Manganese writedowns push South32 to $1.7bn half-year loss
SYDNEY - Australia's South32 on Thursday reported a first-half loss of $1.7-billion, hurt by big writedowns for its manganese and energy coal businesses.
South32 is the dominant global producer of manganese, and has interests in alumina, silver, nickel and coking coal - industrial mainstays hard hit in the wake of China's economic pullback.
It took a $916-million impairment charge on its Australian manganese business, and a $518-million charge on its South African energy coal unit, underscoring the deterioration in industrial demand for imported raw materials in China.
Spun off last year by BHP Billiton, South32 is the largest producer of manganese ore and a top producer of manganese alloy, used in making aluminium products such as drink cans.
The non-cash charges were flagged by the company on February 4, along with plans to cut hundreds of jobs.
South32 Chief Executive Graham Kerr recently warned that challenging conditions and low prices would continue in the manganese market and called for supply-side discipline.
The half-year loss compared with a pro forma profit of $339-million a year ago.
Underlying earnings, excluding non-cash impairments and the impact of foreign exchange, slumped 94% to $26 million.
The company maintained its production guidance for the full year, but has cut capital expenditure by $150-million.
Shares in South 32, which have shed about half their value since first trading in May, fell nearly 3% in morning trade to A$1.09 before recovering to be flat in a slightly weaker overall market.
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