The company announced a full-year profit of $US985 million, up 212% on FY15 and above market consensus of $802 million.

Underlying earnings before interest, tax, depreciation and amortisation rose by 27% to $3.2 billion, despite a 17% drop in revenue to just over $7 billion.

Net cashflow from operating activities jumped 48% to $3 billion, thanks to a 43% reduction in C1 cash costs to $15.43 per wet metric tonne.

Total delivered costs dropped by 39% to just $23/wmt, while the Platts 62% CFR index price fell by 29% to $51.37 per dry metric tonne.

FMG’s average realised price for the year was $45.36/dmt.

The company announced a final dividend of A12c per share, beating UBS’ forecast of an unchanged 2c per share final dividend and above RBC Capital Market’s forecast of a 7c per share dividend.

It takes the company’s FY16 dividends to 15c per share, up from just 5c per share for FY15.

FMG CEO Nev Power said the company had delivered on safety, production and cost targets, driving the strong result.

“Successful cost improvement measures and lower capital expenditure have more than offset the impact of falling iron ore prices to generate strong free cashflow,” he said. 

“We have repaid $US2.9 billion of debt in FY16, reducing net debt to $5.2 billion and will continue to repay debt from operating cashflows.” 

The company had $1.6 billion in cash at June 30.

Power said the result sets the company up for another strong year.

C1 costs dropped to $14.31/wmt in the June quarter and are forecast to average just $12-13/wmt this financial year.

FY17 shipping guidance is 165-170 million tonnes of iron ore, in line with FY16’s result of 169.4Mt.

FMG shares rose over $A5 this morning for the first time in more than two years.