Tag: Motley Fool

Is the Vanguard Australian Shares High Yield ETF (ASX: VHY) a good buy for passive income from ASX dividend shares?

You’d think so. After all, this exchange-traded fund (ETF) offers investors a ‘high yield’ in its very name. But appearances can sometimes be deceiving. So let’s break down the Vanguard High Yield ETF and see if it puts its money where its name is.

So this ETF from provider Vanguard aims to provide investors with a high level of income by holding ASX shares that pay fat and often fully franked dividend payments.

If an ETF holds a dividend-paying share in its underlying portfolio, it is required to pass on any dividend income it receives straight to its investors. These payments are called distributions.

The Vanguard High Yield ETF currently has 73 ASX dividend shares in its underlying portfolio. These, according to the provider, are selected based on their “higher dividend forecasts relative to other ASX-listed companies”. The fund takes into account future dividend potential, as well as a company’s present dividend prowess.

On the latest data, some of this ETF’s top holdings include BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Woodside Energy Group Ltd (ASX: WDS), Wesfarmers Ltd (ASX: WES), and Westpac Banking Corp (ASX: WBC).

But let’s get down to the meat and potatoes.

What kind of dividends does the Vanguard High Yield ETF offer?

So the Vanguard High yield ETF pays out quarterly dividend distributions. This is a little unusual in itself since most ASX shares pay out a dividend every six months. So no doubt some investors will appreciate the more frequent payment schedule.

This ETF’s last four dividend distributions came to an annual total of $4.15 in distributions per unit. At the current Vanguard High Yield ETF unit price of $68.94 (at the time of writing), this gives the fund a trailing yield of 6.02%.

For an investor seeking passive income from ASX dividend shares, this high yield is a pretty good start. To illustrate, it’s a more lucrative yield than what is being offered by any of the ASX big four banks today.

Distributions from this ETF also tend to come very close to fully franked too, which would lift this yield up to approximately 8.5% grossed-up.

The Vanguard Australian Shares High Yield ETF charges a management fee of 0.25% per annum.

The post Is the Vanguard Australian Shares High Yield ETF (VHY) a good buy for passive income? appeared first on The Motley Fool Australia.

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• Growth and income: 2 excellent ETFs for ASX investors to buy this month
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• Which of the Vanguard ASX ETFs has performed best over the past year?
• How I’d generate a $4,000 monthly passive income using only ASX ETFs

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 positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It certainly has been a busy day on the ASX 200 index on Thursday. This has seen a number of ASX 200 shares releasing updates to the market today.

Three that investors have responded positively to are summarised below. Here’s what they reported:

Domain Holdings Australia Ltd (ASX: DHG)

The Domain share price is up 2% to $3.12 after the release of the ASX 200 property listings company’s half year results. While Domain reported a solid 6.5% increase in revenue to $186.6 million, its expenses grew by a massive 20% and weighed heavily on its margins. This led to the company reporting a 38.9% decline in net profit to $15.9 million. Goldman Sachs notes that Domain’s revenue was 2% higher than its estimates but its profits fell 15% short.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is up 1% to $3.54. This morning, this agricultural chemicals company released an upbeat annual general meeting update. Management revealed that FY 2023 “promises to be another strong year for IPL.” Overall, its business is performing materially in line with the outlook provided in November.

IPH Ltd (ASX: IPH)

The IPH share price is up 3% to $8.64. This ASX 200 intellectual property services company reported a 19% increase in half year revenue to $226.9 million and a 16% lift in net profit after tax to $28.5 million. This allowed IPH to increase its interim dividend by 7% to 15.5 cents per share. Management advised that this result was driven by organic growth in Asia and the acquisition of Smart & Biggar. Favourable currency movements also gave its earnings a boost.

The post 3 ASX 200 stocks marching higher following earnings updates appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
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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 recommended IPH. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Whitehaven Coal Ltd (ASX: WHC) share price is sinking on Thursday despite the declaration of a whopping interim dividend.

The company dropped its earnings for the first half this morning, as The Motley Fool Australia reports.

And within them, it revealed a 32 cents per share interim offering – marking a 300% increase on that of last year.

Right now, shares in the S&P/ASX 200 Index (ASX: XJO) coal producer are down 5.98%, trading at $7.70.

