Fortescue 1st Half Net Profit Up 41%, Raises Dividend — Update

By Rhiannon Hoyle

Fortescue on Thursday reported a 41% rise in first-half net profit and raised its midyear payout to shareholders, reflecting an increase in the price it fetched for its iron ore.

The world's fourth-largest iron-ore producer said it made a net profit of US$3.34 billion in the six months through December, up from US$2.37 billion a year earlier.

Directors declared an interim dividend of 1.08 Australian dollars (US$0.71) a share, compared to 75 Australian cents a year ago.

Underlying earnings before interest, tax, depreciation and amortization, or Ebitda, increased by 36% to US$5.91 billion, the miner said.

Fortescue, which makes its money running iron-ore pits in remote northwest Australia, benefited from higher prices for the commodity used to make steel. The company said its average price for the half-year was roughly US$108 a metric ton versus about US$87 a ton a year earlier.

That more than offset a slip in sales and slightly higher costs.

Fortescue's shipments were 2% lower than a year ago, although still the second-highest on record for a fiscal first half, Fortescue said.

Costs were 2% higher than the same period a year earlier as the company faced ongoing inflation pressures, especially for labor. There continues to be significant demand for skilled workers across the resources industry, Fortescue said.

The miner's interim dividend equated to 65% of profits for the half, in line with the company's policy to pay out 50-80% of full-year underlying profit to shareholders, it said. The 65% payout was the same as a year ago.

The company has been seeking to expand into clean energy, approving green hydrogen projects in the U.S. and Australia. Fortescue reported first-half capital expenditure of US$165 million for its energy arm. Total capital expenditure for the group was US$1.5 billion.

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

(END) Dow Jones Newswires

February 21, 2024 18:37 ET (23:37 GMT)

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