This includes A$1.8 billion ($1.32 billion) of asset impairments and restructuring costs, and A$113 million ($83 million) of tax adjustments and other charges.
The adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for Arrium Mining, its mining business division, amounted to A$90 million ($66 million), compared with A$686 million ($504 million) a year earlier.
The drop was primarily driven by the significant decline in iron ore prices, the company said.
Metal Bulletin’s 58% Fe Iron Ore Index, which most closely reflects the average Fe grade of Arrium’s material, averaged $59.01 per tonne cfr Qingdao for the year to June 30, down by 45% from $106.68 per tonne cfr a year earlier.
“The year has been a very challenging one,” Arrium md and ceo Andrew Roberts said. “Earnings for the company on both an underlying and statutory basis were significantly affected by the deterioration in iron ore prices.”
In its steel business, however, Arrium recorded a profit in the second half of the year
. This was the first time it had made a profit in that segment since the global financial crisis of 2008, it said.
While Arrium expected demand for seaborne iron ore to remain strong, it believed that iron ore prices for the 2016 financial year will remain under pressure from the supply-demand imbalance in the market and from negative sentiment.
“The [mining] business has been restructured for the low iron ore price environment, including lowering the target average cash breakeven price to $47 per dry metric tonne [dmt] for the Middeback Range operations, while maintaining its flexibility to adjust its operations up or down subject to the external environment,” the miner said.
It reiterated its sales guidance of 9-10 million tonnes of iron ore for the 2016 financial year, with average Fe grade of 58.5%. About 85% of volumes are under term contracts, Arrium added.