Fortescue Metals Group saw a record annual after-tax net profit of US$3.2 billion, a 195 percent boost from the previous year.

Fortescue Metals Group (ASX:FMG,OTCQX:FSUGY) reaped the benefits of iron ore’s recent price spike with a record after-tax net profit of US$3.2 billion for its 2019 fiscal year (FY19). That’s a 195 percent boost from the previous year (FY18).

The company shipped 167.7 million tonnes of ore in its FY19, marking a 1 percent drop from its FY18. However, average revenue came to US$65 per dry metric ton, which is a 48 percent increase from FY18, pushing total revenue to US$10 billion, a 45 percent boost from FY18.

Fortescue has attributed the revenue spike to several causes, including continued strength in Chinese stainless steel production and an increased volume of higher-value products shipped.

Commenting on Fortescue’s results was CEO Elizabeth Gaines, who highlighted the company’s record dividends and balance sheet strength, as well as demand for iron ore.

“Fortescue’s unwavering determination to deliver shareholder returns through dividends and investment in growth was evident in FY19 with record fully franked dividends of AU$1.14 per share declared, a significant increase on FY18 dividends of AU$0.23 per share,” she said in a statement.

“We have seen a strong start to FY20 and Fortescue is well positioned to continue to deliver benefits to all stakeholders, including our customers, employees and the communities in which we operate while rewarding shareholders.”

In early July, iron ore prices skyrocketed to five year highs on the back of supply concerns stemming partly from a tailings dam collapse at Vale’s (NYSE:VALE) Córrego do Feijão mine in Brazil early this year.

As experts began making predictions that iron ore supply would see at least a two year shortfall, prices jumped as high as US$123.19 per tonne. As Australia is the world’s largest exporter of iron ore, majors in the country are working to step up production to help fill the deficit.

Fortescue is included in this list of majors and has been no stranger to boosting iron ore production in recent months. In late May, the company approved the development of the Queens Valley mining area, set to be part of the pre-existing Solomon Hub in Western Australia’s Pilbara region.

Solomon currently includes the Firetail and Kings Valley mines, which host a cumulative production capacity of 70 million tonnes per year.

Looking ahead, Fortescue laid out guidance for its 2020 fiscal year, which is set to see 170 million to 175 million tonnes in shipments, including 17 million to 20 million tonnes of its West Pilbara Fines product. Total capital expenditure is docketed at US$2.4 billion, US$150 million of which is docketed for developing Queens Valley.

In Australia, Fortescue’s share price closed 5.28 percent lower on Monday (August 26), ending the day of trading at AU$7.17.

Meanwhile, iron ore prices fell 0.47 percent to hit US$92.45 as of 4:35 a.m. EDT on Monday.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

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