 billion” on its fibre business.

The Commission then used this RAB value to determine its price-quality decision for the “first regulatory period of fibre” back in May.

The decision referenced an annual revenue range of $689 million to $786 million through 2022 to 2024. From the numbers, the Commission’s RAB value is around 1.4% behind Chorus’ $5.5 billion proposal.

Chorus then made submissions on the draft price-quality decision back in July. It submitted “strong evidence to support changes” to the proposed reductions in allowable operating expenditure.

Under the draft decision announced today, the RAB would commence in January 2022. Chorus stated the Commission’s draft RAB contains “core fibre assets of $3.98 billion”, alongside a “financial loss asset” of around $1.5 billion.

Moreover, the commission noted in its decision that if “all other aspects” of its decision remain unchanged, then it would “lead to a 2–5% reduction in allowable revenue over the PQP1 period”.

The Commission is expected to give its final decision on the RAB in December, as per the release.

What did management say?

Chorus CEO JB Rousselot said:

We welcome this step towards greater certainty for Chorus and our investors. Our aim is to ensure the final RAB reflects the full costs of structural separation required by the public-private partnership with the Government.

We’ve used a lot of our existing infrastructure and spent billions more to roll out the fibre network over the last decade. It’s critical that the true value of our participation in this partnership is recognised so we can keep investing in developing the capability and reliability of fibre broadband for New Zealand.

Chorus share price snapshot

The Chorus share price has had a difficult year to date, posting a loss of 7% since January 1. It has also fallen 5% in the past 12 months.

As a result, these returns have lagged the broad index’s return of around 25% over the past year.

The post Why the Chorus (ASX:CNU) share price is rocketing 13% on Thursday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Here are the top movers on the ASX 300 today
• ASX 200 midday update: Treasury Wine results, Origin’s $2bn loss, Star impresses

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Qantas Airways Limited (ASX: QAN) share price has not performed too well during this Thursday’s trading day. At the time of writing, Qantas shares are currently down a hefty 1.02% to $4.36 a share.

That puts the airline at a 3.44% loss over the past trading week. As well as a loss of 6.34% for the past month. The Qantas share price is also currently down 11.3% year to date in 2021 so far. But is still up 15.8% over the past 12 months.

So we don’t have to dig too deep into Qantas’ more recent woes. The prospects of a return to unfettered domestic interstate travel have been crushed by outbreaks of the COVID-19 Delta variant across the country. Hope is also fading for the dream of a reopening of our international borders, even with individual ‘bubbles’, anytime soon as well.

So during this difficult time for the Qantas share price, it might be useful to take a look at how Qantas shares have reacted to lockdowns in the past today. Let’s dig in.

How does the Qantas share price perform during lockdowns?

To start things off, here is a graph of the Qantas share price since the start of the 2020 calendar year (right before the onset of the pandemic):

 

As you can see, the largest and most dramatic move on this chart came during March and April 2020. That was when the entire ASX 200 experienced a nasty share market crash due to rapid lockdowns across the global economy. The ASX 200 peaked on February 21, 2020, and troughed on 23 March with a loss of roughly 34%. In contrast, the Qantas share price fell more than 65% over the same period.

During the period from August to October 2020, Melbourne was under strict lockdown, albeit while the rest of the country was enjoying a relatively high level of freedom. This lockdown in the country’s second-largest state by population didn’t seem to have much of an impact on the Qantas share price at the time. As you can see, Qantas shares actually appreciated quite a lot over this period.

But then we get to another outbreak – the December Sydney Northern Beaches scare of Christmas 2020. This outbreak began around mid-December 2020 and lasted until January. Over this difficult time, Qantas shares did take a hit, losing around 18.5% between 27 November 2020 and 29 January 2021.

What about Delta in 2021?

More recently, Qantas has also taken quite a substantial haircut in light of the multi-state Delta outbreak. Since the first ‘week-long lockdown’ for Sydneysiders that was announced on 25 June, Qantas shares have lost around 7.8% of their value. Ever since a prolonged lockdown became inevitable around the first few days of July, Qantas shares have lost more than 11%.

