Fortescue profit soars on iron ore prices

Fortescue Metals Group has almost tripled its full-year profit and doubled its final dividend due to robust output and soaring iron ore prices.
Fortescue Metals Group has almost tripled its full-year profit and doubled its final dividend due to robust output and soaring iron ore prices.

FORTESCUE Metals Group’s full-year profit has nearly tripled and the miner has declared a bumper dividend thanks to robust output and soaring iron ore prices amid a supply crunch.

The result comes amid a windfall for iron ore miners earlier in the year after supply disruptions and strong demand from China sent prices soaring. Fortescue’s shares have nearly doubled this year.

The world’s fourth-largest iron ore miner posted a final dividend of 24 cents a share, double what it paid last year, bringing its total dividend to $1.14.

The price Fortescue received for its ore in the June quarter jumped 30 per cent from the previous quarter to $US92 per dry metric tonne, narrowing its discount to benchmark 62 per cent iron ore to 13 per cent from as wide as 37 per cent a year ago, the miner said in July.

Fortescue reported a full-year underlying net profit after tax of $US3.19 billion ($A4.73 billion), slightly below a forecast of $US3.21 billion from Credit Suisse. It reported a profit of $US1.08 billion the previous financial year.

“We have seen a strong start to FY20 and Fortescue is well positioned to continue to deliver benefits to all stakeholders,” chief executive Elizabeth Gaines said in a statement on Monday.

The miner in July forecast stronger iron ore shipments in 2020 but also flagged higher costs as it ramped up production to meet demand from China, its largest market.

The result comes as global supply is normalising, sparking a steep fall in iron ore prices in August.

Global economic headwinds from the Sino-US trade war have also raised fears that demand could slow.

Fortescue shares are $7.57 before the start of trade on the ASX.

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