Andrew Forrest’s Fortescue Metals managed to keep the fall in half year profit to just 4%, down to $US319 million, despite a 31% slide in revenue to $US3.344 billion.
The pure play iron ore producer is accelerating its cost cutting, trying to make up margins as global commodity prices fall, driven by oversupply and a weakening economy in China.
Its cost per tonne hit about US$16 in the six months to December while shipping 84 million tonnes, in line with the target production rate of 165 million tonnes for the full year.
The company is now aiming for a cost of $US13 per tonne by the end of 2016, well ahead of original targets.
Fortescue was getting about $US43.45 a tonne during the six months.
A short time ago, its shares were down 3% to $2.03.
CEO Nev Power says the results demonstrate the success of the commitment to productivity and efficiency.
“Our operational performance in safely driving sustainable improvements across the business is generating strong operating cash flows which provide a solid foundation for continued debt repayment and a modest increase in our dividend,” he says.
The company declared a full franked dividend of 3 Australian cents.
Fortescue repaid $US1.1 billion of debt during the half year, reducing net debt to $US6.1 billion inclusive of $US2.3 billion cash on hand at the end of December.
The following chart shows the impact on operating revenue as prices keep falling:
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