Fortescue Metals Group Reports 23% Drop in Annual Profit
Fortescue Metals Group announces a 23% decline in annual profit due to project write-down, higher costs, and weaker iron-ore prices. Record shipments achieved and a dividend announced.
Fortescue Metals Group, the world's fourth-largest iron-ore exporter, has announced a 23% decline in annual profit for the year ending in June. The company attributed the decrease to a write-down against its Iron Bridge project in remote northwest Australia, as well as higher costs and weaker iron-ore prices. Despite achieving record shipments of the steel ingredient, these factors resulted in a net profit of US$4.80 billion, down from US$6.20 billion the previous year. Fortescue's underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) also fell by 11% to US$5.52 billion.
The Iron Bridge project, which is jointly owned by Fortescue and Formosa Plastics, incurred a non-cash impairment of US$726 million. The company identified inflationary pressures on construction and supply chain delays as key factors contributing to the project's higher costs.
Fortescue's profits were further affected by the decrease in the price of iron-ore, which is primarily sold to steel mills in China and other parts of Asia. The company reported an average revenue of US$94.74 per metric ton for the full year, compared to US$99.80 per ton in the previous year. In addition, Fortescue experienced a 10% increase in its C1 costs, indicating higher direct operational expenses.
Despite the challenges it faced, Fortescue achieved record shipments of 192.0 million tons during the reporting period, surpassing the 189.0 million tons shipped the previous year. To reward its shareholders, the company declared a final dividend of 1 Australian dollar (US$0.64) per share, a decrease from A$1.21 in the prior year. Fortescue's total dividends for fiscal 2023 amount to A$1.75 per share, representing 65% of the underlying profit for the year. This falls within the company's policy to distribute 50%-80% of profits to shareholders.