01/11/2018 - 15:59

Roy Hill boosts Hancock profit

01/11/2018 - 15:59

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The production ramp-up at iron ore miner Roy Hill Holdings has helped the company lift annual profit by 69 per cent, in turn boosting the annual earnings of its major shareholder, Gina Rinehart’s Hancock Prospecting.

Roy Hill boosts Hancock profit
Roy Hill said its net profit was up 69 per cent.

The production ramp-up at iron ore miner Roy Hill Holdings has helped the company lift annual profit by 69 per cent, in turn boosting the annual earnings of its major shareholder, Gina Rinehart’s Hancock Prospecting.

In a statement posted on its website last night, Roy Hill said its net profit for the year to June 2018 was up 69 per cent to $558 million.

Operating sales revenue was up by a similar percentage to $3.84 billion.

This reflected an increase in iron ore sales from its Pilbara operations to 51 million tonnes from 31mt in FY17.

The Roy Hill mine achieved nameplate capacity of 55mtpa in September 2017, and assuming it sustains that level, annual output will be even higher in the current financial year.

Roy Hill said its operation was largely insulated from the increasing discounts applied to lower grade iron ore.

“The impact on ore produced by Roy Hill, which is priced on the higher grade 62 per cent index was much more limited, with Roy Hill ore continuing to achieve more than 90 per cent of the 62 per cent Platts Index on average over the year,” the company stated.

The company used the strong cash flow from its operations to pay down debt rather than pay dividends.

Its 70 per cent shareholder is Hancock Prospecting – as Business News reported this morning, Hancock lifted its annual net profit 28 per cent to $1.37 billion for the year to June 2018.

This was off the back of a 36 per cent lift in revenue to $6 billion, according to a statement issued last night by the company.

As well as its stake in Roy Hill, Hancock’s other big moneymaking assets is its 50 per cent stake in the Hope Downs iron ore joint venture.

The Hope Downs mines (operated by co-owner Rio Tinto) continued to operate at or above their 45mtpa nameplate capacity for the 2018 financial year.

Hancock said its 67 per cent owned subsidiary Australian Outback Beef, which owns 100 per cent of cattle station business S Kidman & Co, reported a significant increase in revenue to $51.1 million.

The beef company’s underlying net profit before tax increased to $10.1 million.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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