Fortescue shares sink after profit and dividend disappoint
Make us a preferred source
Make us a preferred source on Google
More news: Fortescue shares dropped in morning trade after the mining group more than halved its first-half net profit and interim dividend.
Fortescue shares were down 6.7% to $18.14 at 11:15am AEDT, extending losses of more than 30% over the last 12 months.
Jarden analysts noted that Fortescue's result, which missed market estimates, may have been hindered by accelerated depreciation and amortisation charges.
What they said: "The decarbonisation efforts remain focused for real zero by 2030," the analyst said.
"Dividend preservation might also be a takeaway and focus of the management call, however, [Heavy Mining Equipment] replacement, decarbonisation and an increasing need to step up resource and reserve replacement drilling with consensus outlook for a falling Fe price should put the dividend stream under some pressure."
Fortescue halves HY profit and dividend, missing estimates
The news: Mining giant Fortescue reported a 53% drop in first-half net profit to USD1.6 billion ($2.5 billion), falling short of market estimates.
The numbers: Analysts had expected net profit to fall 47% to USD1.76 billion, down from USD3.33 billion in the first half of 2024, according to Visible Alpha data.
The company also slashed its interim dividend as iron ore prices tumbled and inflationary pressures pushed costs higher. The miner halved its interim payout to 50 US cents per share, down from USD1.08 per share a year earlier.
Despite iron ore shipments rising 3% year on year to 97.1 million tonnes, revenue decreased 20% to USD7.6 billion due to a 21% downturn in the hematite average revenue to USD85 per dry metric tonne.
Hematite costs of USD18.17 per wet metric tonne was also 8% higher year on year, partly due to inflationary pressures.
The context: Fortescue said that it made "significant progress" towards decarbonising its mining fleet during the period, including a securing USD2.8 billion partnership with Liebherr to develop and validate a range of zero emission mining solutions.
However, the company noted that market conditions in the space are "uncertain", with the Trump administration instructing federal agencies to pause grant payments under the Inflation Reduction Act, questions over the implementation of Europe's Renewable Energy Directive, and pending global elections, including in Australia this year.
The source: ASX
