Fortescue cuts dividend to eight-year low, flags cost pressures
Fortescue declares lowest final dividend in eight years, flags cost inflation and China trade risks despite record shipments.
Fortescue, the world's fourth-largest iron ore miner, has declared its lowest final dividend in eight years as it warned that cost inflation linked to Middle East conflict would push up production expenses in the coming year.
The company announced a final dividend of 46 Australian cents per share, down from 60 cents a year earlier. The payout represents 65% of fiscal 2026 underlying net profit after tax.
Despite the reduced payout, shares rose as much as 1.2% to A$18.27 in early trading, outperforming a 0.3% gain in the benchmark index.
For the year ended June 30, Fortescue posted a 2.8% rise in underlying net profit attributable to $3.47 billion, broadly in line with market expectations of $3.52 billion. Record annual shipments of 201.3 million metric tons and higher iron ore prices helped offset elevated Hematite C1 unit costs, largely driven by higher diesel prices.
The miner realised an average price of $90.7 per dry metric ton, compared with $84.8 a year earlier.
However, Fortescue cautioned that recent trade developments could affect demand and realised prices in China through changes to customer purchasing arrangements, pricing benchmarks, and market-access conditions. Jefferies noted that fourth-quarter realisations fell to 84% from 88% for the full year, underscoring this risk.
China's state iron ore buyer, China Mineral Resources Group, has been adopting increasingly aggressive tactics against miners to secure better terms for domestic steel mills facing low margins.
The company also disclosed it was served with a class action in July alleging workplace misconduct, including sexual harassment and sex discrimination, with potential damages not yet specified.
Separately, Fortescue paid A$150.4 million on July 1 following final court orders for compensation to the Yindjibarndi people for cultural loss linked to mining on their land. The Yindjibarndi Ngurra Aboriginal Corporation has indicated it intends to appeal the ruling before the August 26 deadline.