Iron awe at Fortescue
Forrests take $1.2bn dividend on strong resource prices
Fortescue has declared a $1.08 a share interim dividend on the back of last year’s surge in the iron ore price, with the company declaring a $US3.3bn net profit for the half.
The dividend represents a payout of 65 per cent of the company’s first-half profit, and comes after Fortescue booked EBITDA of $US5.9bn, up 36 per cent on the first half of the previous financial year.
The dividend will deliver a $1.2bn payout to the commercial and charitable interests of Andrew and Nicola Forrest, whose business and philanthropic affairs remain intertwined despite their separation last year.
Fortescue’s Energy division booked a $US320m EBITDA loss for the half, up from $US302m in the first half of the previous financial year. The energy division now includes UK technology business WAE, which booked revenue of about $US26m for the year.
Fortescue’s policy is to pay out 50 to 80 per cent of its net profit in dividends, and the mid-range payment – the same as its total payout ratio across last financial year – comes as the company looks to ramp up spending on its Pilbara iron ore mines and its green energy projects.
The iron ore giant spent $US1.52bn on capital projects in the first half of the financial year, with about $US1bn of that on sustaining capital for its existing Pilbara miners. Another $US165m was spent on Fortescue Energy projects across the globe, and another $US104m on decarbonising the company’s iron ore operations.
Fortescue says it expects to spend $US3.3bn to $US3.7bn in capital for the full financial year, with about $US500m of that to go towards green energy projects and $US300m to $US500m on decarbonisation.
Fortescue’s first half result comes after the company received an average $US108 a dry metric tonne for its iron ore shipments in the half, up from $US87 a tonne in the prior corresponding period, with the company booking $US9.5bn in revenue, up 21 per cent.
Cash production costs lifted 2 per cent to $US17.77 a wet metric tonne for the period, as Fortescue kept inflationary pressures in the Pilbara largely under control.
Citi analyst Paul McTaggart said the results had beaten analyst consensus estimates of a $US5.6bn EBITDA and a $1.04 dividend.
Fortescue shares were up 2.9 per cent to $28.03 in a flat market late on Thursday morning.