Fortescue has reported a full-year net profit after tax of $2.093 million, against a market forecast of $2.125 million.
The result represents a 113% increase on the prior year, as the company took advantage of higher prices for iron ore combined with an increased focus on costs.
This table from the company’s consolidated income statement illustrates how Fortescue increased revenue by almost $1.5 billion while also reducing its cost of sales:
The company announced a final dividend of 25 cents (against a market forecast of 15 cents), taking full-year dividends to 45 cents fully franked.
Free cash flow from operating activities rose by almost $1.5 billion after capital expenditure.
Fortescue used the excess funds to pay off an additional $2.7 billion of debt, while arranging refinancing for a further $1.5 billion.
“The whole Fortescue team has delivered these outstanding results against our key stretch targets of safety, production and cost,” said Fortescue CEO Nev Power.
“Safety improved by 33% compared to the previous year, while costs improved by 17% and we achieved a record low C1 operating cost of US$12.16/metric tonne in the June quarter.”
The company’s focus on costs is shown in the chart below, which shows a steady decline in operating costs per tonne since 2012:
Fortescue shipped 170.4 million tonnes of iron ore during FY17.
Iron ore prices climbed from $US56 a tonne in October last year to a peak above $US94 a tonne in February, before declining steeply back below $US60 a tonne as at the end of the financial year.