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Fortescue Ltd (ASX:FMG) the fourth-largest iron ore miner globally, has reported a 3% increase in its full-year profit despite facing significant challenges, including a slowdown in demand from its largest customer, China. For the fiscal year ending June, Fortescue's underlying net income reached AUD 5.68 billion, falling short of analyst expectations of AUD 6.12 billion. The company has declared a dividend of 89 Australian cents per share.
The report comes during a turbulent period for Fortescue and its Chairman, billionaire Andrew Forrest. In July, Forrest was compelled to drastically scale back his ambitious plans to establish Fortescue as a major player in the green hydrogen sector. The Perth-based miner has also been grappling with the departure of several senior executives, operational disruptions from a train derailment, and adverse weather conditions affecting its Pilbara iron ore projects.
Despite these setbacks, Fortescue remains steadfast in its commitment to achieving net-zero emissions by 2030. Forrest highlighted the company's ongoing focus on decarbonisation, emphasising its dedication to developing four global green hydrogen projects located in the United States, Australia, Norway, and Brazil.
However, Fortescue's goal of producing 15 million tons of green hydrogen annually by 2030 has been temporarily postponed due to high electricity prices, which have slowed progress across the sector. The company also announced plans to cut approximately 700 jobs in response to these challenges.
Green hydrogen, which is produced by using renewable energy to split water into hydrogen and oxygen, has yet to be commercially produced on a large scale globally. Fortescue has been producing a small quantity at a plant in the Pilbara region of Western Australia and recently made a final investment decision on three additional projects at a cost of around AUD 750 million.
The company's financial performance has been affected by inflationary pressures, an increased strip ratio, and costs associated with recovering from the December train derailment. This incident, caused by extreme heat, led to a significant disruption in Fortescue's rail operations, impacting its export capabilities.
For the period, Fortescue shipped 191.6 million tons of iron ore. The company's reliance on iron ore, amid a broader slowdown in China’s property sector and reduced steel demand, underscores the challenges it faces in a market that may see downward pressure on iron ore prices.
