Fortescue on Tuesday reported a 41% fall in annual net profit and pared its dividend, reflecting lower iron-ore prices as China's real-estate crisis weighed on steel demand.
The world's fourth-largest iron-ore producer posted net profit of US$3.37 billion for the year through June, down from US$5.68 billion a year earlier. Analysts expected about US$3.49 billion, according to a Visible Alpha consensus.
Directors declared a final dividend of 60 Australian cents, equivalent to around 39 U.S. cents, versus 89 Australian cents a share a year ago.
Earnings were eroded by weaker prices for ore mined in remote northwest Australia and sold mostly to Chinese steel mills. The average price Fortescue received fell by nearly one-fifth year over year. It was the company's lowest annual profit in six years. Shares were down by more than 2% by late morning in Sydney.
Despite the backdrop of weak prices, Fortescue's operational performance was solid, analysts said.
Fortescue notched record annual shipments, up 4% on year, and trimmed reported production costs by 1%.
"Our operations have never been stronger," Metals and Operations Chief Executive Dino Otranto said on a call with analysts and reporters.
Iron-ore prices have been pressured by China's property slump, with fewer homes being built. China is the largest global importer of iron ore, making Fortescue highly dependent on continuing demand from the Chinese steel industry.
Fortescue said realized prices were also affected by geopolitical uncertainty, U.S. trade policies and increased global supply, though demand for its products remained strong.
Otranto painted a positive picture of Chinese demand. "Every time I am in China, I am unbelievably impressed by the continued growth of that economy," he said.
Underlying earnings before interest, tax, depreciation and amortization, or Ebitda, fell by 26% to US$7.94 billion, on a 15% drop in revenue. Its underlying Ebitda margin narrowed to 51% from 59%.
Its dividend for fiscal 2025 will total A$1.10 a share, representing a 65% payout ratio, said Otranto. Fortescue has a policy of paying shareholders between 50% and 80% of annual underlying profit.
Fortescue reported total capital expenditure of US$3.93 billion, including US$312 million for its energy arm.
In recent years, the miner has sought to build a clean-energy business focused on green hydrogen, with projects in the U.S. and Australia, but has slowed plans as the Trump administration cuts support for clean-energy industries.
Last month, Fortescue said it wouldn't proceed with a green-hydrogen project in Arizona targeted for mid-2026 and also abandoned a project in Gladstone, Australia.
The miner said it continues to view green hydrogen--hydrogen made with renewable energy--as a critical future energy source.
"No new industry or transformational shift has ever been linear--or easy," Fortescue founder and Executive Chairman Andrew Forrest said in the company's annual report. "We haven't always got it right, but we learn every day from advances and setbacks."
Write to Rhiannon Hoyle at [email protected]