South32 Ltd. (AU:S32)
ASX:S32
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South32
(Sydney:S32)
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Rating:63Neutral
Price Target:
AU$5.00
▲(10.38% Upside)
Action:ReiteratedDate:03/26/26
The score is driven primarily by stable-but-mixed financial performance (strong margins and low leverage, but weak net profitability and pressured free cash flow). Valuation is supportive (low P/E with a dividend), while technical indicators are notably bearish and weigh on the overall score. The latest earnings call adds modest support due to strong interim results and capital returns, tempered by material aluminum/power and project execution risks.
Positive Factors
Conservative balance sheet
South32's low debt-to-equity (0.18) and high equity ratio (~64%) provide durable financial flexibility in a cyclical commodities industry. This conservative capital structure supports steady investment in projects, enables sustained shareholder returns, and buffers against commodity downturns and financing stress over the next 2–6 months.
Negative Factors
Weak free cash flow conversion
Despite healthy operating cash conversion to net income (0.85), the materially negative FCF growth and low FCF/net income (0.25) indicate limited discretionary cash available after sustaining and growth capex. This constrains the company's ability to self-fund projects, buy back stock or increase dividends without relying on commodity tailwinds or financing.
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Positive Factors
Negative Factors
Conservative balance sheet
South32's low debt-to-equity (0.18) and high equity ratio (~64%) provide durable financial flexibility in a cyclical commodities industry. This conservative capital structure supports steady investment in projects, enables sustained shareholder returns, and buffers against commodity downturns and financing stress over the next 2–6 months.
Read all positive factors
South32 (S32) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$18.75B
Dividend Yield2.67%
Average Volume (3M)22.65M
Price to Earnings (P/E)5.9
Beta (1Y)1.27
Revenue Growth2.25%
EPS Growth97.21%
CountryAU
Employees9,906
SectorBasic Materials
Sector Strength58
IndustryIndustrial Materials
Share Statistics
EPS (TTM)0.07
Shares Outstanding4,486,486,000
10 Day Avg. Volume27,687,413
30 Day Avg. Volume22,651,275
Financial Highlights & Ratios
PEG Ratio-0.20
Price to Book (P/B)0.98
Price to Sales (P/S)1.49
P/FCF Ratio26.01
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$4.58Price Target Upside1.02% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering11
EPS Forecast (FY)0.21
Revenue Forecast (FY)AU$6.63B
South32 Business Overview & Revenue Model
Company Description
South32 Limited operates as a diversified metals and mining company in Australia, Southern Africa, North America, and South America. The company operates through Worsley Alumina, Brazil Alumina, Brazil Aluminium, Hillside Aluminium, Mozal Aluminiu...
How the Company Makes Money
South32 makes money primarily by extracting, processing, and selling mined commodities to industrial customers, traders, and smelters under a mix of term contracts and spot/market-linked pricing, with revenue largely driven by shipped volumes and ...
South32 Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 20, 2026
Earnings Call Sentiment Positive
The call presented a predominantly positive financial and operational picture: strong H1 FY26 results (USD 1.1bn underlying EBITDA, 28.2% margin, USD 435m earnings growth), low net debt and meaningful shareholder returns (USD 175m dividend + capital management increase). Project and exploration progress (Taylor, Hermosa, Sierra Gorda, Ambler) and safety improvements were highlighted as key positives. However, material challenges remain in the aluminum portfolio — notably Mozal’s likely move to care and maintenance due to prolonged power shortages and the underperformance of an Alcoa-operated Brazilian asset — alongside project execution risks (Sierra Gorda delays, Hermosa shaft contractor issues) and tariff/supply uncertainties. On balance the strong financial position, cash returns, and progress on growth projects outweigh the operational and power-related setbacks, though those lowlights represent meaningful near-term and socio-economic risks.Positive Updates
Strong financial performance
Underlying EBITDA of USD 1.1 billion, group operating margin of 28.2%, and underlying earnings growth of USD 435 million for H1 FY26; net debt of only USD 25 million, supporting investment and returns to shareholders.
