Fortescue Metals Group Ltd., Australia’s third-biggest iron ore producer, said first-half profit gained more than threefold, missing analyst estimates, after expanding output at its operations in Western Australia.
Net income was $1.7 billion in the six months ended Dec. 31, compared with $478 million a year earlier, the Perth-based company said today in a statement. That compares with a median estimate of $1.8 billion of four analysts surveyed by Bloomberg. The company declared a 10 Australian cent dividend.
Australia’s biggest junk-bond issuer is seeking to cut its liabilities as it boosts production and after global iron ore prices rebounded from their June low. BHP Billiton Ltd., the world’s biggest mining company, yesterday joined Rio Tinto Group in predicting lower prices for 2014 as supply rises.
Strong demand from the steel industry meant that new supply was “being absorbed,” Chief Executive Officer Neville Power said on a call with reporters. He said the company maintained its long-term price forecast of $110 a metric ton to $120 a ton.
Fortescue declined 2.3 percent to A$5.84 at the close of Sydney trading. The benchmark S&P/ASX 200 rose 0.3 percent. Iron ore prices were unchanged at $124.40 a ton yesterday, according to the Steel Index.
“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,” Power said, according to the statement.
Fortescue has plans to repay a further $2 billion of debt, Chief Financial Officer Stephen Pearce said on the call. The specific timeframe of the repayment will depend on the strength of the iron ore price, he said.
The company has already announced plans to repay $3.07 billion of debt early in the wake of rising production and strong iron ore prices in 2013, helping to save more than $300 million in interest payments, Fortescue said last month.