Fortescue Metals shares have fallen despite it announcing a 56 per cent jump in full year profit built on higher production.

The world’s fourth largest iron ore miner grew 2013-14 net profit to a record $US2.7 billion and said it expects to hit its expansion target in the year ahead.

However it has not lifted its dividend, which remained at 10 US cents per share, citing the need to pay down more debt.

The company’s share price was down two cents down at $4.60 at 1145 AEST.

Fortescue’s revenue in the year to June rose 45 per cent to $US11.8 billion, while costs fell.

It says it expects to produce 155 to 160 million tonnes of iron ore in fiscal 2015, its stated target following a near tripling through a costly expansion in the last three years.

Total delivered costs of $US56 a tonne compared to a realised price that fell to $US106 a tonne from $US114 the previous year.

That was only 86 per cent of the benchmark Platts index’s $US123 but Fortescue would realise up to 90 per cent through better quality ore from its new projects, it said.

The company’s net debt position improved to $US7.2 billion from $US10.5 billion in 2012-13.

It would increase its dividend pay-out ratio when its gearing levels are achieved over the next 18-24 months, the company said.

“We remain steadfast in our commitment to debt reduction, with another $US500 million to be repaid in October 2014, taking repayments to US$3.6 billion in less than a year and moving us closer to our gearing target of 40 per cent,” chief executive Nev Power said.

IG market strategist Evan Lucas said the headline numbers looked good but the company’s bullish view on iron ore prices was optimistic after this year’s falls and compared to peers such as BHP Billiton chief Andrew Mackenzie.
“They continue to deliver despite the naysayers,” Mr Lucas told AAP.

“They have still got a considerable amount of debt on the balance sheet … that is certainly still the risk that comes with Fortescue and that 98 per cent of earnings comes from China and they are exposed to one and one only commodity.”