Fortescue's Iron Ore CEO Departs; Annual Profit Falls — Update
By Rhiannon Hoyle
Fortescue Metals Group on Monday said the chief executive of its metals business has stepped down after six months at the helm, as it reported a 23% fall in annual profit, partly tied to a large write-down.
Fortescue executives declined to provide reasons for the surprise departure of Fiona Hick, who has been succeeded by the chief operating officer of Fortescue's iron-ore mining operations, Dino Otranto.
The "market will be unsettled by yet another senior management change," Citi analyst Paul McTaggart said in a note. The CEO replacement overshadowed the miner's fiscal 2023 earnings, which were broadly in line with expectations, he said.
Fortescue's shares were down roughly 5% by midday in Sydney.
In a statement, the miner said Hick's departure "has been both friendly and mutual." Otranto, who joined Fortescue in 2021, has more than two decades of experience in the energy and resources industries, spanning a number of commodities at operations in several parts of the world, Fortescue said.
In an email statement, Hick said she looks "forward to time with family and friends while I consider my next move."
The world's fourth-largest iron-ore exporter said it had a net profit of US$4.80 billion in the 12 months through June, down from US$6.20 billion the previous year.
Fortescue reported a US$726 million noncash impairment against the Iron Bridge project that it owns in a joint venture with Formosa Plastics in remote northwest Australia. The miner said inflation pressures and supply chain delays have affected the project's cost base.
Underlying profit fell 11% to US$5.52 billion, as weaker iron-ore prices and higher operational costs more than offset record shipments of the steel ingredient.
The company said the average revenue for the iron ore it sells to steel mills in China and elsewhere in Asia was US$94.74 a metric ton, down from US$99.80 a ton a year earlier.
Rising costs also eroded profits, with Fortescue's so-called C1 costs--a measure of direct operational expenses--up 10% year-over-year.
Fortescue reported record shipments of 192.0 million tons for the period, versus 189.0 million tons the previous year.
Directors declared a final dividend of 1.0 Australian dollar (US$0.64) a share, down from A$1.21 the previous year. Fortescue's total dividends for fiscal 2023--at 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, the company said.
Fortescue also said Monday that it will no longer allocate 10% of profits to fund its clean-energy arm. All investments pursued by the energy unit will compete equally with mining and metals investments for funding, the company said.
"There is no preconceived idea about how much we spend on the energy business going forward," said Mark Hutchinson, the chief executive of Fortescue's energy arm.
Fortescue is targeting five final investment decisions on clean-energy projects by the end of 2023, and the company said it has advanced talks for supply arrangements underway with potential customers.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
August 27, 2023 23:32 ET (03:32 GMT)
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