By Rhiannon Hoyle
SYDNEY-- Fortescue Metals Group Ltd. said first-half profit
tumbled more than 80% and that it would considerably reduce its
midyear dividend amid the downturn in iron-ore prices.
The Australian producer, the world's No. 4 exporter of iron ore,
reported a net profit of US$331 million in the six months through
December. That compared with a net profit of US$1.72 billion in the
same period a year earlier, and came during a period when iron-ore
prices shed one-quarter of their value because of a surge in mine
supply.
Its first-half profit was broadly in line with a US$335 million
median of six analyst forecasts compiled by The Wall Street
Journal.
On Tuesday, Fortescue said it substantially cut shareholder
payouts given the deterioration in global iron-ore markets. It
declared an interim dividend of three Australian cents, compared
with a payout of 10 Australian cents a share a year ago.
Iron-ore prices halved over the course of 2014 and have
continued to fall this year as major companies such as Fortescue
and Rio Tinto PLC dig up rising volumes of ore.
Still, that sharply higher production helped cushion the fall in
prices, said Fortescue, which shipped 53% more iron ore compared
with the year earlier from its operations in the remote Pilbara
mining region of northwestern Australia.
Fortescue has aggressively expanded its iron-ore operations in
recent years to help feed China's appetite for materials in
industries ranging from construction to auto production. Iron ore
is the key ingredient in steelmaking.
To remain profitable, Fortescue has taken a knife to its costs
as well. Last month, it was able to lower its full-year guidance
for costs, saying it was benefiting from lower oil prices, a weaker
Australian dollar, and from working its operations harder.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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