The Fortescue Metals Group Limited (ASX: FMG) share price is higher in early morning trade, up 1.07% to $4.26.
This comes after the company posted a 58% drop in annual profit on the back of declining prices and demand for its iron ore from China.
- Net profit $US879 million vs $US2.09 billion in FY17, down 58%
- Revenue down 18% to $US6.89 billion
- Final dividend of 12 cents per share, down from 25 cents per share
The world’s fourth-largest iron ore miner reported a full-year net profit of $US879 million, down from $US2.09 billion a year ago and missing analyst estimates of $US1.08 billion.
Demand for Fortescue’s iron ore from China has been on the decline as steelmakers look to import higher-grade, less-polluting iron ore.
In July, iron ore shipments to China from Australia’s Port Hedland, which Fortescue and BHP Billiton Limited (ASX: BHP) use, fell nearly 20% from a month earlier.
This has led to Fortescue realising weaker prices for its lower grade iron ore. Fortescue realised revenue of 64% of the average Platts 62 CFR Index price in fiscal 2018, just lower than its guidance of around 65%.
Cost per wet metric tonne (wmt) came in at $US12.36 for the full-year that ended June 30, in line with previous guidance.
Fortescue declared a final dividend of 12 cents per share, down from 25 cents a share a year ago.
The miner, however, maintained its fiscal 2019 cost guidance of $US12-13 per wet metric tonne, and production guidance of 165 million to 173 million tonnes.
“A 60 per cent iron content product, named West Pilbara Fines, will be produced in the second half of financial year 2019 in advance of the development of the Eliwana mine and rail project,” the company said.
Fortescue approved the new $US1.3 billion Eliwana iron ore mine in May.
The Fortescue Metals Group Limited share price has fallen 13.73% since the beginning of 2018, compared to the S&P/ASX 200 Index, which has gained 4.52% in the period.