Let’s delve into all investors need to know about Whitehaven’s newly declared monster dividend.

Whitehaven share price slumps despite record interim dividend

The Whitehaven share price might not be reacting favourably, but investors are likely jumping for joy after learning of the company’s upcoming 32-cent per share payout.

It revealed the offering alongside a $1.78 billion net profit after tax (NPAT) – marking a 423% year-on-year improvement, and $2.65 billion of earnings before interest, tax, depreciation, and amortisation (EBITDA) – a 319% jump.

That was helped by an average realised coal price of $553 a tonne – up from $202 a tonne in the prior comparable period, and a 4.8% increase in production.

It’s likely no surprise then that the company’s interim dividend comes fully franked.

The 32-cent per share offering is also the largest-ever interim dividend to be declared by Whitehaven.

It represents 16% of the company’s basic earnings per share (EPS), which came in at $1.989.

It’s also the second-largest ordinary dividend the coal producer has ever declared, bested only by the 40-cent per share final dividend it paid in September 2022.

Taking both dividends into account, Whitehaven boasts a 9.2% dividend yield at its current share price.

Key dates to keep in mind

Want-to-be-shareholders still have time to jump on board to receive the ASX 200 company’s interim offering. Whitehaven doesn’t trade ex-dividend until this time next week.

Anyone holding shares in the coal giant next Thursday will see the dividend hitting their accounts from 10 March.

The post Everything you need to know about the monster Whitehaven dividend appeared first on The Motley Fool Australia.

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More reading

• Whitehaven Coal share price sinks despite 423% profit jump
• ‘Looks attractive’: Fund names 3 ASX shares to buy for the energy crisis
• Here are the top 10 ASX 200 shares today
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• Why are ASX 200 energy stocks like Woodside having such a stellar start to the week?

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 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 Scott Phillips.

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BHP Group Ltd (ASX: BHP) shares have come roaring back over the past few months.

Fuelled by rebounding iron ore and copper prices over the past three months, shares in the S&P/ASX 200 Index (ASX: XJO) mining giant are up 28% since 1 November.

Which begs the question, should ASX 200 investors snap up some shares before BHP releases its half-year results on Tuesday, 21 February?

To buy, or not to buy?

Whether BHP shares rise or fall following the release of the company’s half-year results will hinge on a few key factors.

One of those is whether or not the miner meets consensus expectations (quoted by Goldman Sachs) of earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$14.3 billion and net profit after tax (NPAT) of US$7.0 billion.

Those expectations have factored in that iron ore and copper prices were down sharply for much of the six-month reporting period. Both industrial metals rebounded in early November.

Any surprise to the upside of consensus expectations should see BHP shares march higher, while results falling short of expectations will likely see the miner’s shares fall.

Another big influence on the share price will be the kind of forward-looking statements and earnings guidance provided by management. A positive outlook and guidance will help support the share price.

Of course, as long-term investors, we’re more interested in the 12-month plus performance, rather than what happens on the day the results are released.

What’s the longer-term outlook for BHP shares?

The ASX 200 miner derives the majority of its revenue from iron ore, with copper coming in at number two. Coal also still plays an important role.

On the coal front, while thermal prices may not retain the all-time highs hit in 2022, Russia’s war in Ukraine and limited new supplies amid strong global demand should see coal prices remain elevated through the year.

Iron ore and copper prices have retraced some over the past few weeks, but both industrial metals remain well above their November lows. China’s continuing reopening from its pandemic restrictions should help support prices in the months ahead.

BHP shares could also get a boost if its planned takeover of ASX 200 copper giant Oz Minerals Limited (ASX: OZL) goes through. That remains subject to shareholder and court approval.

As for tailwinds, BHP will continue to face elevated costs for skilled labour alongside higher energy and materials prices.

Though those higher costs aren’t overly concerning to Don Hamson, managing director at Plato Investment Management.

“Despite the naysayers, Australian miners have continued to deliver strong dividends,” Hamson recently told The Motley Fool. “Broadly speaking, we think this will continue into 2023. Income from the sector will remain strong, but we may not see the record dividends and special dividends seen in recent years.”

