Fortescue profit halves on lower prices for Chinese ore exports
Iron ore pureplay Fortescue Metals Group's full-year statutory net profit fell 58 per cent to $US878 million ($1.2 billion) as the miner received lower prices for its ores exported to China in fiscal 2018.
Revenue fell 18 per cent for the year to $US6.89 billion.
In a statement outlining its results, Fortescue attributed the revenue drop to lower prices for its ores, confirming the average price it received per tonne in fiscal 2018 was $US44 per dry metric tonne, down from $US53 per wet metric tonne in fiscal 2017.
Discounts for its ore deepened to 36 per cent of a widely accepted industry benchmark price (for iron ore with 62 per cent iron content) in fiscal 2018, compared with a 23 per cent discount in fiscal 2017.
The lower prices were largely driven by Chinese steel makers using higher iron content ores to "maximise production", to capitalise on high steel profitability in China, Fortescue said.
The miner reported an underlying net profit after tax of $US1.08 billion, which was down 49 per cent on the previous year.
The results came in below some analyst forecasts. According to Bloomberg, analysts had been expecting total revenue of $US7.04 billion and earnings before interest, tax, depreciation and amortisation of $US3.28 billion (compared with Fortescue's $US3.18 billion).
Underlying net profit was in line with consensus expectations of $US1.07 billion.
Fortescue declared a final dividend of 12¢ a share, for a full-year dividend of 23¢ a share. The fully franked dividend will be paid on October 2.