Fortescue profit plunges 41% to A$3.37bn as iron‑ore prices drop 18%; record 198.4Mt shipments fail to stop margin squeeze

Fortescue Metals Group (ASX: FMG) posted a sharp fall in annual profit as softer iron-ore prices ate into the top line, even as the miner squeezed out record volumes and kept costs down.

Net profit after tax fell to $3.37 billion for the year to June 30, down 41% from $5.68 billion a year earlier. Revenue dropped 15% to $15.5 billion. Average hematite prices for the year slid 18% to $84.79 per dry metric tonne - the main driver behind the earnings decline.

Underlying EBITDA dropped 26% to $7.94 billion and the margin narrowed to 51% from 59% the prior year. Still, the operational side showed muscle: shipments hit a record 198.4 million tonnes, up 4% year-on-year, and reported C1 cash costs fell to $17.99 per wet metric tonne.

The market reacted predictably: Fortescue shares closed down 3.9% at A$19.22.

Management declared a fully franked final dividend of A$0.60 a share, taking the full-year payout to A$1.10. Capital spending for the year was hefty - $3.93 billion - with $312 million directed to its energy arm. That division, focused on green hydrogen projects, has been trimmed after the Trump administration reduced support for clean-energy initiatives; Fortescue scrapped planned projects in Arizona and Gladstone.

Company commentary pointed to several headwinds compressing realised prices: the slump in China's property sector denting steel demand, rising global supply, trade tensions and geopolitical uncertainty. Still, management said demand for Fortescue ore remains solid. Dino Otranto, Metals and Operations CEO, sounded upbeat about China's long-term prospects: "Every time I am in China, I am unbelievably impressed by the continued growth of that economy." Executive Chairman Andrew Forrest wrote in the annual report that the company views green hydrogen as a core part of its future, while acknowledging the path won't be linear.

Looking ahead, Fortescue guided shipments for fiscal 2026 to 195-205 million tonnes and forecast hematite C1 costs of $17.50-$18.50 per tonne.

For traders watching the stock: earnings show how exposed earnings are to iron-ore price swings even when operations are humming. Margins have tightened, capex remains high and China demand dynamics - especially the property sector - are a key variable to monitor. Shares closed at A$19.22, down 3.9% on the news.