Earnings season wrap-up: 23 August
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Christine St Anne is Morningstar's online editor and Nicholas Grove is a Morningstar journalist.
Companies covered in this report:
Fortescue delivers 53pc boost in profit
Despite a fall in iron ore prices, Fortescue Metals Group (FMG) announced a headline profit of US$1.6 billion for fiscal 2012, up 53 per cent on the prior year.
The profit announcement includes a $156 million pre-tax item. When stripped out from the headline profit number, the profit is in line with Morningstar's forecast.
Full-year dividends of 0.08 Australian cents a share fully franked were declared. This represents an 11 per cent increase in dividend payments for fiscal 2012. This was also consistent with Morningstar's forecast.
"It looks like a good result, but as always, the devil will be in the detail," Morningstar senior basic materials and energy analyst Mathew Hodge said.
Profit before income tax adjusted for depreciation and amortisation, net finance expenses and refinancing costs increased by 14 per cent to US$3.0 billion. This was achieved through revenue growth.
Revenue for Australia's third-largest iron ore producer rose 23 per cent to US$6.7 billion.
Cash flow from operating activities rose slightly by 1 per cent to US$2.8 billion.
Hodge said the company will come under pressure following the expected slowdown in China.
"We continue to be concerned that future margins will not be as positive as the past few years, as growth in investment and consumption of steel in China slows - from very favourable rates - and additional iron ore supply comes on," Hodge said.
"Fortescue is a big part of that additional supply," he said.
The company said while growth rates will be low, Fortescue will still be strong in absolute volumes.