Fortescue Annual Profit Fell 23% on Project Write-Down

By Rhiannon Hoyle

Fortescue Metals Group on Monday reported a 23% fall in annual profit, in part because of a write-down against the Iron Bridge project in remote northwest Australia. The miner said higher costs and weaker iron-ore prices also more than offset record shipments of the steel ingredient.

The world's fourth-largest iron-ore exporter said it made a net profit of US$4.80 billion in the 12 months through June, down from US$6.20 billion a year earlier. Underlying earnings before interest, taxes, depreciation and amortization, or Ebitda, fell by 11% to US$5.52 billion.

Directors declared a final dividend of 1 Australian dollar (US$0.64) a share, down from A$1.21 in the year earlier.

Fortescue reported a US$726 million noncash impairment against the Iron Bridge project that it owns in joint venture with Formosa Plastics. The miner said inflation pressures on construction and supply chain delays had impacted the project's cost base.

Earnings at Fortescue have been weighed by a pullback in the price of the commodity that it sells to steel mills in China and elsewhere in Asia. The company said its average revenue for the full year was US$94.74 a metric ton, down from US$99.80 a ton in the year-prior period.

Rising costs also eroded profits. Fortescue's so-called C1 costs, a measure of direct operational expenses, rose by 10% year-over-year.

Fortescue reported record shipments of 192.0 million tons for the period, versus 189.0 million tons a year earlier.

Its total dividends for fiscal 2023--of A$1.75 a share--equate to 65% of underlying profit for the year, in line with the company's policy to pay out 50%-80% of profits to shareholders, it said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

August 27, 2023 20:43 ET (00:43 GMT)

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