Fortescue misses -- profits down 88%

Fortescue founder Andrew Forrest. Paul Kane/Getty Images

Fortescue Metals just posted a worse than expected 88% drop in profit to $317 million from $2.7 billion.

Analysts had expected a drop of 80% as falling iron ore prices drain revenue. Revenue was down down 27% to $8.574 billion.

The miner says its has reduced operating costs by 21%. Net debt stands at of $US7.2 billion.

Fortescue maintained production at 165 million tonnes in 2015 and plans to continue at that rate in 2016.

Production costs are forecast at $US18 a tonne in 2016.

CEO Nev Power says the market has been significantly affected by threats of oversupply made by some of the large iron ore producers.

“This in turn contributed to the dramatic volatility in the iron ore price during FY15. Fortescue has supported the need to raise public awareness of the impact of this issue, including the importance of holding other organisations accountable.”

Despite volatility in the price of iron ore and weak demand in China, Fortescue maintains confidence in China’s growth.

“China has reaffirmed its objective of ensuring ongoing GDP growth of 7%,” Power says. “Further easing measures have been announced aimed at stabilising and supporting the Chinese property market which remains a major driver of steel demand.”

The company declared a final dividend of $0.02 a share.

Its shares lost 14.62% to close at $1.635.

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