The Fortescue Ltd (ASX: FMG) share price is falling hard today.
Shares in the S&P/ASX 200 Index (ASX: XJO) mining stock closed yesterday trading for $19.45. At the time of writing in morning trade on Thursday, shares are changing hands for $18.09 apiece, down 7.0%. Shares were trading as low as $17.98 each.
For some context, the ASX 200 is down 0.7% at this same time.
This sell-off follows the release of Fortescue's half-year results for the six months to 31 December (1H FY 2025).
Here's what's happening.
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Fortescue share price hammered on profit plunge
- Record half-year iron ore shipments of 97.1 million tonnes (Mt), up 3% year on year
- Revenue of US$7.6 billion, down 20% from 1H FY 2024
- Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$3.6 billion, down 38% year on year
- Net profit after tax (NPAT) of US$1.6 billion, down 53% year on year
- Fully franked interim dividend of 50 Aussie cents per share, down 53.7% from last year's interim payout
What else happened during the half year?
The big fall in half-year revenue dragging on the Fortescue share price today was driven by a falling hematite (iron ore oxide) price, with average revenue over the six months of US$85/dry metric tonne (dmt).
Costs went the other way, with hematite C1 costs reported to be US$19.17/wet metric tonne (wmt), up 8% from 1H FY 2024. Fortescue said this was the result of inflationary pressures and mine plan-led cost escalation.
Margins also came under pressure, with the ASX 200 miner's underlying EBTIDA margin falling to 48% from 62% in the prior corresponding half.
Fortescue's reduced 50 cents per share interim dividend represents a 65% payout of NPAT. That's in line with the miner's dividend policy to payout 50% to 80% of full-year underlying NPAT.
As at 31 December, Fortescue had a cash balance of US$3.4 billion and gross debt of US$5.4 billion. That works out to a net debt of US$2.0 billion, up from a net debt of $500 million at 30 June.
On the sustainability front, Fortescue reported "significant progress" towards decarbonising its mining fleet. That includes a US$2.8 billion partnership the miner signed with Liebherr, where Fortescue Zero will supply the battery power systems.
What did management say?
Commenting on the results pressuring the Fortescue share price today, Fortescue Metals CEO Dino Otranto said, "It's been an outstanding operational performance for the first half of FY25 with the team achieving our highest ever half year shipments while keeping costs low."
Fortescue Energy CEO Mark Hutchinson added:
We have continued to advance and commercialise our portfolio of green technologies to assist Fortescue's own decarbonisation goals and help other companies in their transition to Real Zero.
Now what?
Looking at what could impact the Fortescue share price in the months ahead, the miner provided full-year FY 2025 guidance of 190Mt to 200Mt of iron ore shipments.
The company expects C1 cost for hematite of US$18.50 to US$19.75/wmt.
Fortescue Metals' capital expenditure is forecast to be between US$3.5 billion and US$3.8 billion.
Fortescue Energy's net operating expenditure is expected to be approximately US$700 million, with capital expenditure of approximately US$400 million.
Fortescue share price snapshot
With today's big intraday fall factored in, the Fortescue share price is down 35% since this time last year.