And that brings us to the present day. Qantas is clearly a company that is heavily impacted by COVID restrictions, and it’s likely that we will continue to see the company under pressure until a national path out of this latest outbreak becomes clear.

At the current Qantas share price, the airline has a market capitalisation of $8.3 billion.

The post How does the Qantas (ASX:QAN) share price perform during lockdowns? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Investors will be hoping the Adairs Ltd (ASX: ADH) share price will react the same as it did last reporting season.

The homewares retailer was a market darling last year as many Australians were ordered to stay at home.

Let’s take a look at how the Adairs share price responded last earnings season.  

Here’s how the Adairs share price responded last year

The Adairs share price bolted more than 17% after releasing its full-year results for FY20.

Shares in the retailer closed 10% higher as investors digested the company’s performance.

For FY20, Adairs reported a 110.5% surge in online sales of $124.2 million, which contributed 34.8% to total sales.

Overall, total sales for the company were up 12.9%, with in-store sales struggling during the pandemic.

Adairs also reported a 39.7% surge in underlying earnings before interest and tax to $60.7 million.

For FY20, the retailer also reported a 19% jump in statutory net profit after tax of $35.3 million.

The company’s management highlighted the role of the pandemic in driving demand to its online platform.

For FY20, Adairs rewarded shareholders by declaring a final dividend of 11 cents per share, fully franked.

Snapshot of the Adairs share price

Adairs is a soft furnishings and homewares retailer that operates in Australia and New Zealand.

In addition to more than 160 physical stores, the company also has a strong online presence.

The Adairs share price has been relatively subdued in 2021 although is currently 12% higher since the start of the year.

After hitting a record high of $4.97 a share in late February, the Adairs share price has given back much of its gains. At the time of writing, it’s sitting on $3.70.

As well as bringing forward the settlement of its Mocka acquisition, the Adairs share price has also battled against negative broker coverage.

Regardless, the company’s share price still offers investors a decent dividend yield.

After reporting a solid set of results in its half-year report earlier this year, the retailer also declared an interim dividend of 13 cents per share.

Adair’s potential dividend was recently acknowledged by noted broker Goldman Sachs.

According to a recent note from the broker, analysts cited the company’s strong market position and omnichannel presence.

Analysts also forecast Adairs to pay a fully franked dividend per share of 26 cents in FY21.

Adairs is scheduled to release its financial results for FY21 tomorrow.

The post How did the Adairs (ASX:ADH) share price respond last earnings season? appeared first on The Motley Fool Australia.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Thursday, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of US markets and is tumbling lower. The benchmark index is currently down 0.6% to 7,456.8 points.

Here’s what is happening on the ASX 200 today:

Treasury Wine shares fall despite earnings beat

The Treasury Wine Estates Ltd (ASX: TWE) share price is falling on Thursday following the release of its full year results. This is despite the wine giant delivering an EBITS result in line with guidance and slightly ahead of the consensus estimate. Treasury Wine reported broadly flat EBITS of $510.3 million. This compares to its guidance of $495 million to $515 million and the market consensus estimate of ~$508 million.

Origin posts $2.2 billion loss

The Origin Energy Ltd (ASX: ORG) share price is dropping today after the energy company released its full year results and revealed a heavy loss. Origin posted an 8% decline in revenue to $1.2 billion and a statutory loss of $2.2 billion in FY 2021. On an underlying basis, EBITDA fell 35% to $2 billion. This was driven by a 32% decline in Energy Markets EBITDA to $991 million and a 35% reduction in Integrated Gas EBITDA to $1,135 million.

Star’s FY 2021 results impress

The Star Entertainment Group Ltd (ASX: SGR) share price is charging higher today after investors responded positively to its full year results. Investors appear pleased that the casino and resort operator’s full year profit after tax fell only 5% to $116 million despite COVID disruptions. No dividend was declared due to ongoing uncertainty.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Thursday has been the Chorus Ltd (ASX: CNU) share price with a 14% gain. This follows the release of the NZ Commerce Commission’s draft RAB decision for its fibre business. The worst performer on the ASX 200 has been the Mineral Resources Limited (ASX: MIN) share price with an 8% decline. This follows a 4% decline in iron ore prices overnight.

