Fortescue cuts dividend as profit slumps
Fortescue Metals' half-year profit has dropped 44 per cent as the miner offered wider discounts on its lower-grade product, but the result still came in ahead of market expectations.
SYDNEY - [AAP] Fortescue Metals' (FMG) half-year profit has dropped 44 per cent as the miner offered wider discounts on its lower-grade product, but the result still came in ahead of market expectations.
The world's fourth-biggest iron ore exporter reported net profit of $US681 million for the six months to December 31, down from $US1.2 billion a year earlier.
Revenue for the year fell 18 per cent to $US3.68 billion.
However, the company surprised the market by cutting its interim dividend to 11 cents a share, down from 20 cents a year ago, and dragging its shares into the red.
By 1230 AEDT, Fortescue shares were down 3.7 per cent at $5.16.
But incoming chief executive Elizabeth Gaines, who took charge from Nev Power this week, indicated a business-as-usual approach.
"Our team has continued to deliver during the first half improving safety, lowering C1 costs to $US12.08/wmt (per wet metric tonne) in the December quarter and maintaining production in line with our full-year guidance of 170 mtpa," she said.
Iron ore prices have remained firm through the six-month period, trading between $US60 and $US70 a barrel, but discounts between the top-grade iron ore and Fortescue's lower grades have widened in recent months, as Chinese steel mills look to reduce their cost base by using higher iron content ores.
The company realised an average price of 68 per cent of the Platts 62 CFR index during the half-year, which itself averaged $US68 per dry metric tonne (dmt).
It expects average realised price for the full year to be between 70 and 75 per cent of the benchmark Platts 62 CFR index.
Fortescue has also raised a $US1.4 billion syndicated term loan through Chinese, European and Australian financial institutions, the proceeds of which will be used to partially redeem its senior secured notes due in 2022.
This will result in its borrowing cost reducing by about $US80 million per annum, the company said.
FORTESCUE HALF-YEAR PROFIT SLIDES:
* Net profit $US681m vs $US1.22bn
* Revenue $US3.68bn, down 18pc
* Interim dividend of 11 cents a share, down from 20 cents
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