August 19, 2018 / 11:11 PM / a month ago

CORRECTED-UPDATE 1-Australia's Fortescue Metals annual profit plunges, but maintains guidance

(Drops comparison with analysts’ forecast in first and second paragraphs)

Aug 20 (Reuters) - Australia’s Fortescue Metals said on Monday its annual profit fell 58 percent on declining prices and demand for its iron ore from China.

The world’s fourth-largest iron ore miner reported a full-year net profit of $879 million, down from $2.09 billion a year ago.

Demand for Fortescue’s iron ore from China has been on the fall as China looks to import higher-grade, less-polluting iron ore. In July, iron ore shipments to China from Australia’s Port Hedland, which Fortescue and BHP use, fell nearly 20 percent from a month earlier.

This has led to Fortescue fetching weaker prices for its lower grade iron ore. Fortescue realized revenue of 64 percent of the average Platts 62 CFR Index price in fiscal 2018, a percent lower than its guidance of around 65 percent.

Cost per wet metric tonne (wmt) came in at $12.36 for the full-year that ended June 30, in line with previous guidance.

The miner, however, maintained its fiscal 2019 cost guidance of $12-$13 per wet metric tonne, and production guidance of 165 million to 173 million tonnes, along with other 2019 outlooks provided earlier.

“A 60 percent iron content product, named West Pilbara Fines, will be produced in the second half of financial year 2019 in advance of the development of the Eliwana mine and rail project,” the company said.

The iron ore miner approved the new $1.3 billion Eliwana iron ore mine in May.

Fortescue declared a final dividend of A$0.12 per share, down from A$0.25 a share a year ago. (Reporting by Susan Mathew in Bengaluru; Editing by Dan Grebler)

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