Fortescue Metals (FMG), the country’s third placed iron ore miner and exporter has reported record earnings of $US2.74 billion profit for the year to June 30, and doubled dividend payout to shareholders.
The rise in dividends, from 10 cents a share to 20 cents will mean the company’s founder, Twiggy Forrest will get another big pay out. It will in fact be his third $US100 million payout in just over a year.
Fortescue said yesterday intends to move to a 30% to 40% dividend pay-out ratio once initial targeted gearing levels are achieved.
The result was slightly under analyst forecasts, but was up a huge 56% than the $US1.74 billion profit earned in 2012-13.
The company paid a 10 cent a share dividend, taking its full year dividend to 20 cents a share.
Fortescue has also payed down another $US500 million on its debt, meaning its net debt now stands at $US7.2 billion.
The company plans to pay another $US500 to $US1 billion off debt this year, as part of plans to cut debt by $US2 billion over the next two years.
FMG YTD – High expectations hinder Fortescue
Looking to the rest of 2014-15, the company said it expects "to ship 155 to 160 million tonnes at a C1 cost of US$31 to US$32/wmt."
"The reduction in C1 costs guidance reflects a full year of production from the Kings Valley mine, improved processing capability, operational efficiencies and innovations."
"These targets remain sensitive to weather events and exchange rates. Iron ore prices have stabilised over recent months with spreads between the 62% Platts and 58% indices narrowing as supply re-balances.
"As Fortescue transitions to a product suite dominated by the high quality Fortescue Blend and Kings CID products, realised iron ore prices are expected to range between 85 and 90 per cent of the 62% Platts price index."
Capital expenditure for FY15 is estimated at US$1.3 billion, including approximately US$0.1 billion deferred from FY14.
"In order to achieve the initial gearing target of 40 per cent, further debt repayments of US$2.0 billion to US$2.5 billion are expected to be executed over the next 18 to 24 months period. The exact timing of these repayments depends on a number of factors, including the iron ore price and the Australian dollar exchange rate," the company said.
Despite the higher dividend and result, Fortescue shares eased 1.5% to $4.55 yesterday as investors pondered another dip in the iron ore spot price to around $US93 a tonne.
FMG Results Video
