Fortescue Set for Record First-Half Profit

Fortescue Metals is expecting a record first-half profit of between $US4 billion and $US4.1 billion when it releases results on February 18.

The company revealed in its December quarter and half year production and sales report on Thursday a “preliminary” profit estimate of “$US4.0 – $US4.1 billion” for the December half. That’s between $A5.2 and $A5.4 billion.

That will be a record for an interim result from the country’s third iron ore major and a 60% jump on the then record $US2.5 billion reported for the December, 2019 half year.

No dividend was discussed in Thursday’s report but it will almost certainly top the record interim dividend of 76 US cents a share which was paid for the December, 2019 half year.

Looking to the rest of the year the company maintained its 2021 financial year guidance, predicting total ore shipments for the year to fall between 175 million tonnes and 180 million tonnes.

Fortescue releases its full half year report on February 18, BHP releases its interim two days before and Rio Tinto releases its full year figures on February 17.

Iron ore earnings for the trio will be a record with costs under tight control and prices in November and December at near record levels.

The sharp rise in earnings forecast by the company came after it shipped 46.4 million tonnes of iron ore in the fourth quarter, taking shipments for the December half to a record 90.7 million tonnes.

“Record shipments of 90.7mt surpassed any half-year since Fortescue’s inception, and we are very well placed to meet the sustained strength in demand from our customers, CEO Elizabeth Gaines told the ASX.

“Across the business, our entire team is achieving excellent operational performance while continuing to manage challenges associated with COVID-19, including border restrictions.”

The company said production costs of $US12.81/wet metric tonne were in line with the previous quarter, while average revenue was $US122/dry metric tonne realised 91%  the average Platts 62% CFR Index.

Fortescue shares hit a record of $26.40 on January 8. They closed at $22.73 on Thursday, down 4% on the day and 10% in the past two days.

Fortescue had US$4 billion (around A$5.2 billion) in the bank at the end of December, which is over a billion dollars less than the US$5.1 billion (around A$6.7 billion) held at the end of September. The fall was due to payment of the final dividend and capex spending.

The company said it had net debt of around $US100 million.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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