Fortescue posts 40% profit drop on weak iron ore prices, China slowdown

By Praveen Menon and Sameer Manekar

(Reuters) -Australian miner Fortescue Metals Group Ltd mentioned on Monday its annual revenue fell 40% regardless of file shipments of iron ore, because of declining costs of the steelmaking materials amid cooling demand from high shopper China.

The income of Fortescue, the world’s fourth-largest iron ore miner, have been nonetheless the second largest within the firm’s historical past. The miner posted file earnings the earlier yr.

Miners have taken successful from iron ore costs retreating from highs in 2021, as demand from high metal producer China cools and its economic system slows because of COVID-19 lockdowns.

Rival miner Rio Tinto, reported a 29% drop in income and greater than halved its dividend in July, citing softening demand from China and supply-chain snags.

Fortescue, which is about 37%-owned by billionaire founder Andrew Forrest, reported annual underlying web revenue after tax of $6.20 billion, down from a file $10.35 billion a yr in the past. It was largely in keeping with a Refinitiv estimate of $6.24 billion.

The Perth-based miner earned common income per dry metric tonne (dmt) of iron ore of $99.80 throughout the yr, down from $135.32/dmt for the earlier yr, when the miner noticed file earnings.

Its margins have been additional crimped by rising prices and labour shortages within the aftermath of the COVID-19 pandemic, which has raised personnel prices throughout Australia’s mining sector.

The miner declared a remaining dividend of A$1.21 per share, down from A$2.11 apiece declared final yr.

Monday’s outcomes have been the final hosted by Elizabeth Gaines, who stepped down as chief govt. It was introduced in Could that Forrest can be govt chairman, particularly overseeing the iron ore enterprise for the interim interval.

Below Forrest the corporate has seemed to shift in the direction of changing into a significant producer of inexperienced hydrogen to satisfy the worldwide demand to maneuver away from fossil fuels.

“Fortescue is transitioning into a worldwide inexperienced vitality, metals, minerals and expertise firm, able to delivering not solely inexperienced vitality but additionally the minerals important to the inexperienced vitality transition,” Forrest mentioned in a press release.

(Reporting by Sameer Manekar and Harshita Swaminathan in Bengaluru; Enhancing by Sandra Maler and Jacqueline WOng)