Ahead of Fortescue’s interim profit results release tomorrow UBS has a note out which includes two charts that show powerfully why the company’s share price is so much more volatile than the other two big Australians, BHP and Rio.
The pure play miner derives all its profit from selling iron ore to China which means it’s heavily exposed to movements in the commodity price and decisions made by the Asian powerhouse.
Here are the charts.
UBS is expecting first half net profit to come in at $US361 million, down 64% from the $1.007 billion recorded in the previous period.
The bank said the impact of lower iron ore price, which averaged $US75 a tonne over the period, would be felt in these results. But the miner has offset part of the fall by ramping up shipment volumes. A lower Aussie dollar has also helped the exporter.