Lower ore prices push Hancock profits down 33%

The first contribution of the Roy Hill project has failed to balance the impact of falling iron prices on the accounts of Gina Rinehart's Hancock Prospecting which recorded a one third drop in net profit from operations to $443 million.

In a statement, Hancock said the three Hope Downs mines operated above name-plate tonnage capacity but that production, combined with the new mine at Roy Hill, resulted in revenue at $1.72 billion for the year ended 30 June 2016, down from more than $2 billion in the previous corresponding period.

Hancock said taxes paid in the 2016 fiscal year amounted to more than $390 million.

“The continued substantial reduction in the iron ore price has had a direct impact on profits and cash flow, with a 33 per cent reduction in underlying profit from operations,” the company said.

“This reduction is due almost solely to reduced revenue, which in turn was caused by the lower average iron ore price for the year.”

The group increased its investment in the agricultural sector during the year with several cattle stations being acquired, providing a diversification away from largely sole reliance on iron ore.