Peru's Shougang sees profits drop on lower iron ore prices

Shougang Hierro Perú, the South American country’s only large-scale iron ore producer, saw its profits fall in Q3 despite higher sales by volume.

The drop is explained by "the decrease in iron prices in the international market, and the increase in prices of operating materials and electricity," according to management's analysis.

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At the end of August, the price of iron ore was down 33% compared to the same time last year. According to the Trading Economics portal, the price was around US$100/t on Tuesday.

Chinese-owned Shougang Hierro’s revenues were 1.35bn soles (about US$340mn) in Q3, down 34% year-on-year from 2.05bn soles. 

In the first nine months, revenues fell 27% from 6.78bn soles to 4.93bn, despite sales by volume increasing to 13.1Mt compared to 12.2Mt. In Q3, sales were 4.12Mt, up 7.4% year-on-year.

Third quarter net earnings were 548mn soles compared with 1.12bn a year earlier. In January-September, net profits were 1.84bn soles, down from 3.40bn.