Fortescue Delivers Record Half — and a Dividend Surprise
Fortescue (ASX: FMG) has posted a standout set of half-year numbers, topping year-ago comparisons across virtually every metric and handing shareholders a bigger-than-expected dividend cheque.
The iron ore miner reported underlying EBITDA of US$4.5 billion for the six months to 31 December 2025, up 23 per cent on the same period a year earlier, with the EBITDA margin expanding five percentage points to 53 per cent. Net profit after tax came in at US$1.9 billion, also 23 per cent higher year-on-year, while revenue grew 10 per cent to US$8.4 billion on the back of higher sales volumes and a stronger realised iron ore price of US$91 per dry metric tonne. Perhaps the most eye-catching number was on shipments. Fortescue moved 100.2 million tonnes in the first half — the highest first-half figure in the company's history and three per cent above H1 FY25. That came alongside a cost performance that will be the envy of the industry: the Hematite C1 unit cost fell three per cent to US$18.64 per wet metric tonne, cementing Fortescue's position as the lowest-cost major iron ore producer in the world. Dividend beats pre-results forecasts The Board declared a fully franked interim dividend of A$0.62 per share — 24 per cent above the A$0.50 paid in the prior corresponding period and representing a 65 per cent payout of first-half NPAT, consistent with the company's policy of returning 50 to 80 per cent of full-year underlying profit to shareholders. The result is a notable beat against the cautious sentiment that had built ahead of results day. Investors had been weighing RBA rate hikes, a firmer Australian dollar, and softer iron ore sentiment Simply Wall St in the lead-up to the announcement. Analyst opinions on Fortescue shares were split, with Ord Minnett carrying a Buy rating, Bell Potter and UBS at Hold, and Macquarie and Jarden maintaining Sell ratings with targets ranging from $16 to $21.50. Motley Fool Australia The A$0.62 dividend materially exceeded the A$0.50 that at least some forecasters had pencilled in. Strong balance sheet, clean capital structure Free cash flow of US$1.5 billion after US$1.7 billion in capital expenditure reflects the underlying cash-generating power of the business. Fortescue ended the period with US$4.7 billion in cash and net debt of just US$1.0 billion — down from US$1.1 billion at 30 June 2025 — even after paying out the FY25 final dividend of US$1.2 billion during the half. The company also cleaned up its debt structure, syndicating a low-cost Renminbi term loan equivalent to around US$2 billion while repurchasing US$750 million of senior notes. Looking ahead Full-year guidance for iron ore shipments of 195–205 million tonnes and a C1 unit cost of US$17.50–US$18.50/wmt was left unchanged, signalling management confidence in the trajectory. Fortescue also pressed ahead with its bid to acquire the remaining 64 per cent of Alta Copper and continued accelerating its decarbonisation programme, with solar, wind and battery storage projects all advancing across the Pilbara. The results represent a meaningful rebuke to the more bearish end of analyst opinion. With costs falling, shipments at record levels, and the dividend comfortably above prior-year, Fortescue has given investors little to complain about — at least for now. The bigger question hanging over the stock, as China's iron ore buying patterns evolve and new supply from projects like Simandou emerges, is whether this first half can be sustained into the second.
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