Fortescue Metals reports tripled FY profits

Fortescue Metals reports tripled FY profits

Australian iron ore giant Fortescue Metals Group (ASX:FMG) has reported a full-year profit of US$985 million, tripling last year’s US$316 million net profit due to the improvement in production costs.

The miner also raised its final dividend by 500% to $0.91 a share, up from just $0.2 in the same period last year.

Nev Power, Fortescue CEO said: “The entire Fortescue team has delivered on safety, production and cost targets resulting in outstanding FY16 results. Successful cost improvement measures and lower capital expenditure have more than offset the impact of falling iron ore prices to generate strong free cash flow.”

Iron ore prices are currently around $60 a metric tonne after hitting all-time lows around $37 a tonne in December.

The increase has been driven by building activities in China, the world’s largest iron ore consumer.

In related news, Moody’s Investor Service has upgraded the corporate family rating of Fortescue to Ba2 from Ba3.

It also upgraded the senior unsecured credit rating to Ba1 and the senior unsecured credit rating to B1.

Moody’s noted that the upgrade “reflects the considerable progress that the company has made in reducing its debt levels.”

Stephen Pearce, Fortescue’s chief financial officer said: “Through excellent operational performance, Fortescue has continued to generate significant free cash flows, reducing debt and strengthening our balance sheet.”

The rating update has no impact on the company’s debt capital structure.