By Rhiannon Hoyle
SYDNEY--Fortescue Metals Group Ltd. (FMG.AU) said its first-half profit fell by 44%, as revenue was squeezed by weaker prices for its iron ore.
Fortescue said its net profit fell to US$681 million in the six months through December, from US$1.22 billion in the same period a year earlier. Underlying earnings were down 31% at US$1.83 billion.
Fortescue said it will pay an interim dividend of 11 cents a share, down from 20 cents a year ago.
Still, the payout--equivalent to 40% of profits--reflects Fortescue's "consistent operating performance and financial outlook," said Elizabeth Gaines, who succeeded Nev Power as chief executive this month.
Once a tiny explorer, Fortescue took on major producers Vale SA, Rio Tinto PLC and BHP Billiton Ltd. in a decadelong expansion that turned it into a major competitor in the global market for the material, used to make everything from cars to skyscrapers.
But the Australian company, the world's fourth-largest exporter of iron ore, said revenue took a knock during the period, as it grappled with weaker demand for its ore, which is lower in iron content than its big rivals.
First-half revenue fell 18% to US$3.68 billion. "High steel mill profitability incentivized blast furnaces to maximize production by using higher iron-content ores," said Fortescue.
As a result, the miner only received about US$47 a ton for its shipments, down from US$56 a ton in the same period a year earlier, despite a 5% rise in the average benchmark market price.
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