Hamson noted that BHP shares have benefited from “a great demonstration of diversified revenues”, including coal:

In FY22, it posted net profits of US$22.4 billion. That was up 64% on 2021 when many thought it was the peak for the ‘Big Australian’ because it was the top of the iron ore cycle. But last year, it was coal that provided a windfall, generating about US$9.5 billion for the company.

Whether it’s before or after the ASX 200 miner reports its results on Tuesday, I agree with Hamson on this one.

BHP shares are worth considering adding to your long-term portfolio.

The post Should you dig into BHP shares before the ASX 200 miner reports next week? appeared first on The Motley Fool Australia.

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More reading

• Will ASX 200 shares crash in 2023?
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• Better buy: Fortescue vs BHP shares
• ASX 200 shares: How to invest $10,000 to get $910 per year in passive income

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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One of the ASX 200 shares reporting its earnings today was blue chip Telstra Group Ltd (ASX: TLS). Telstra shares have reacted positively to the company’s latest earnings, with the Telstra share price presently up a healthy 1.81% to $4.215 a share.

As we went through this morning, the telco reported green numbers across the board. Over the six months to 31 December 2022, Telstra’s total income rose 6.4% to $11.6 billion. Earnings before interest, tax, depreciation and amortisation (EBITDA) rang in $3.9 billion, an 11.4% lift, while net profit after tax (NPAT) was up 25.7% to $0.9 billion.

Tesltra’s earnings per share (EPS) increased by 27.1% to 7.5 cents per share.

And this enabled the centrepiece of Telstra’s results: a 6.3% increase to Telstra’s cherished interim dividend to a fully franked 8.5 cents per share.

Telstra shares rise as divided hiked

During Telstra’s full-year results for FY2022 from last year, investors were immensely excited when the telco raised its final dividend to 8.5 cents per share, the first time in seven years Telstra had given investors a pay rise. So what is now a back-to-back dividend hike is certainly welcome news.

This latest interim dividend will take Telstra’s annual payout to a fully franked 17 cents per share.

On the current Telstra share price, this gives the telco a forward dividend yield of 4.03%.

Here’s what Telstra’s management said about the dividend hike this morning:

On the back of our continued growth, the Board resolved to pay a fully franked interim dividend of 8.5 cents per share representing a 6.3 percent increase on the prior corresponding period, and in line with the second half of last financial year.

The interim dividend is consistent with our policy to maximise the fully franked dividend and seek to grow it over time.

So when can investors look forward to getting the cash in their hands?

Well, this new interim dividend is scheduled to be doled out on 31 March. But if any new investors wish to receive it, they will have to own Telstra shares on or before the ex-dividend date of 1 March, with the record date set for the following day.

Investors then have until 3 March to opt for the optional dividend reinvestment plan (DRP) if they wish to receive additional Telstra shares instead of a cash payment.

The Telstra share price is now up a healthy 6.46% in 2023 to date, but only up 3.3% over the past 12 months:

The post Everything you need to know about the boosted Telstra dividend appeared first on The Motley Fool Australia.

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More reading

• Telstra share price higher on half-year revenue and earnings beat
• Telstra share price on watch amid strong half-year profit growth
• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• If I invest $2,000 in Telstra shares now, what could my return be in 2023?

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. 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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Earnings season has gone up a gear on Thursday with countless results being released to the market.

Two ASX All Ords shares that have released results are listed below. Here’s what they reported and how investors have responded:

NRW Holdings Limited (ASX: NWH)

The NRW share price is falling 9% today despite the diversified contract services company delivering a result in line with its guidance. The ASX All Ords share reported a 15% increase in revenue to $1.3 billion and a 7.4% lift in EBITA to $80.1 million.

Management has also reaffirmed its full year revenue and EBITA guidance of $2.6 billion to $2.7 billion and $162 million to $172 million. However, investors may believe that NRW’s first half performance means the lower end of its guidance range is more likely now.

Ridley Corporation Ltd (ASX: RIC)

Investors have responded significantly better to this premium quality, high-performance animal nutrition solutions provider’s half year results. The ASX All Ords share is up over 11% at the time of writing. Ridley Corp reported a 25.4% increase in revenue to $637.9 million and a 20.3% lift in net profit (before significant items) to $21 million.

