A surge in the price of iron has helped Fortescue Metals Group nearly quadruple its net profit in the first half and pay a bumper dividend.
The iron ore miner booked a net profit of US$1.2bn in the six months to December 31, up from $319m a year earlier on a 34 per cent increase in sales to $4.5bn. Management decided to pay a fully-franked interim dividend of 20 Australian cents for the December half, up from 3 Australian cents a year ago.
The price of iron ore with 62 per cent iron content delivered to China fetched $78.87 a tonne at the end of last year, almost double their price at the end of 2015. Prices were up 2.7 per cent to $94.86 at Tuesday’s close, the highest since August 2014.
Fortescue maintained its guidance for shipping 165m to 170m tonnes of iron ore in the 2017 financial year at an average cash cost of between $12 and $13 per wet metric tonne. The company shipped iron ore at an average cost of $13.06/wmt during the December half.
The iron ore also miner voluntarily paid off $1.7bn of debt, leaving it with net debt of $4bn as at December 31.
Fortescue shares were down 1.8 per cent on Wednesday in Sydney, but are up 19.5 per cent so far this year and yesterday closed at their highest level since July 2008. Shares have risen 248.2 per cent over the past year.
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