Fortescue Metals recorded an 88% drop in profit in its financial year (FY) 2015 report released on 24 August.
Net profit after tax fell from USD2.74 billion in FY 2014 to USD316 million in FY 2015. Fortescue iron ore shipped out of Australia’s Pilbara rose from 118.4 million tonnes in FY 2014 to 160.2 million tonnes in FY 2015. Production totalled 165.4 million tonnes, up 33%.
Underlying earnings more than halved to USD2.5 billion, down from USD5.6 billion.
Revenue from the sale of iron ore fell by 28%, reflecting the impact of lower price of USD7.184 billion. This was partially offset by a USD4.022 billion increase generated from higher shipments.
Related news: Fortescue triples ore shipments
However, chairman and founder Andrew Forrest in the introduction to the report remained upbeat.
“Our operations are mining, processing, shipping, and exploring our valuable iron ore at a steady canter of 165 million tonnes per annum,” he wrote. “Sitting within our arsenal is the ability to accelerate production significantly, quickly, and very cost efficiently. Operating costs, which continue to fall, are already a match for the best in the industry.”
Forrest said his company remained “confident in our own competitiveness and the strong fundamentals of the Chinese market”. This is despite the recent plunge in Chinese stocks, wiping AUD50 billion (USD 3.6 billion) off the Australian stock exchange in recent days.
Forrest, however, looked to the long term, saying China’s USD140 billion ‘Belt and Road’ infrastructure plane would drive solid growth and demand for steel for decades to come.
CEO Nev Power told media on 24 August, “We see continued urbanisation and industrialisation in China. There is going to be an enormous demand for steel and iron ore.”