Fortescue Metals Group has more than doubled its net profit, to $US2.1 billion ($2.7 billion), lifted dividend and pledged to reward shareholders with a bigger dividend in the current financial year.
The net profit came from a 48% lift in underlying earnings before interest, tax, depreciation and amortisation to $US4.74 billion and a 112% jump in net after tax profit to $2.093 billion.
Fortescue will pay a final, fully franked dividend of 25 cents ($Australian) a share, up from 12 cents a share a year ago, which equates to a pay-out of 52% of the net profit. The full year dividend will be 45 ($A) cents a share, three times the15 cents a share for 2015-16. Investors cheered the results and the promise of a higher dividend, as well as the higher than forecast final and pushed the shares up more than 6% yesterday to $5.85.
Based on chairman Andrew Forrest’s holding of just over 1 billion shares, he will receive $260 million in final payout and $450 million from the full year dividend.
Providing fiscal 2018 guidance, Fortescue said it increased its dividend payout guidance to a range of 50% to 80% of net profit after tax, meaning shareholders will see another sharp rise in payout in 2017-18 (especially chairman Andrew ‘Twiggy’ Forrest who owns 335%of the company).
Fortescue CEO Nev Power said Fortescue had delivered "outstanding results".
“Fortescue has continued to generate excellent cashflows allowing further repayment of debt, strengthening of our balance sheet and increasing returns to our shareholders,” he said in yesterday’s statement. The company said “Dividend pay-out ratio guidance (is) increased to a range of 50 to 80 per cent of net profit after tax.”
“The actual dividend pay-out ratio will be determined each reporting period based on the prevailing iron ore price and financial performance whilst maintaining Fortescue’s commitment and priority to disciplined capital management and balance sheet strength."
"Fortescue’s safety performance improved by 33 per cent during the year with production of 170.4 million tonnes (mt). The strong FY17 financial results reflected higher iron ore prices during the year, as well as the contribution of a sustained focus on productivity and efficiency initiatives to further reduce C1 costs to US$12.82 per wet metric tonne (wmt),” the company said.
Cash at the end of June was $US1.8 billion with net gearing reduced to 21% following an additional $US2.7 billion in debt repayment during the year and a further $US1.5 billion refinanced, extending maturities to 2022 on improved terms and conditions.
Net debt at 30 June 2017 was $US2.6 billion, halved from the $US5,188 million at June 30, 2016), including cash on hand and finance lease liabilities of $US818 million. During 2016-17 a total of $US2.7 billion in debt was repaid while finance leases increased by $US313 million mainly due to construction of Fortescue’s ore carriers, according to the company.
Fortescue said it refinanced $US1.5 billion of debt in May 2017 extending the nearest term maturity to 2022 on improved terms and conditions.
