Fortescue Posts Higher H1 Earnings on Record Shipments; Shares Climb

Fortescue reported a stronger first-half performance driven by a record shipment run and improved realised hematite prices. The miner posted underlying EBITDA of $4.5 billion and net profit after tax of $1.9 billion for the six months to Dec. 31, each up 23% year-on-year, and declared a higher fully franked interim dividend while maintaining full-year shipment and cost guidance.

Key Points

Fortescue reported a 23% rise in both underlying EBITDA ($4.5 billion) and net profit after tax ($1.9 billion) for the six months to Dec. 31, with revenue up 10% to $8.4 billion.
Shipments reached a first-half record of 100.2 million tonnes and realised hematite prices improved; the company declared a fully franked interim dividend of A$0.62 per share, a 24% increase from the prior year.
Management maintained full-year shipment and cost guidance, and cited supply chain performance and Pilbara decarbonisation as contributors to record volumes and lower unit costs - implications for the mining and commodities sectors and Australian equity markets.

Shares of Fortescue (ASX:FMG) climbed on Wednesday after the iron ore producer released first-half results showing improved earnings linked to record shipment volumes and firmer realised prices.

For the six months ending Dec. 31, the company reported underlying EBITDA of $4.5 billion, a 23% increase from the same period a year earlier. Net profit after tax also rose 23% to $1.9 billion. Revenue for the period advanced 10% to $8.4 billion.

The company attributed the revenue and earnings gains in part to a first-half shipments record of 100.2 million tonnes and to higher realised hematite prices. Sydney-listed shares of Fortescue were up nearly 4% at A$20.96 as of 00:50 GMT.

Fortescue declared a fully franked interim dividend of A$0.62 per share, representing a 24% increase from the prior year and amounting to a payout equal to 65% of first-half profit. The miner reiterated its full-year shipment and cost guidance.

Chief Executive Dino Otranto said the combination of record volumes and lower unit costs reflected robust supply chain performance and ongoing decarbonisation across Pilbara operations. The company cited those factors as contributors to the improved results.

Financial highlights (six months to Dec. 31)

Underlying EBITDA: $4.5 billion - up 23% year-on-year
Net profit after tax: $1.9 billion - up 23% year-on-year
Revenue: $8.4 billion - up 10% year-on-year
Shipments: 100.2 million tonnes - first-half record
Interim dividend: A$0.62 per share - fully franked, 24% higher than last year, 65% payout of first-half profit

Investors responded to the set of results and the larger interim dividend with a near 4% rise in the company’s Sydney-listed share price. Management has held its full-year shipment and unit cost outlook, leaving guidance unchanged based on the information provided.

These results highlight the operational drivers behind Fortescue’s performance in the reporting period: volume growth, realised price improvement, supply chain effectiveness and improvements in unit cost metrics tied to decarbonisation work at Pilbara mines.

Risks

Earnings momentum depends on maintaining shipment volumes and realised prices; declines in either could pressure revenue and profit - relevant to mining and commodity markets.
Unit cost improvements were linked to supply chain performance and decarbonisation across Pilbara operations, so disruptions to supply chains or slower progress on decarbonisation could increase costs - relevant to operations and industrial cost structures.
Market reaction to future guidance updates creates uncertainty for investors in the ASX-listed stock; the company has maintained full-year shipment and cost guidance but any subsequent revision could affect equity valuations.

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