Fortescue Metals Group (FMG) shares eased yesterday after the country’s Number 3 iron ore miner and exporter maintained interim dividend payout to shareholders after reporting a slight dip in earnings for the six months to December.
The miner posted a small fall in net profit to $US319 million for the December half, down from $US331 million in the December half of 2014.
That saw the shares dip 4.7% to $2, as the wider market fell away sharply at the close to lose more than 2% on the day.
Fortescue reported after news that world iron ore prices continued their rise on Tuesday night – up 8 cents to $US51.60, a new five month high.
The interim result was achieved despite a 31% slide in revenue to $US3.34 billion, the impact of which was offset by deep cost cutting in the half year.
Fortescue said it will pay an unchanged interim dividend, fully franked of 3 cents a share.
The company has managed to curb the effects of the plunging ore price by slashing costs by $US1.3 billion in the six months to December.
Fortescue said it achieved a record low C1 cost of $US16 per wet metric tonne of iron ore for the 84 million tonnes it shipped in the half year, in line with the targeted annual production rate of 165 million tonnes for the June 30 year.
The company says it is looking to trim that to just $US13 per wet metric tonnes by the end of the financial year, for an average of $US15 a wet tonne for the full 12 month period (based on the Aussie dollar remaining around 71 US cents until the end of June).
Fortescue says it has $US2.3 billion cash on hand and doesn’t have a repayment until 2019, but will continue trying to buy back some of its debt at advantageous prices – as it did in the December half year when it bought back $US1.1 billion.
It had net debt of $US6.1 billion at the end of December, inclusive of the $US2.3 billion of cash in the bank.
Fortescue Metals Half Year Result 24 Feb 16: FMG combats lower prices with cost cuts
