FMG posts first-half profit crash

Fortescue Metals Group has posted an 81 per cent profit slump due to the falling price of iron ore.

The miner recorded a first-half profit of $US331 million, down from the $US1.7 billion it posted a year ago.

It comes as FMG’s realised price during the half year was $US66 a tonne compared to $US124.

Working to reduce overheads, FMG cut C1 costs by nine per cent during the half to US$30/wmt.

Fortescue’s total delivered cost to customers, inclusive of C1, shipping, royalty and administration costs, has further decreased to US$43/wmt.

The company also worked hard to increase production in order to offset the low iron price, shipping 82.7mt of ore in the half, a 53 per cent increase.

FMG maintained guidance of 155 to 160 million tonnes for the full year, and is targeting total delivered costs to reduce to US$35/wmt by the end of the financial year.

The company had US$1.6 billion of cash on hand at 31 December 2014, with capital expenditure decreasing to $US436 million.

The miner has decided to pay a 3 cent per share fully-franked interim dividend.

FMG CEO Nev Power said the company is delivering “record operational performance and consistent, sustained cost reductions through focusing on the things we can control – safety, productivity and efficiency”.

“As a result, we are generating positive cash margins and continuing to strengthen our financial position to deliver long term value for shareholders.”

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