South32’s FY25: higher earnings, bigger dividend, and a cleaner portfolio
South32 has delivered a strong set of FY25 numbers, helped by better prices and improved operations across alumina, aluminium and copper. Underlying earnings jumped 75% to US$666 million, while underlying EBITDA rose 7% to US$1,928 million, pushing the Group operating margin up to 26.3%.
The Board lifted ordinary dividends 71% year-on-year to 6.0 US cents per share, including a fully-franked final dividend of 2.6 US cents (US$117 million) payable on 16 October 2025. The balance sheet flipped back to net cash of US$123 million, and the buy-back programme has been extended by 12 months with US$144 million still to return.
FY25 headline numbers that matter
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Revenue from continuing operations | US$5,780M | US$4,923M | +17% |
| Underlying revenue | US$7,610M | US$8,296M | -8% |
| Underlying EBITDA | US$1,928M | US$1,802M | +7% |
| Underlying EBITDA margin | 26.3% | 22.8% | +3.5 ppt |
| Underlying EBIT | US$1,211M | US$886M | +37% |
| Underlying earnings (to members) | US$666M | US$380M | +75% |
| Basic underlying EPS | 14.8 US cents | 8.4 US cents | +76% |
| Ordinary dividends per share | 6.0 US cents | 3.5 US cents | +71% |
| Net cash/(debt) | US$123M | (US$762M) | +US$885M |
| Shares on issue | 4,504M | 4,529M | -0.6% |
What drove the rebound in FY25?
Alumina and aluminium: pricing tailwinds and volume growth
Alumina was the standout. A 45% uplift in realised alumina prices helped push alumina underlying EBITDA up by US$714 million to US$1,078 million, delivering a chunky 40% operating margin. Worsley Alumina secured key environmental approvals for new mining areas, paving the way for steadier bauxite supply and a planned 3% production lift to 5.3 Mt by FY27.
Aluminium production rose 6% to 1,211 kt, with Hillside testing its maximum technical capacity, Mozal recovering earlier in the year, and Brazil Aluminium ramping up. Aluminium segment underlying EBITDA rose by US$66 million to US$187 million, as higher sales and better prices offset higher alumina input costs.
Copper: Sierra Gorda firing and paying cash
At Sierra Gorda (45% owned), payable copper equivalent production increased 20% to 88.1 kt in FY25, supported by higher grades and better molybdenum recoveries. Underlying EBITDA increased by US$207 million to US$482 million, at a 58% margin. Importantly, South32 received US$176 million of distributions from the asset during the year. A feasibility study on a fourth grinding line – aimed at ~20% throughput growth – is due in late H1 FY26.
Headwinds: coal exit, cyclone-hit manganese, and impairments
- Steel-making commodities pulled back as Illawarra Metallurgical Coal (IMC) was sold in August 2024. That lowers revenue but reduces complexity and carbon exposure.
- Australia Manganese suffered prolonged disruption from Tropical Cyclone Megan, leading to a US$105 million underlying EBITDA loss and additional remediation costs of US$133 million (excluded from underlying results). The good news: shipments resumed in Q4 FY25 and production is guided to normalise at 3,200 kwmt in FY26 and FY27.
- Statutory profit was held back by US$464 million of impairments – US$346 million at Mozal Aluminium due to power-supply uncertainty and US$118 million related to the Cerro Matoso nickel sale. Even so, profit after tax to members swung to US$213 million from a loss in FY24.
Strategy: sharpening the portfolio for the energy transition
Management continued to reshape the business towards higher-margin, transition-linked metals. The sale of IMC is complete. A binding deal to divest Cerro Matoso (for nominal upfront consideration and up to US$100 million of future payments) is expected to complete in late H1 FY26. Both moves reduce volatility and capital intensity.
On growth, South32 invested US$517 million at Hermosa in FY25 and plans US$750 million in FY26 as the Taylor zinc-lead-silver project advances. Shafts are sinking, the process plant construction has started, and an exploration decline into the Clark battery-grade manganese deposit is underway. This is a big swing at long-life base metals – attractive, but execution will need watching.
The difficult call was Mozal Aluminium. Without confidence in sufficient, affordable electricity beyond March 2026, South32 is limiting investment and expects to place the smelter on care and maintenance when the current power deal expires. FY26 production is guided to 240 kt as pot relining stops. Brazil Aluminium continues to ramp and Hillside remains strong.
Cash, returns and balance sheet
Free cash flow from operations (excluding equity accounted investments) improved by US$272 million to US$192 million, as profitability improved and capital intensity fell post the IMC sale. Net cash moved to US$123 million, a US$885 million swing, helped by US$938 million of proceeds from the IMC transaction.
Shareholder returns were solid: US$350 million in FY25 via dividends (US$294 million) and buy-backs (US$56 million). The capital management programme has been extended to 11 September 2026 with US$144 million remaining.
On tax, the underlying effective tax rate landed at 35.0% (FY24: 38.8%). Return on invested capital lifted to 8.7% from 4.8% – a clean sign the portfolio is earning better through-cycle returns.
Outlook: production tweaks, cost focus and disciplined capex
- FY26 production guidance is broadly unchanged, except for Mozal (240 kt, operations guided to March 2026) and Cannington, where a revised mine plan reduces FY26 payable zinc equivalent to 200.6 kt as the team manages underground complexity.
- Looking to FY27, South32 guides to 4% growth at Worsley Alumina as bauxite access improves and 5% growth at Sierra Gorda on higher copper grades.
- Operating unit costs remain tightly managed. Selected FY26 guidance: Worsley Alumina US$310/t, Sierra Gorda US$17.0/t processed, Cannington US$205/t processed, South Africa Manganese US$3.10/dmtu FOB, and Australia Manganese US$2.40/dmtu FOB (returning to normalised rates).
- FY26 capital expenditure (including equity accounted investments) is guided to US$1,400 million. Excluding EAIs, spend is US$1,090 million, with Hermosa the major driver at US$750 million.
Safety, people and sustainability notes
There was a tragic fatality at Cerro Matoso in September 2024. South32 reports 30% and 27% year-on-year reductions in lost time injury frequency (to 1.4) and total recordable injury frequency (to 3.7), respectively, alongside increased reporting of significant hazards – signalling stronger hazard awareness. Scope 3 emissions fell 58% to 22.7 Mt CO2-e following the IMC sale; operational emissions increased 2% to 20.7 Mt CO2-e due to power constraints at Mozal during drought conditions.
My take: a stronger, simpler South32, with a couple of watch-outs
- Positives: underlying earnings and margins moved the right way; the balance sheet is back to net cash; dividends and buy-backs continue; copper and alumina are delivering; and Hermosa is progressing. The strategy to exit coal and divest Cerro Matoso simplifies the story and leans into transition metals.
- Negatives: the looming care and maintenance at Mozal is a material headwind from March 2026. Cannington’s revised plan reduces near-term volumes. Hermosa capex is ramping, which raises execution and budget risk in a tight market for skills and equipment.
Overall, the FY25 print shows real operational momentum and a portfolio that is becoming more copper, aluminium and zinc-led. If Sierra Gorda’s expansion lands well and Hermosa stays on schedule, South32 should be positioned for disciplined growth. Keep an eye on power developments in Mozambique, cost control as inflation lingers, and the cadence of cash returns as the capex peak passes.
Dividend details at a glance
- Final dividend: 2.6 US cents per share, fully franked (US$117 million).
- Record date: 19 September 2025. Payment date: 16 October 2025.
- Total ordinary dividends for FY25: 6.0 US cents per share.
- Capital management programme: extended to 11 September 2026; US$144 million remaining.
