(Adds dividend outlook, details)
Aug 21 (Reuters) - World number 4 iron ore miner Fortescue Metals Group FMG.AX said on Monday it will pay a record-high final dividend after more than doubling its annual profit, and increased its future payout ratio.
Fortescue said the higher price for iron ore it mostly sells to China and lower operating costs boosted net profit to $2.1 billion in the year to June 30 from $985 million the previous year, in line with a Thomson Reuters I/B/E/S forecast.
Fortescue declared a A$0.25 per share final dividend, more than doubling its final dividend of A$0.12 a year ago.
That took the total annual dividend to A$0.45 per share, a 52 per cent pay-out of net profit after tax, well above the company's previous payout ratio of 30-40 percent.
For next year, the company said it would pay out between 50 and 80 percent of net profit in dividends, subject to market conditions.
Shares in Fortescue jumped as much as 4.7 percent to A$5.76 after the result.
Fortescue and other miners are under pressure to pay bigger dividends as their cash reserves rise amid improvements in prices of iron ore and other industrial commodities.
Larger rival Rio Tinto RIO.AX RIO.L recently paid a record interim dividend after its underlying half-year profit more than doubled. has been driving down costs to help offset steeper price discounts for its ore because of a lower iron content. discount on Fortescue's ore against the 62 percent-grade benchmark widened to 23 percent in fiscal 2017 from 10-15 percent a year earlier. Power has estimated the discount will range between 20 to 25 per cent in the 2018 financial year.
The miner is targeting further cost cuts but plans to keep its iron ore shipments steady at around 170 million tonnes in 2017/18 to avoid flooding the market.
China is the number one market for seaborne-traded iron ore, importing around 1 billion tonnes a year, mainly from Australia and Brazil.
Benchmark iron ore .IO62-CNO=MB was last quoted at $77.94 a tonne.