01/11/2013 - 13:30

Hancock earnings lower despite $2bn revenue

01/11/2013 - 13:30

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Gina Rinehart's Hancock Prospecting has notched up almost $2 billion in revenue and an operating profit of $601 million in the 2013 financial year, which makes it one of Australia's most lucrative private companies despite being the group's lowest profit in four years.

Gina Rinehart's Hancock Prospecting has notched up almost $2 billion in revenue and an operating profit of $601 million in the 2013 financial year, which makes it one of Australia's most lucrative private companies despite the profit being the group's lowest in four years.

Hancock said that a lower iron ore price and decreased production and sales at its Hope Downs mine (a 50:50 joint venture with Rio Tinto) had driven the company's annual earnings down, in line with its forecasts earlier this year.

In a statement summarising its annual results, Hancock sad the average iron ore price realised on shipments from Hope Downs was around 17 per cent lower than in 2012, while the volume of ore shipped was almost 4 per cent lower.

The company's $601 million net profit from operations for 2013 was down 40 per cent on the previous year, due largely to a 21 per cent reduction in revenue from iron ore sales. Revenue dropped 15 per cent to $1.99 billion from $2.34 billion.

In the same period, Hancock recorded a net profit after tax of $490 million, down from more than $3.2 billion the previous year.

The company's 2012 after-tax profit  was inflated by a $1.16 billion deferred tax asset related to the minerals resource rent tax and a further $1.1 billion in proceeds from the sale of the company's Galilee Basin thermal coal project to Indian company GVK. 

Conversely, the 2013 after-tax profit was reduced by a $111 million one-off charge related to the MRRT.

Hancock said it applauded the Abbott government's plans to remove the MRRT and anticipated that its production and profit levels would be higher in 2014. 

"With the ramp-up of production and shipments from the third Hope Downs mine, Hope 4, accelerating since commencement of production in April 2013, production and shipment volume for the 2014 fiscal year is expected to be significantly higher than for the 2013 fiscal year, while the iron ore price has recovered from its lows in late 2012," Hancock said. 

The company also noted that it had paid more than $560 million in federal and state taxes during 2013, bringing its total taxes paid for the past two fiscal years to more than $1.2 billion.

Hancock said this almost certainly meant Mrs Rinehart paid more taxes than any other Australian and places her private group within the ranks of Australia's largest corporate taxpayers.

The company is in the process of securing around $7 billion in debt financing for its $10 billion Roy Hill project, in which it holds a 70 per cent interest alongside POSCO, Marubeni and China Steel Corporation

In the meantime, the owners are funding development of the project with equity injections.

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