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(Reuters) -Australian miner Fortescue Metals Group (OTC:FSUGY) Ltd said on Monday its annual profit fell 40% despite record shipments of iron ore, due to declining prices of the steelmaking material amid cooling demand from top consumer China.
The profits of Fortescue, the world’s fourth-largest iron ore miner, were still the second largest in the company’s history. The miner posted record earnings the previous year.
Miners have taken a hit from iron ore prices retreating from highs in 2021, as demand from top steel producer China cools and its economy slows due to COVID-19 lockdowns.
Rival miner Rio Tinto (NYSE:RIO), reported a 29% drop in profits and more than halved its dividend in July, citing softening demand from China and supply-chain snags.
Fortescue, which is about 37%-owned by billionaire founder Andrew Forrest, reported annual underlying net profit after tax of $6.20 billion, down from a record $10.35 billion a year ago. It was largely in line with a Refinitiv estimate of $6.24 billion.
The Perth-based miner earned average revenue per dry metric tonne (dmt) of iron ore of $99.80 during the year, down from $135.32/dmt for the previous year, when the miner saw record earnings.
Its margins were further crimped by rising costs and labour shortages in the aftermath of the COVID-19 pandemic, which has raised personnel costs across Australia’s mining sector.
The miner declared a final dividend of A$1.21 per share, down from A$2.11 apiece declared last year.
Monday’s results were the last hosted by Elizabeth Gaines, who stepped down as chief executive. It was announced in May that Forrest would be executive chairman, specifically overseeing the iron ore business for the interim period.
Under Forrest the company has looked to shift towards becoming a major producer of green hydrogen to meet the global demand to move away from fossil fuels.
“Fortescue is transitioning into a global green energy, metals, minerals and technology company, capable of delivering not only green energy but also the minerals critical to the green energy transition,” Forrest said in a statement.
