Australia's Fortescue year profit up 12 pct on output growth
MELBOURNE Aug 22 (Reuters) - Australia's Fortescue Metals Group reported a 12 percent rise in annual profit, beating market forecasts as rapid growth in iron ore production offset weaker prices, and said offers for a stake in its port and rail unit had failed to meet its targets.
The world no.4 iron ore miner put a minority stake in its port and rail business, The Pilbara Infrastructure (TPI), up for sale last December with the aim of raising around $3 billion to pay down debt.
The minority stake attracted strong interest, but that was not good enough, the company said on Thursday.
"While these offers were significant they have not met Fortescue's objectives for value and terms," it said in its results announcement.
Net profit rose to $1.75 billion for the year to June from $1.56 billion a year earlier, ahead of analysts' forecasts around $1.68 billion, according to Thomson Reuters I/B/E/S.
Fortescue shipped 41 percent more iron ore in the 2013 financial year than a year earlier and is on track to reach a production rate of 155 million tonnes a year in December.
The $9 billion expansion to triple its output was slowed last September as Fortescue scrambled to refinance debt and cut spending when iron ore prices plunged to a three-year low of $86.70 a tonne.
Prices have since recovered to around $139 and have proven more resilient than expected despite cooler Chinese growth, fueling a 44 percent rally in Fortescue's share price over the past two months. Fortescue's shares last traded at A$4.05.
Fortescue said on Thursday its cash balance was strong enough to allow it to start repaying debt this year, which it would do.
"With growth capex effectively done by this year, FMG has the potential to become a 'cash machine'," Barclays analyst Ephrem Ravi said in a note last week.
The iron ore price recovery had heightened speculation that Fortescue would not go ahead with a sale of a minority stake in its TPI port and rail unit. It said on Thursday it would continue to look for ways to extract value from TPI. (Reporting by Sonali Paul; Editing by Richard Pullin)
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