Fortescue Announces 41% Rise in First-Half Net Profit
Fortescue announced on Thursday that its first-half net profit has risen 41% and the company has increased its midyear payout to shareholders. This increase reflects the higher price Fortescue has been able to fetch for its iron ore.
The world’s fourth-largest iron-ore producer reported a net profit of US$3.34 billion for the six months through December, compared to US$2.37 billion in the same period the previous year.
Directors have declared an interim dividend of 1.08 Australian dollars (US$0.71) per share, up from 75 Australian cents last year.
The miner’s interim dividend is equivalent to 65% of its profits for the first half, which fits within its policy to pay out 50-80% of full-year underlying profit to its shareholders.
Fortescue also reported first-half capital expenditure of US$165 million for its energy arm.
The company’s underlying earnings before interest, tax, depreciation, and amortization (Ebitda) increased by 36% to US$5.91 billion.
Fortescue’s higher profits were driven by increased prices for the commodity used to make steel. The average price for the first half of the year was approximately US$108 per metric ton, compared to around US$87 per ton the previous year.
This increase in price offset a slight decrease in sales and slightly higher costs.
Although shipments were 2% lower than the previous year, they were still the second-highest on record for a fiscal first half.
Costs also rose by 2% compared to the same period the previous year, as the company faced inflation pressures, particularly in labor costs. The resources industry continues to see a significant demand for skilled workers.
Fortescue has been looking to expand into clean energy and has approved green hydrogen projects in the U.S. and Australia. The company’s total capital expenditure for the group was US$1.5 billion.
Overall, Fortescue’s strong first-half results demonstrate the company’s ability to capitalize on higher iron ore prices and its commitment to returning value to shareholders. The company’s focus on clean energy projects also highlights its efforts to adapt to changing market dynamics.
Analyst comment
Positive news: Fortescue’s first-half net profit has risen 41%, and the company has increased its midyear payout to shareholders. This reflects the higher price they fetched for their iron ore.
Market analysis: With strong profitability and commitment to shareholder value, Fortescue is likely to continue capitalizing on higher iron ore prices. The company’s focus on clean energy projects could also contribute to its growth and adaptation to market dynamics.
