BC Iron ramps up dividend after a bumper year
BCI revealed a 35¢ full-year dividend that easily exceeded last year's 15¢ payout, helping BCI shares soar to their highest in the company's seven-year history.
The dividend rush came after another strong year for the iron ore exporter, which increased underlying profit by more than 40 per cent to $71.4 million. Net profit of $48.8 million was slightly lower than last year's $50.6 million, after the company took a foreign exchange loss on US-denominated debt and wrote down the value of holdings in two other ASX companies.
BCI managing director Morgan Ball said 2013 had been an outstanding year "on any measure".
"BC Iron has achieved record production and financial results, which has pleasingly been reflected in a very strong comparative total shareholder return," he said.
Octa Phillip analyst Andrew Shearer said BCI's 2009 deal with Fortescue Metals Group had been vindicated, despite BCI having to trade 50 per cent of its iron ore tenement for port and rail access.
While many other Pilbara juniors are floundering without transport solutions, BCI has been exporting for the past 30 months because of the Fortescue deal, giving it exposure to what could be the last of the high iron ore prices.
Mr Shearer said the results had reinforced that BCI has "great management, a great asset, and a simple story".
"The dividend payout ratio is more like the sort of payout ratio you see from an industrial rather than one typically associated with resource stocks."
BCI's strong dividend flows continue a trend that has emerged throughout this year's reporting season.
Dividend payouts from the biggest 200 companies on the ASX are reportedly approaching historic highs of about 70 per cent of underlying profits. The mining sector traditionally lags other sectors in terms of dividend payout ratios, but has surprised this year by delivering a series of better than expected dividends.
BCI's big payout follows Fortescue's 10¢ dividend last week, which more than doubled the 4¢ analysts were expecting.
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BC Iron announced a 35 cent full-year dividend, more than double last year’s 15 cent payout, a move that helped BCI shares jump to their highest level in the company’s seven-year history.
The bigger dividend followed a strong year for the iron ore exporter: underlying profit rose by more than 40% to $71.4 million. Net profit was slightly lower at $48.8 million after a foreign exchange loss on US‑denominated debt and write‑downs of holdings in two other ASX companies, but the underlying result supported the higher payout.
BC Iron reported underlying profit of $71.4 million (up over 40%), and a net profit of $48.8 million, which was marginally below the prior year’s $50.6 million due mainly to FX losses and write‑downs.
BCI’s 2009 deal with Fortescue, which involved trading 50% of an iron ore tenement for port and rail access, gave the company export capacity. That access let BC Iron export for the past 30 months while other Pilbara juniors struggled for transport, exposing BCI to the high iron ore price environment and helping deliver stronger returns and dividends.
Octa Phillip analyst Andrew Shearer said the results reinforced that BC Iron has “great management, a great asset, and a simple story.” He also noted the dividend payout ratio looked more like what you’d see from an industrial company rather than a typical resource stock.
BC Iron’s big payout is part of a broader trend of better‑than‑expected dividends across the reporting season. Dividend payouts from the largest 200 ASX companies are reportedly approaching historic highs of about 70% of underlying profits, and the mining sector has surprised by increasing dividends this year.
The surprise larger dividend helped BC Iron shares surge to their highest level in the company’s seven‑year history following the announcement.
Fortescue paid a 10 cent dividend recently, which more than doubled analysts’ expectations of a 4 cent payout.
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