Andrew Forrest at his iron ore mine at Cloudbreak. Photo: Quentin JonesFortescue Metals Group has joined in the dividend bonanza sweeping the Australian market, announcing a higher than expected half-year payout that will see close to $103 million flow to its biggest shareholder, billionaire rich-lister Andrew ‘Twiggy’ Forrest.
The 10¢ per share dividend is equal to the dividend that came with full year profit announced by the company in 2013.
The dividend came as Fortescue reported a $US1.71 billion net profit for first half, which was slightly lower than the $US1.77 billion that a consensus of analysts were expecting.
But it was better than the $US1.67 billion that UBS was expecting.
The result is a stunning 259 per cent higher than the first half of 2013, and reflects the huge rise in production that is underway at the iron ore miner.
Fortescue has also benefited from higher than expected iron ore prices over the past six months.
Fortescue has kept its full year export guidance at 127 million tonnes, despite weather challenges over the past seven weeks.
Fortescue chief executive Nev Power warned last month that heavy rainfall was persisting through January and could interrupt production and shipments.
The wet weather has continued since then, and UBS analyst Glyn Lawcock noted this week that one year’s worth of average rainfall in the Pilbara had fallen in January alone.
That prompted Mr Lawcock to lower his export estimate to 125 million tonnes, but the company is so far holding its guidance at 127 million tonnes.
Fortescue was initially forecasting that exports would range between 127 million tonnes and 133 million tonnes in the 2014 financial year, but changed that in January to 127 million tonnes exactly.
Fortescue wants to gradually increase its dividends until it hits a consistent dividend payout ratio of between 30 and 40 per cent.
But the company will need to pay down more of its debt before it hits that level.
The dividend paid out by Fortescue was almost double the 5.3¢ dividend analysts had been expecting.