Negative Updates
Mozal power issues and likely care & maintenance
Mozal facing prolonged power supply constraints from Cahora Bassa; company planning Mozal transition to care and maintenance. Ongoing care & maintenance cost estimated ~USD 5 million per year; closure and rehabilitation estimate ~USD 119 million. Significant socio-economic impacts noted (~4,000–5,000 direct roles and ~20,000 indirectly affected).
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Q2-2026 Updates
Positive
Negative
Strong financial performance
Underlying EBITDA of USD 1.1 billion, group operating margin of 28.2%, and underlying earnings growth of USD 435 million for H1 FY26; net debt of only USD 25 million, supporting investment and returns to shareholders.
Read all positive updates
Company Guidance
The company left FY‑26 unit production guidance unchanged and expects H2 cash generation to benefit from commodity price tailwinds and planned Mozal inventory drawdown; H1 results included underlying EBITDA of USD 1.1bn, group operating margin 28.2%, underlying earnings growth of USD 435m and net debt of USD 25m, and the board declared a fully franked H1 dividend of USD 175m and increased the USD 2.6bn capital management program by USD 100m (with USD 209m still to be returned). Project and capital milestones include Taylor spend to date of just over USD 1bn (~48% of budgeted schedule), bench shaft 459/824m (56%) and main shaft 370/898m (41%) with a project milestone and capex reassessment due in H2 FY‑26 and federal permits for Taylor/Clark/Peake expected in H1 FY‑27; Sierra Gorda’s Catabela NE exploration target is 1.1–2.9 billion tonnes and the fourth grinding line feasibility/independent review is nearing completion ahead of a potential joint FID mid‑calendar 2026. Operational guidance/other metrics noted: Cannington announced a 28% reserve increase (to ~13 Mt) with ~45 Mt underground resource and planned FY27–28 capital of ~USD 65–80m for ventilation/shaft work, Mozal is ~565 pots online of 710 capacity (~80%), current FY‑26 guidance ~135,000t (FY‑27 ~140,000t vs capacity 179,000t), Mozal uses ~940 MW of power, Mozal care‑and‑maintenance costs ~USD 5m/yr (100% basis) and closure/rehab estimated ~USD 119m, and Hillside’s power contract runs to 2031.South32 Financial Statement Overview
Summary
Income Statement
65
Positive
Balance Sheet
70
Positive
Cash Flow
55
Neutral
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.46B | 5.78B | 5.48B | 5.65B | 9.27B | 5.48B |
| Gross Profit | 2.45B | 2.52B | 1.86B | 1.94B | 5.46B | 2.57B |
| EBITDA | 835.59M | 1.34B | 141.00M | 416.00M | 4.47B | 1.47B |
| Net Income | 304.09M | 213.00M | -203.00M | -173.00M | 2.67B | -195.00M |
Balance Sheet | ||||||
| Total Assets | 13.80B | 13.73B | 14.24B | 14.56B | 16.34B | 13.24B |
| Cash, Cash Equivalents and Short-Term Investments | 1.66B | 1.68B | 842.00M | 1.26B | 2.37B | 1.61B |
| Total Debt | 1.69B | 1.63B | 1.57B | 1.74B | 1.83B | 1.21B |
| Total Liabilities | 4.54B | 4.87B | 5.27B | 5.19B | 5.56B | 4.29B |
| Stockholders Equity | 9.24B | 8.85B | 8.96B | 9.38B | 10.78B | 8.96B |
Cash Flow | ||||||
| Free Cash Flow | 388.87M | 332.00M | -2.00M | 303.00M | 2.48B | 815.00M |
| Operating Cash Flow | 1.44B | 1.33B | 1.12B | 1.19B | 3.07B | 1.41B |
| Investing Cash Flow | -899.69M | -20.00M | -1.11B | -908.00M | -2.10B | -608.00M |
| Financing Cash Flow | -478.90M | -405.00M | -417.00M | -1.39B | -215.00M | -501.00M |
South32 Technical Analysis
Positive
4.53
Price Trends
4.38
Positive
4.03
Positive
3.45
Positive
Market Momentum
0.10
Negative
55.18
Neutral
51.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:S32, the sentiment is Positive. The current price of 4.53 is above the 20-day moving average (MA) of 4.35, above the 50-day MA of 4.38, and above the 200-day MA of 3.45, indicating a bullish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 55.18 is Neutral, neither overbought nor oversold. The STOCH value of 51.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:S32.