A key driver of this growth was its Packaged Feeds and Ingredients segment, which delivered a 21.9% increase in earnings. This was supported by its Ingredient Recovery business, which reported strong results from accessing premium markets with differentiated products. Another positive was that higher selling prices for protein meals and tallows more than offset increased raw material and manufacturing costs.

Looking ahead, while no guidance has been provided, management advised that it expects its earnings to improve over the prior corresponding period.

The post 2 ASX All Ords shares making massive moves on results announcements appeared first on The Motley Fool Australia.

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More reading

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• Magellan share price shakes off 60% profit slump and marches higher
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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 Scott Phillips.

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The Super Retail Group Ltd (ASX: SUL) share price is racing higher amid the release of its half-year results this morning.

Wasting no time, shares in the operator of retail brands SuperCheap Auto, rebel, BCF, and Macpac are drifting 5.3% higher to $12.60 in early trade. For context, the S&P/ASX 200 Index (ASX: XJO) is 0.52% stronger than yesterday.

It appears shareholders are still stoked with today’s release, despite getting a glimpse into these figures back in January.

So, which metrics are making investors’ hearts race?

Booming profits jump-start the Super Retail share price

• Group sales up 15% year-on-year to a first-half record of $1.96 billion
• Statutory net profit after tax (NPAT) up 30% to $144 million
• Normalised earnings per share (EPS) up 36% to 63.9 cents per share
• Fully franked interim dividend of 34 cents per share declared, up 26% from last year
• Finished the half with $212 million in cash and no drawn bank debt

Super Retail Group has delivered a solid result on behalf of its shareholders today with earnings at the top of its prior guidance.

According to the release, the record sales were aided by a strong trading period over Black Friday and the Christmas season. This, in conjunction with cost controls, resulted in the company delivering a significant increase in profits — up 30% compared to the prior corresponding period.

The biggest contribution — in terms of total sales growth — came from the company’s Macpac division. This business segment achieved 55% sales growth year-on-year. Whereas the weakest momentum could be found in the BCF unit, which grew by 7%.

What else happened during the first half?

One aspect of retailing that has been a major headache for many companies is inventory levels. Holding excess inventory can be a costly practice. However, the need to mitigate supply chain issues prompted buying ahead of demand.

Fortunately, inventory levels further normalised during the first half, finishing the period at $876 million. This could be playing into the stronger Super Retail share price today.

As the slide above shows, inventory represented 44.7% of group sales at the end of December 2022 — more in line with pre-pandemic values.

What did management say?

In acknowledging the accomplishments of the first half, Super Retail Group CEO Anthony Heraghty said:

This result is a testimony to the strength of our four core brands, all of which delivered record first-half sales off the back of strong peak period trading. The success of our new store formats (including rebel rCX and the new BCF superstore) and our club member programs, which have added one million members in the past 12 months, have helped to deliver a strong first-half performance.

Shifting gears to the second half, Heraghty noted the positive signs so far, stating:

Pleasingly, the strong sales momentum we saw in the first half has continued into January, with all
brands trading well.

Though, the forward outlook isn’t without its drawbacks.

What’s next?

The second half is already showing signs of positive performance. On a year-to-date basis, sales for each of the company’s four brands are positive on a like-for-like comparison.

Furthermore, management is targeting the opening of 18 new stores during the current half. In particular, Super Retail is expanding its rebel ‘rCX’ store format by an additional two stores, which would bring the total count to 15.

However, the company’s CEO noted a potential headwind from rising interest rates in the second half. A higher rate environment could lead to weaker consumer spending, translating into dampened group sales.

Super Retail share price snapshot

The performance of the Super Retail share price remains negative over the past year. Although, the last six months have been a completely different story.

Those that invested in this ASX share six months ago are already up nearly 22%. And, despite the substantial rally, the company’s price-to-earnings (P/E) ratio is relatively conservative at 11.7 times.

The post Super Retail share price roars on 30% profit boost appeared first on The Motley Fool Australia.

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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 positions in and has recommended Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Sonic Healthcare Limited (ASX: SHL) share price is charging higher on Thursday.

In morning trade, the healthcare company’s shares are up 9% to $31.74.