The post ASX 200 midday update: Treasury Wine results, Origin’s $2bn loss, Star impresses appeared first on The Motley Fool Australia.

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• Origin Energy (ASX:ORG) share price on watch after $2.2 billion loss
• Treasury Wine (ASX:TWE) share price on watch after FY21 earnings beat

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Afterpay Ltd (ASX: APT) share price is going against the tide on Thursday, eking out a gain of 0.31% to $130.91 at the time of writing. This is despite the S&P/ASX 200 Index (ASX: XJO) sliding 0.49% to 7,465.100.

The resilient performance of Afterpay shares coincides with one of the biggest online shopping events in the country — Afterpay Day.

What is Afterpay Day?

Afterpay Day typically happens twice a year, providing Aussies with up to 70% off across hundreds of retailers. It started at 7am today and will run until midnight Sunday, August 22.

In addition to great sales, the company also launched a new augmented reality experience, ‘Invisible Drops’.

By scanning various QR codes found across the Afterpay site, app and social media outlets, shoppers can access exclusive product drops from participating merchants including Dyson, Sephora and Culture Kings.

Campaign Brief quotes Afterpay VP marketing ANZ Andrew Balint as saying:

This Afterpay Day, we’re excited to offer customers experiencing lockdown a fun and engaging augmented reality experience, which is the future of shopping. Not only are we giving shoppers the chance to see products in 3D before purchasing, but it means they can enjoy an immersive in-store experience from anywhere, particularly in the comfort of their own home.

With the ongoing economic impacts the nation is experiencing, half of the Aussie population have said they actively seek out ways to save, while 42% are more conscious than ever about only shopping during sales . So we’re excited to see our “Carte Diem” campaign for Afterpay Day encourage shoppers to seize huge deals responsibly, whilst supporting retailers.

What’s the big deal about Afterpay Day?

Afterpay hasn’t provided any specific commentary about the performance or impact of Afterpay Day since late 2019.

In this announcement, Afterpay said “during the last Afterpay Day sale in March 2019, the business saw over 400 US retail partners participate with an average increase in sales volume of more than 110% over a two-day period, with some retailers generating a 300%+ increase in sales volume.”

The Afterpay share price would rally 6.10% on the day of that announcement in August 2019.

Afterpay share price snapshot

The Afterpay share price has had a volatile year, with a year-to-date performance ranging from peaks of +30% to troughs of -28%.

The recent Square Inc (NYSE: SQ) takeover offer has helped Afterpay shares jump back into positive territory, up 9.84% for the year.

The post Afterpay (ASX:APT) share price edges higher as ‘Afterpay Day’ kicks off appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Accent Group Ltd (ASX: AX1) share price is slipping today despite the company posting record results for financial year 2021.

Accent released its FY21 earnings report after market close last night. Within them, the footwear retailer announced its FY21 sales had increased 19.9% compared to those of the prior financial year. Additionally, its earnings before interest and tax (EBIT) were also 19.3% higher.

Despite the good news, the Accent share price has been falling today. At one stage it was down 6.62%. However, Accent shares have since recovered somewhat and are now swapping hands for $2.27 apiece, a 2.99% drop from yesterday’s close.

Let’s take a closer look at how the company performed over FY21.

Accent’s FY21 earnings

Accent’s 12 months ended 30 June 2021 were incredibly productive. However, that hasn’t been enough to break the Accent share price’s downward trend.

Over FY21, Accent brought in $76.9 million in net profits after tax. That’s 38.6% more than it made in FY20. Additionally, its total sales equated to $1.14 billion, and its EBIT came to $242 million.

That’s particularly impressive considering, between all Accent’s retail stores, it experienced a total of 14 lockdowns in FY21.

The company also announced an 11.25-cent full-year dividend, up 21.6% on that of FY20.

