Fortescue Metals first-half profit drops 32% as costs weigh

China’s push to curb emissions and easing construction activity in the country’s debt-laden property sector led to prices of the steel-making commodity halving from record levels last year, while a covid-19 wave in Australia due to the Omicron variant also hampered Fortescue’s operations.

Analysts expect iron ore prices to stabilise this year, but remain some way away from last year’s peak. BHP Group said on Tuesday commodity price volatility will continue for some time, though outlook for demand and pricing remains strong.

“We remain focused on managing industry cost pressures and challenges posed by Western Australia’s ongoing border restrictions,” Fortescue Chief Executive Officer Elizabeth Gaines said, adding that the company was working with the state government to ensure access to specialist labour.

The miner posted an underlying net profit of $2.78 billion, compared with $4.08 billion a year earlier. Analysts had expected a profit of $2.70 billion, according to Vuma Financial.

Fortescue declared an interim dividend of 86 Australian cents per share, compared with A$1.47 per share a year earlier.

The company reiterated its annual shipments, costs and capital expenditure forecast.