Fortescue Metals Group has reported a 5 per cent dip in half-year profit, but blew past estimates as it won higher prices for its iron ore, pushing its shares to a two-year high.
The world's fourth-biggest iron ore miner rewarded shareholders with a 19 Australian cents per share interim dividend, up from 11 cents per share last year, as well as special dividend of 11 cents per share.
Net profit for the six months to December 31 came in at $US644 million, down from $US681 million a year ago, but handily beat the $US544 million average of two estimates by UBS and Goldman Sachs.
"The half year results demonstrate Fortescue's continued ability to generate strong cashflows from its highly efficient Pilbara operations," the company said in a statement.
Shares in FMG jumped as much as 6 per cent to $6.73 on the ASX, the highest since March 2017.
Fortescue said the combined interim dividend, which was 30 per cent higher than the total paid in fiscal 2018, reflected its confidence in its outlook.
The miner said it realised $US47 a tonne for its iron ore in the December half, up from $US40 a tonne in the previous half.
Chinese steel mills have turned to Fortescue's lower grade and mid grade iron ore as their steel margins have tightened.
A deadly mine disaster in Brazil that has curtailed Vale SA's prdocution is also expected to prompt buyers to take more Australian iron ore, underlying a solid outlook for Fortescue for the remainder of the financial year.
FORTESCUE HY PROFIT BEATS EXPECTATIONS
* Net profit down 5pct to $US644m
* Revenue down 4pct to $3.54 billion
* Interim dividend 19 Australian cents, fully franked, plus 11 cent special dividend.
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