Analyst Note
| Mathew Hodge, CFA |No-moat South32’s first-half fiscal 2021 result was weak but met our expectations. Adjusted net profit after tax of USD 136 was broadly in line with last year’s USD 131 million. Adjusted EBIT of USD 282 million was a slight decrease on last year’s USD 293 million with the headwinds from the average 7% reduction in average commodity prices and inflation largely offset by lower costs and higher sales volumes. We expect profitability to lift in the second half with commodity prices generally better. The planned sale of loss-making South African energy coal assets, expected at the end of March, should also benefit South32. Our adjusted net profit forecast for fiscal 2021 is now USD 671 million, or USD 13.7 cents per share, a modest 3% reduction from our prior forecast.