Despite the seemingly outstanding performance, Accent’s stock has continued to slide. It has now fallen 18% since the beginning of August.

To make the drop even stranger, before today Accent hadn’t released any price-sensitive news since May.

The drop in the Accent share price may be related to the current Covid-19 outbreaks in Sydney and Melbourne. Accent warned its FY22 will be impacted by around $15 million due to the lockdown of Australia’s 2 largest cities. However, the impact will be greater if the outbreaks continue.

Accent share price snapshot

Despite Accent’s recent strong performance, its share price has been struggling on the ASX.

It has fallen 4% year to date. However, it has gained 39% since this time last year.

The post Accent (ASX:AX1) share price slides despite strong sales growth appeared first on The Motley Fool Australia.

More reading

• Accent (ASX:AX1) share price on watch following record FY21 results
• Accent (ASX:AX1) share price down as market awaits FY21 earnings
• How did the Accent (ASX:AX1) share price respond last earnings season?
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• Who’s starting the week off as the biggest mover on the ASX 300 today?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Origin Energy Ltd (ASX: ORG) share price has crept into the red during early trade on Thursday. At one point, Origin shares were exchanging hands at $4.08 apiece, a 5% drop on the day.

Today’s pressure on the charts arrives as Origin reported its FY21 earnings this morning.

What’s up with the Origin Energy share price today?

The Origin Energy share price is on the move as the company reported a significant down-step in its earnings over the course of FY21.

To illustrate, Origin recognised an 8% year on year down-step in revenue to $1.2 billion, whereas it recorded a 35% decrease in EBITDA from the year prior.

As a result, this contributed to a statutory loss of $2.2 billion. It, therefore, comes as little surprise that Origin also trimmed its dividend by 2.5 cents from FY20, announcing an unfranked 7.5 cents per share final dividend.

This brought the final dividend to 20 cents per share for FY21, signifying a 31% payout ratio from its cash flow.

Moreover, Origin also booked a 24% and 40% decrease in its electricity and natural gas segments, respectively.

Despite these headwinds, Origin reduced its Scope 1 and 2 equity emissions by 8% and launched an electrical vehicle (EV) platform.

In addition, the company expects these challenges to remain in place for the time being and into FY22.

Investors have punished Origin shares on the back of the announcement. The Origin share price is now changing hands at $4.26, a 2.4% dip into the red from the opening of trade.

Origin Energy share price snapshot

The Origin Energy share price has had a choppy year to date, bathing in a sea of red since January 1. Origin shares have posted a loss of 10% this year, extending the previous 12 month’s loss of 28%.

These returns have lagged the S&P/ASX 200 Index (ASX: XJO)’s return of around 25% over the past year.

The post Origin (ASX:ORG) share price slides 5% after revenue decline appeared first on The Motley Fool Australia.

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• ASX 200 midday update: Treasury Wine results, Origin’s $2bn loss, Star impresses
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• 5 things to watch on the ASX 200 on Thursday
• How did the Origin (ASX:ORG) share price respond last earnings season?
• Origin (ASX:ORG) share price lifts following green ammonia news

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The IGO Ltd (ASX: IGO) share price is on course to end the week with a day deep in the red.

In morning trade, the battery materials focused mining company’s shares have fallen 8% to $8.78.

Why is the IGO share price sinking today?

Today’s decline by the IGO share price appears to have been driven by broad weakness in the resources sector and news that it is in talks to acquire nickel producer Western Areas Ltd (ASX: WSA).

In respect to the latter, this morning IGO responded to media speculation. It stated that it “is in preliminary discussions with Western Areas in relation to a change of control proposal and the basis upon which engagement and due diligence could proceed.”

This was also confirmed by Western Areas. However, both companies are warning that there can be no assurance whether any transaction will eventuate. Nor is there any assurance in regard to the terms and conditions of any such transaction should one eventuate.

Nevertheless, that hasn’t stopped investors bidding up the Western Areas share price and selling down the IGO share price today.

Why Western Areas?

