Fortescue's Profit Plunges Amid Weakening Iron Ore Demand
Fortescue Ltd. reported a 53% decline in its first-half profit as China's softening demand for iron ore weighed on the company.
Despite achieving record shipments of 97.1 million tons during the six months ended December, net income plunged to $1.55 billion. Fortescue announced a dividend cut of over 50% to A$0.50 per share.
Shares of Fortescue dropped up to 7% in Sydney following the announcement. The company faces challenges as China's steel demand plateaus and iron ore prices remain stagnant.
Fortescue's Iron Bridge project, a key growth initiative, is ramping up but currently falls short of its full capacity. The company aims to ship 9 million tons of Iron Bridge ore this fiscal year and adjust the schedule to reach annual production of 22 million tons.
Total iron ore shipments from Fortescue's Pilbara operations are expected to reach 190-200 million tons for the period.
Earlier this month, Fortescue acquired Red Hawk Mining to access an undeveloped mine near its Solomon project in Western Australia.
The company's results follow Rio Tinto Group's recent announcement of a profit decline due to weaker demand from China. Rio reported an annual underlying profit of $10.9 billion, down 7.6% year-over-year.
Fortescue expressed concerns about the fate of the Inflation Reduction Act under a potential second Trump administration, hindering green hydrogen project plans.
Iron ore prices saw a 5% decrease during Fortescue's reporting period.