South32 Ltd on Thursday reported a bumper first half with a 57% rise in revenue driving a surge in profit, but operational challenges remain.

South32 shares were up 1.6% to R 49.28 each in Johannesburg on Thursday morning, and were up 2.8% to 240.50 at the equities open in London. The stock closed up 1.1% at A$4.50 in Sydney.

For the six months to December 31, the Perth-based diversified miner reported pretax profit from continuing operations of $1.46 billion, soaring from just $155 million a year prior.

This was off a 57% jump in revenue to $3.65 billion from $2.32 billion.

South32’s operating margin rose to 44% from 24% the year before, thanks to strong production and high operating leverage, the company said.

‘Our business is in excellent financial health and we have continued to reshape our portfolio, with the planned acquisition of a 45% stake in the Sierra Gorda copper mine [in Mexico], and further investment in green aluminium,’ Chief Executive Graham Kerr said.

Last September, South32 bought a further 25% stake in Mozal aluminium from Mitsubishi Corp subsidiary MCA Metals Holding GmbH for $250 million, taking its ownership of the smelter up to 72%.

Mozal Aluminium is an aluminium smelter located near Maputo, Mozambique. The operation is jointly owned by South32, Mitsubishi, the Industrial Development Corp of South Africa and the Mozambican government.

The Perth-based diversified miner upped its interim dividend to 8.7 US cents from just 1.4 cents a year before.

South32 also mentioned that operations continued to be hindered by Covid-19 which was hurting worker availability.

Looking ahead, South32 lowered its financial 2022 guidance for Australia manganese by 9% to 3.2 million wet metric tonnes.

Australia-based Illawarra metallurgical coal guidance was revised 7% lower for financial 2022 to 6.8 million tonnes, while the Australia-based Cannington zinc, silver, and led project saw guidance revised up by 5% to 2.8 million dry metric tonnes.

‘Looking ahead, we are well positioned to capitalise on current market conditions as countries continue their economic recovery from Covid-19, and into the future as they invest in new infrastructure that is expected to see continued growth in demand for the metals critical for a low carbon future,’ Kerr said.

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