Earlier this month IGO made an appearance at the Diggers and Dealers conference. In its presentation, management spoke very positively about nickel, noting that demand for the metal is expected to increase 5.2x by 2030 from 2021 levels. This is largely due to its use in the lithium batteries of electric vehicles.

Management appears to see Western Areas as a good addition to its growing battery materials portfolio. It would also help offset the declining production at its Nova operation, which is nearing the end of its mine life.

However, with the IGO share price falling heavily today, investors don’t appear too keen on the idea.

This could be due to IGO finishing FY 2021 with a cash balance of $528.5 million. So, with an acquisition price of $1 billion being touted for Western Areas, IGO would either need to raise funds again or issue shares.

Another factor that could be of concern is Western Areas’ underwhelming performance in recent years. Its addition could add some uncertainty, especially given the ongoing ramp up of Western Areas’ key Odysseus mine at the Cosmos Nickel Operation.

Despite today’s decline, the IGO share price is up 32% in 2021.

The post Why the IGO (ASX:IGO) share price is sliding 8% today appeared first on The Motley Fool Australia.

More reading

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• Why Janus Henderson, Mineral Resources, Telix, & Western Areas are rising

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Perpetual Limited (ASX: PPT) share price is slipping lower in morning trade on Thursday. This comes after the global financial services company released its full-year results for FY21 today.

At the time of writing, the Perpetual share price is down 0.58%, trading at $39.24.

Perpetual share price dips despite ‘transformational’ year

• Operating revenue increased 31% to $640.6 million
• Underlying profit after tax up 26% to $124.1 million with the inclusion of Trillium and Barrow Hanley acquisitions
• Total assets under management (AUM) reached $98.3 billion
• Net profit after tax fell 9% to $74.9 million due to significant one-off costs
• Fully franked final dividend declared of 96 cents per share, bringing total dividends for FY21 to $1.80 per share — an increase of 16% on FY20.

What happened in FY21 for Perpetual?

While the share price movement may have you thinking otherwise today, Perpetual has generated respectable growth across its various financial businesses in FY21.

For those less familiar, Perpetual operates four separate divisions known as Perpetual Asset Management International (PAMI), Perpetual Asset Management Australia (PAMA), Perpetual Corporate Trust (PCT), and Perpetual Private (PP).

Pleasingly for shareholders, the company’s assets under management grew 246% year-over-year to $98.3 billion. Of those funds, a significant amount outperformed their respective benchmarks over the year. Notably, 100% of its PAMI funds outperformed their relative benchmarks. This is crucial for Perpetual’s client satisfaction, retaining, and growing funds — and inevitably the Perpetual share price.

Additionally, with AUM more than tripling, the firm managed to increase operating revenue by 31% to $640.6 million. This was reflective of Perpetual’s successful acquisitions of Trillium and Barrow Hanley.

Investors might be focusing on the firm’s fall in statutory profits. While net profit after tax declined 9% to $74.9 million, this was mostly a result of one-off costs involved with the acquisitions during the financial year.

What did management say?

Commenting on the result, Perpetual CEO and managing director Rob Adams said:

We delivered solid results in FY21, with a strong uplift in earnings. The year was truly transformational for Perpetual and saw our continued evolution from a largely Australian-focused business with A$28.4 billion in AUM, to now managing close to A$100 billion in AUM, with a global footprint, a global client base and a strong forward-looking growth profile.

Furthermore, regarding the company looking forward, Adams said:

At 30 June, the group maintained its strong balance sheet which positions us to drive organic growth and take advantage of inorganic opportunities to add further depth and breadth of capability to our offerings globally.

What’s next for Perpetual?

According to the release, Perpetual will focus on three main priorities in FY22. These are client first, future fit, and new horizons. The new horizons priority involves the continued leveraging and expansion of Jacaranda Financial Planning. In addition, the company will continue to build out further investment capabilities for Trillium and Barrow Hanley.

In terms of guidance, Perpetual shared its expectation of total expenses to be between $549.2 million to $568 million in FY22. This would indicate an increase of 17% at a minimum compared to FY21’s total expenses. The company noted significant integration costs and amortisation of acquired intangibles during the year ahead.

