Fortescue Metals Group Ltd. joined iron-ore mining peers in posting lower profits due to China’s economic downturn, and announced the sudden departure of the head of its metals division.
The full-year results were announced shortly after Fortescue said Fiona Hick, chief executive officer of the iron ore division, had resigned after less than six months in the role. It was the latest in a series of exits of senior executives from Fortescue.
She was replaced immediately by Dino Otranto, the company’s chief operating officer for iron ore. Fortescue’s shares fell as much as 6% in Sydney.
China’s struggling economy has weighed on demand for the steelmaking material, with Rio Tinto Group, BHP Group Ltd. and Vale SA all reporting weaker profits over the past month. Iron ore prices in Singapore have fallen around 16% from a peak in mid-March as optimism over the recovery in Asia’s largest economy dimmed.
Fortescue, the world’s fourth-biggest iron ore producer, said underlying profit fell 11% to $5.52 billion in the 12 months to June 30. One ton of its iron ore fetched $95 per ton on average over the fiscal year, down from $100 the previous year. The Perth-based company will pay a dividend of A$1 per share.
The miner aspires to become a major producer of green hydrogen and other clean-energy technologies and there was a restructure earlier this year to create two CEO roles, one for the metals operations and the other running the new energy arm. Both report to the company’s chairman and founder, billionaire Andrew Forrest.
Read More: Fortescue Iron Ore CEO Fiona Hick Resigns After Brief Tenure
Mark Hutchinson, chief executive officer of the clean energy arm of Fortescue Energy, declined to go into the reasons for Hick’s sudden departure.
Her resignation was a “mutual decision between Fiona and the board” made on Sunday, he said on an analyst call on Monday. Hick had attended a party to celebrate Fortescue’s 20-year anniversary over the weekend, Hutchinson said.
“The optics are obviously challenging,” said Adrian Prendergast, an analyst at Morgans Financial Ltd., referring to the “the lack of explanation” for Hick’s abrupt departure. He also said there was a lack of clarity on the new capital allocation strategy between the metals and energy divisions.
Fortescue said on Monday that it was abandoning an earlier policy of spending 10% of profits on the green energy arm, with metals and energy projects now competing for capital on an equal basis.
Capital expenditure for the entire company would be between $2.8 billion and $3.2 billion for the current fiscal year ending June 30, 2024, of which $400 million would go to the clean energy arm, Fortescue said. The $400 million figure doesn’t include hydrogen investments, which are expected to be announced later this year.
(Updates with analyst comment in 9th paragraph.)