Fortescue Metals cuts debt as profit soars
FORTESCUE Metals has lifted its full-year profit by more than 50 per cent as the iron ore miner ramps up its debt repayments and flags lowers costs in the year ahead.
In the year to June 30, Fortescue posted a net profit of $US2.73bn ($2.93bn), a 56 per cent lift on the previous year, but slightly below the market consensus of $2.8bn.
Revenue in the period rose 45 per cent on the previous year to $US11.753bn.
The group will pay a fully franked final dividend of 10 Australian cents on October 3 to shareholders on the register at September 3.
This morning, Fortescue ramped up plans to pay down its debt, announcing a further repayment of $US500m.
That would takes the group’s total debt repayments since November 2013 to $US3.6bn.
Fortescue also intends to pay down its debt further in fiscal 2015, in a range between $US500m and $US1bn, subject to iron ore prices and other market factors.
Fortescue — which has a break-even price of $US72 a tonne for iron ore — has been particularly exposed to the recent downturn in the iron ore price.
The iron ore price slumped to its lowest level in two months last week. Benchmark iron ore for immediate delivery to the port of Tianjin in China is currently trading at $US93 a tonne, down from $US93.30 in the previous session.
In June, the iron ore price dropped to as low as $US89 a tonne, but despite a minor recovery since then, the year-to-date falls are still over 30 per cent.
Earlier this month, the iron ore miner said it plans to pay down more than $2 billion in debt over the next two years as it looks to save $400 million by converting its operations to gas.
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