Perpetual share price recap

The Perpetual share price has returned shareholders a solid return of 27.4% over the past 12 months. For comparison, those who simply invested in an index fund tracking the S&P/ASX 200 Index (ASX: XJO) made a 20.9% gain.

Finally, based on the current share price, Perpetual is trading on a price-to-earnings (P/E) ratio of 33.5.

The post Perpetual (ASX:PPT) share price falters after reporting 9% profit fall appeared first on The Motley Fool Australia.

More reading

• How did the Perpetual (ASX:PPT) share price respond last earnings season?
• Why the Perpetual (ASX:PPT) share price is pushing higher today
• Perpetual (ASX:PPT) share price struggles despite ‘strong performance’

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The South32 Ltd (ASX: S32) share price is in reverse on Thursday morning following the mining outfit’s full-year FY21 results. It may come as a surprise the company reported a relatively strong result, yet delivered a mammoth net loss after tax.

At the time of writing, South32’s shares are fetching for $2.85 apiece, down 1.38%.

South32 share price stutters

The South32 share price fell wayside after the company delivered its result for the 12 months ending 30 June 2021. Here are some of the key highlights:

• Total revenue improved to US$6,337 million, up 4% on the prior year (FY20 US$6,075 million);
• Underlying earnings before interest and tax (EBIT) jumped to US$844 million, up 89% on the prior year (FY20 US$446 million);
• Net loss after tax came to US$195 million, (FY20 net loss after tax US$65 million);
• Underlying earnings per share (EPS) rocketed to US 10.3 cents, up 164% on the prior year (FY20 US 3.9 cents per share); and
• Full-year dividend (ordinary and special) lifted to US 6.9 cents per share, up 82% on the prior year (FY20 US 3.2 cents per share).

What happened in FY21 for South32?

On the production front, South32 came in strongly. The company achieved record production at Worsley Alumina and Brazil Alumina with both refineries benefitting from higher plant availability. In addition, the company’s attained its best ever output at Australia Manganese, exceeding previous earnings guidance.

Sales volumes increased and realised prices for aluminium, silver, zinc and nickel all improved. Higher base metals prices were partially offset by lower realised prices for South32’s bulk commodities, with metallurgical coal and manganese ore prices declining.

The strong operating result and higher prices translated into an improved group operating margin of 26%. South32’s cost base remained relatively unchanged despite higher power costs, the inflationary impact of global freight rates and stronger producer currencies.

The company’s response to the pandemic continued throughout FY21 whilst controls remained in place across its operations. It noted that some of the COVID-19 local cases are in areas where it currently operates.

However, affecting the South32 share price is the company’s sizeable loss on the bottom line. South32’s statutory profit after tax declined by US$130 million to a loss of US$195 million following the recognition of impairment charges totalling US$728 million (US$510 million post-tax).

This is in relation to Illawarra Metallurgical Coal and a loss on sale of US$159 million following the company’s divestment of South Africa Energy Coal.

What did management say?

South32 CEO Graham Kerr touched on the company’s performance, saying:

During the year, we made substantial progress reshaping our portfolio, completing the divestments of South Africa Energy Coal, the TEMCO manganese alloy smelter, and a portfolio of non-core precious metals royalties. This simplifies our business, reduces capital intensity and will improve our underlying operating margin.

At Hermosa we continue to progress studies for the Taylor and Clark deposits. We have also commenced the summer field season drilling program at the Ambler Metals Joint Venture in Alaska.

What’s next for South32?

Looking ahead, South32 expects to see robust volumes at its base metals operations following investment projects to increase aluminium and nickel production. This is in relation to the company’s Mozal Aluminium, Cerro Matoso and Cannington sites.

While remaining subject to further potential impacts from COVID-19, FY22 guidance is unchanged. This is, however, with the exception of the company’s non-operated Brazil Alumina and underground base metals operation at Cannington.

The post South32 (ASX:S32) share price drops on US$195 million net loss after tax appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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