This follows the release of Sonic Healthcare’s half year results.

Sonic Healthcare share price jumps despite profit decline

• Total revenue down 14% to $4,082 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) down 40% to $920 million
• Net profit down 54% to $382 million
• Fully franked interim dividend increased 5% to 42 cents per share

What happened during the half?

For the six months ended 31 December, Sonic Healthcare reported a 40% decline in total revenue to $4,082 million. This reflects a 72% decline in COVID-19 revenue to $379 million, which offset a 9% lift in base business revenue to $3,703 million.

When compared to its performance in the first half of (pre-pandemic) FY 2020, revenue would have been up 22%.

It was a similar story for Sonic Healthcare’s earnings, which fell heavily year over year but rose strongly compared to pre-pandemic times. The company’s net profit of $382 million was down 54% over the prior corresponding period but up 50% from the first half of FY 2020.

Despite the year over year profit decline, Sonic Healthcare has maintained its progressive dividend policy and increased its interim dividend by 5% to a fully franked 42 cents per share.

How does this compare to expectations?

Given the Sonic Healthcare share price performance today, you might expect that this result was ahead of expectations.

However, the company’s sales and net profit were actually 1% below consensus estimates.

Management commentary

Sonic’s CEO, Dr Colin Goldschmidt, described the company’s profit as ‘amazing’. He commented:

At face value, Sonic Healthcare’s result for the half-year shows declining revenue and earnings as a result of a dramatic reduction in revenue from COVID-19 related services against the same period in the prior year. Taking a longer-term view, our net profit for the half-year is an amazing 50% higher than in the most recent pre-pandemic comparable period, being H1 FY 2020.

The reduction in COVID related revenues also tends to mask the performance of our base business, which remains strong and is gaining further momentum. Base business revenue grew 6% organically versus H1 FY 2022 and 8% versus H1 FY 2020. For the month of January 2023 base business organic growth for the group was 10% versus January 2020. I am particularly pleased with the growth momentum of our Australian Pathology business, where growth in January was 16% versus January 2020. Comparing our own Australian base business Medicare billings to the national Medicare data over the last decade shows that Sonic has been consistently growing market share organically.

Outlook

No guidance has been provided for FY 2023. However, the company did advise that revenue was up 10% in January compared to the same period in 2020.

Furthermore, management appears positive on the outlook for the base business. Dr Goldschmidt added:

We are well-positioned to capitalise on the accelerating trend towards higher value tests and modalities in both laboratory medicine and radiology. We expect ongoing strong growth in genetic testing, including prenatal tests, and through exclusive or limited provider tests such as ThyroSeq, Oncotype DX, microbiome testing and others. Our base business organic growth is assisted by strong underlying industry drivers and is expected to be enhanced by post-pandemic catchup testing.

With the worst of the pandemic seemingly now behind us, we look forward to continuing to provide world-leading medical diagnostic services to our patients and their physicians.

And with the company ending the period with available liquidity of $1.5 billion, management revealed that it is progressing several acquisition opportunities. This could be what has got investors excited and boosted the Sonic Healthcare share price today.

The post Sonic Healthcare share price surges 9% on ‘amazing’ profit result appeared first on The Motley Fool Australia.

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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 recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Magellan Financial Group Ltd (ASX: MFG) share price is in the green on Thursday. 

Shares in the S&P/ASX 200 Index (ASX: XJO) funds manager closed yesterday trading for $9.45 and are currently swapping hands for $9.55, up 1.1%.

This comes following the release of the company’s half-year results for the six months ending 31 December (1H FY23).

Read on for the highlights.

Magellan share price gains despite cratering profits

• Adjusted revenue and other income of $209 million, down 49% from $384 million in 1H FY22
• Adjusted net profit after tax (NPAT) of $98 million, down 60% from $319 million in the prior corresponding half-year
• Average funds under management (FUM) $53.8 billion, decreased 52%
• Interim dividend of 46.9 cents per share, 85% franked, down from 110.1 cents per share in 1H FY22

What else happened during the half year?

Magellan said it continued to progress with simplifying its business and organisational structure to support its long-term strategy.

The company reaffirmed its fund management operating expenses in the range of $125 million to $130 million.

