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Fortescue Metals has announced record half-year profit results, claiming cost-cutting measures and expansion plans have helped boost performance.
The group saw its earnings after expenses more than triple, climbing from US$478 million (AUD$532 million) in the six months to December 2012 to US$1.7 billion at the end of 2013. Year on year, the company also experienced a 77 per cent rise in revenues.
Chief executive Nev Power said the results were indicative of Fortescue’s approach to improving capacity and pushing forward with productivity gains.
“The ongoing strong demand for our products has allowed us to accelerate debt repayment, de-risk the balance sheet and increase returns to our shareholders,” he added.
“This record result underlines the continued success of Fortescue’s strategy to rapidly construct new capacity, ramp up production and drive down costs.”
The world’s fourth-largest iron ore miner was also helped by strong prices for the commodity in the second half of 2013. Shipments jumped 51 per cent when compared with the preceding corresponding period.
According to the company, it is on track to deliver 155 million tonnes of iron ore annually by March this year, with expansion plans nearly complete. Fortescue maintained its full-year guidance figures of 127 million tonnes.
The organisation said capital expenditure (CAPEX) will continue to decline, having already slumped from US$3.1 billion to US$1.4 billion in the second half of 2013. It predicted that CAPEX would be just US$2.1 billion for the whole of 2014.
Mr Power estimated iron ore prices will average between US$110 to US$120 per tonne this year. However, he admitted there will be short-term fluctuations.
“There is quite a bit of new supply coming into the market, but most of that now has really already come in and we’re seeing that supply absorbed by strong steel and imported iron ore demand,” he commented.