Fortress Minerals posts 41.8% fall in net profit after tax

CATALIST-LISTED Fortress Minerals posted a 41.8 per cent decline in net profit after tax to US$4.2 million for its first quarter ended May 31, 2022, from US$7.2 million a year earlier.

Revenue for the quarter declined 15.5 per cent to US$14.6 million, down from US$17.3 million the year before.

The iron ore concentrate producer attributed the decline in revenue to the weakening of the average benchmark IODEX CFR North China of Platts Daily Iron Ore Assessments price index. Average realised selling price during the quarter fell to US$119.80 per dry metric tonne (DMT), compared to US$143 per DMT the year before.

It also noted that average unit cost of sales increased 25.6 per cent to US$32.08 per wet metric tonne (WMT) due to higher diesel prices. The group said that it uses its in-house fleet of trucks to partially offset higher transport costs and will continue to take a “disciplined approach” to cost controls to mitigate the impact.

The group also announced that it had commenced production at its recently acquired Cermat Aman Sdn Bhd (CASB) mine on Jul 1 after testing and commissioning of operations at the mine were completed in May this year.

It added that the initial mining will take place in the oxide ore zone and focus on producing high grade iron ore.

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Meanwhile, Fortress Minerals expects weaker-than-expected global growth, especially with China’s strict pandemic restrictions, to slow global steel demand growth in 2022.

Still, it noted that as demand for low-carbon steel rises, the group’s higher-grade iron ore will continue to see strong demand in the long run.

Fortress Minerals shares closed flat at S$0.38 on Wednesday (Jul 6).