Fortescue profit falls as lower iron-ore price hits revenue
PERTH (miningweekly.com) – Iron-ore major Fortescue Metals on Wednesday reported a decline in net profit after tax for the half-year ended December, as revenue for the interim period fell by 31% on the back of lower iron-ore prices.
Net profit for the six months under review declined from the $331-million in 2014 to $319-million, as revenue for the same period declined from $4.8-billion to $3.3-billion.
Ore mined during the interim period increased by 4%, from 86.5-million tonnes to 89.9-million tonnes, with 81.7-million tonnes of ore shipped during the six months.
C1 cash costs decreased by 47% year-on-year to $16.34/t, as operating performances and cost reductions exceeded expectations, offsetting the reduction in the iron-ore price.
Cost reduction initiatives included maximising equipment productivity, renegotiating contracts, enhancing plant reliability and enhancing mine plans at the Pilbara operations.
Capital expenditure for the period also decreased from the $436-million spent in the first half of 2015 to $88-million, reflecting the productivity improvements, deflation and a lower average foreign exchange rate.
“Fortescue’s results demonstrate the success of our team’s ongoing commitment to productivity and efficiency improvements, with cost guidance revised to $13/t by the end of 2016, well ahead of target,” said Fortescue CEO Nev Power.
He noted that the company’s operational performance in safely driving sustainable improvements across the business was generating strong operating cash flows, which, in turn, provided a solid foundation for continued debt repayment and a modest increase in dividends.
During the interim period, Fortescue reduced its net debt by $1.1-billion to $6.1-billion.
For the full 2016, Fortescue maintained its shipping guidance of 165-million tonnes, with capital expenditure targeted at $200-million.
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