South32 to Cut Costs Amid Commodity Market Downturn -- Update
August 23 2015 - 8:49PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--South32 Ltd. (S32.AU) said it intends to cut operating
costs to safeguard profit amid a downturn in world commodity
markets.
The mining company, spun out of BHP Billiton Ltd. (BHP.AU)
earlier this year, said it aimed to cut annual costs by US$350
million or more by mid-2018.
"South32 has already made strong inroads in reducing costs but
there is more to be done," the company said in a statement
Monday.
It will also reduce sustaining capital expenditure this fiscal
year by 9% to US$650 million. The company aims to maintain that
rate of project spending for the forseeable future, it said.
In its maiden fiscal report, South32 reported a pro forma net
profit of US$28 million, which it said compared to a profit of
US$64 million a year earlier. It reported a statutory loss of
US$919 million.
It said net profit was knocked by writedowns against some mining
operations. Pro forma underlying earnings were up 41% at US$575
million, it added.
Still, South32 cautioned it faced challenging market conditions.
Mining company earnings have been squeezed by falling commodity
prices, as China's economy slows. The price of industrial metals
and other commodities such as coal and manganese have fallen
sharply.
"This is likely to persist for some time," Chief Executive
Graham Kerr said on a conference call.
Shares in the company have been falling since it listed in May,
weighed by uncertainty over its outlook, following one of the
largest corporate breakups in mining history. South32 was down 2.6%
in early Sydney trading.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 23, 2015 20:34 ET (00:34 GMT)
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