South32 Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
63 Neutral | AU$18.75B | 5.91 | 3.36% | 2.67% | 2.25% | 97.21% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
56 Neutral | AU$3.67B | -1.63 | -12.75% | 1.04% | -13.24% | -223.96% | |
54 Neutral | AU$13.99B | 5.40 | 11.50% | ― | 3.58% | ― | |
53 Neutral | AU$20.52B | 103.52 | -2.64% | ― | 4.86% | -177.78% | |
47 Neutral | AU$4.78B | -13.02 | -2.79% | 5.03% | -3.26% | 66.55% | |
45 Neutral | AU$6.38B | -45.43 | -9.95% | ― | -36.60% | 80.62% |
* Basic Materials Sector Average
AU:S32
South32
4.19
1.43
52.03%
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Iluka Resources Limited
8.53
4.41
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93.58%
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71.34
48.53
212.76%
AU:NIC
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1.10
0.47
74.60%
South32 Corporate Events
South32 balances safety setback with cash generation and Hermosa growth push
Apr 21, 2026
South32 reported mixed operational and financial results for the March 2026 quarter, overshadowed by a fatal incident at its Worsley Alumina refinery that has prompted a renewed emphasis on safety and cooperation with authorities. Despite adverse ...
South32 Reports Lapse of Over 1.1 Million Conditional Rights
Apr 8, 2026
South32 Limited has notified the market of the lapse of 1,189,611 conditional rights to securities, recorded under ASX code S32AA, after the performance or vesting conditions were not met or became incapable of being satisfied. The cessation of th...
South32 Issues 452,944 New Shares on Conversion of Unquoted Securities
Apr 8, 2026
South32 Limited has notified the market of the issue of 452,944 new ordinary fully paid shares following the conversion or exercise of previously unquoted equity securities. The shares were issued on 31 March 2026, slightly expanding the company&#...
South32 Issues Unquoted Rights Under Employee Incentive Scheme
Apr 8, 2026
South32 Limited has notified the market of the issue of 1,500 unquoted rights securities under an employee incentive scheme, effective 31 March 2026. The small, unlisted allocation underscores the company’s ongoing use of equity-based remune...
South32 Names Sinead Kaufman to Board, Files Initial Interest Notice
Apr 1, 2026
South32 has announced the appointment of Sinead Kaufman as a director of the company, effective 1 April 2026, in a filing made under Australian listing rules governing director interests. The initial director’s interest notice confirms that ...
South32 Idles Mozal Aluminium Smelter After Power-Supply Deadlock
Mar 15, 2026
South32 has placed its Mozal Aluminium smelter near Maputo, Mozambique, on care and maintenance as of 15 March 2026 after failing to secure sufficient, affordable power beyond March, despite six years of negotiations with the Mozambican government...
South32 Updates Dividend Notice With Currency Conversion Details
Mar 12, 2026
South32 Limited has updated its previously announced dividend notification for holders of its ordinary fully paid shares. The revision, dated 12 March 2026, provides exchange rates and local currency conversion details for the dividend relating to...
South32 Sets Local Currency Rates for 2026 Interim Dividend
Mar 12, 2026
South32 has confirmed the local currency equivalents for its previously declared fully franked 2026 interim dividend of US 3.9 cents per share for the half year to 31 December 2025, payable on 2 April 2026. Based on average exchange rates over lat...
South32 Names Stephen Pearce as New Chair After Karen Wood’s Retirement
Mar 1, 2026
South32 has executed a planned leadership transition at board level, with Stephen Pearce formally taking over as Chair effective 1 March 2026. He succeeds Karen Wood, who has retired from the board after overseeing the company through a period of ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.