Of the 10 million Magellan shares authorised for the on-market share buyback, its bought 4.2 million to date at a cost of $46.7 million.

The company also noted its Energy Transition Investment Strategy is set to launch to institutional clients this month, while it’s now “well progressed” on the Airlie Small Companies Fund.

What did management say?

Commenting on the results that are seeing the Magellan share price lift today, CEO David George said:

Magellan has experienced a period of accelerated and substantial change in recent times. We now have a well-defined and actionable five-year strategy which builds upon the qualities that have made us successful, while further diversifying the business to deliver sustainable growth and revenue.

George added that over the six-month period, Magellan had taken “key first steps in delivering on our five-year target of $100 billion in funds under management by 2027”.

What’s next?

Looking at what could impact the Magellan share price down the road, the company expects “challenging market conditions and volatility” to continue, with higher interest rates and inflationary pressures to persist.

However, Magellan sees opportunities from these challenges, saying, “These market and economic conditions provide opportunities for active fund managers to differentiate between companies and to capitalise on value as it emerges.”

Magellan share price snapshot

After a rough 2022, the Magellan share price is up 8% so far in 2023. As you can see in the chart below, shares in the ASX 200 fund manager remain down 41% over the past 12 months.

The post Magellan share price shakes off 60% profit slump and marches higher appeared first on The Motley Fool Australia.

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• Earnings preview: Here are the ASX shares reporting on Thursday
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Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The South32 Ltd (ASX: S32) share price is fighting back after the mining giant posted its first-half earnings this morning.

Stock in the S&P/ASX 200 Index (ASX: XJO) diversified mining and metals company plummeted on open, falling to a low of $4.45 – a 3.7% tumble.

It has since recovered to trade 0.43% in the green at $4.64.

South32 share price suffers early slip alongside profits

Here are the highlights of the half-year report:

• US$3.7 billion of revenue – an 8% fall on that of the prior comparable period (pcp)
• US$685 of profit after tax – down 34% on the pcp
• US$560 million of underlying earnings – a 44% drop
• US$1.36 billion of underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) – down 27%
• Basic earnings per share (EPS) slipped 33% to 14.9 US cents
• 4.9 US cent interim dividend declared – down from 8.7 US cents last year

South32’s profits tumbled alongside commodity prices last half, with additional dints from inflation and uncontrollable costs.

Its production increased 12% last half, helped by investment in copper and low-carbon aluminium, while coal was the biggest earnings contributor.

It ended the period with US$1.6 billion of cash and a US$298 million net debt position.

What else did the company announce today?

In good news for those invested in South32 shares, the company has increased its buyback by around US$50 million, leaving it with US$158 million to return to shareholders before September.

The company also revealed changes to its upper management team this morning.

Its current chief financial officer (CFO) Katie Tovich will be appointed chief human resources and commercial officer, while its vice president of finance Sandy Sibenaler will step up to the CFO position.

What did management say?

South32 CEO Graham Kerr commented on the results driving the company’s share price today, saying:

We delivered another period of strong production results, and while commodity prices retreated from record levels, we recorded one of our largest profit results to date with Underlying EBITDA of US$1.36 billion.

Our strong financial result was underpinned by production growth of 12%, our recent portfolio improvements, which increased our exposure to the metals critical to a low-carbon future, and continued focus on cost efficiencies.

The long-term outlook for our business is positive as a result of our portfolio investments and high-quality development options in the metals critical for a low-carbon future.

What’s next?

Looking forward, South32 believes commodity markets have strengthened. That leaves it ready to benefit from the planned production growth and lower operating costs expected across the majority of its operations in the second half.

It expects its production will increase another 6% this half. That’s tipped to be supported by embedded improvement projects and the ramp-up of its Brazil Aluminium smelter.

Meanwhile, its full-year capital expenditure guidance has dropped US$105 million to US$1.14 billion.

South32 share price snapshot

The South32 share price has gained 17% so far this year. It’s also currently 3% higher than it was this time last year.

For comparison, the ASX 200 has risen 6% year to date and around 1% over the last 12 months.

The post South32 share price recovers as earnings tumble 44% appeared first on The Motley Fool Australia.

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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 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 Scott Phillips.

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