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Dow Jones Newswires: Mining giant Fortescue sees annual profit tumble 40% on lower prices, higher costs

Fortescue Metals Group Ltd.

reported a 40% fall in annual profit as iron-ore prices weakened and operating costs climbed.

The world’s fourth-largest iron-ore exporter said it made a net profit of $6.20 billion in the 12 months through June, down from $10.30 billion a year earlier. Underlying earnings before interest, tax, depreciation and amortization fell by 36% to $10.56 billion.

Fortescue posted a surge in profits in the year-earlier period to a record high on strong iron-ore prices, and net profit in fiscal 2022 was still the company’s second-highest to-date, said Chief Executive Elizabeth Gaines.

Directors declared a final dividend of 1.21 Australian cents ($0.83) a share, taking the miner’s total dividend for fiscal 2022 to A$2.07 per share. That equates to 75% of annual profits, the upper end of Fortescue’s policy to pay out 50-80% of profits, said Ms. Gaines.

“We have experienced a strong start to FY23 and through operational excellence, a sustained focus on productivity and a disciplined approach to capital allocation, we will continue to deliver benefits to all our stakeholders,” she said.

Fortescue reported record shipments of 189 million metric tons for last fiscal year, but faced weaker iron-ore prices and captured less of the benchmark price for the low-grade ore that it sells.

The miner said it made an average $100 a ton, or 72% of the industry’s benchmark price, in fiscal 2022. That compared to $135 a ton, or 88% of the benchmark, in the year-earlier period.

Meantime, Fortescue grappled with rising costs, which have been challenging companies industrywide. The company reported a 14% increase in output costs, mostly because of higher prices for labor, diesel and other consumables, it said.

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