UPDATE 1-Fortescue triples profit, year iron ore output to rise 57 pct

* Fortescue H1 profits rises to $1.7 billion

* Sets fiscal 2014 iron shipment target at 127 million tonnes

* Costs drop 34 percent to $33 per tonne

(Adds details, ceo quote)

By James Regan

SYDNEY, Feb 19 (Reuters) - Australian miner Fortescue Metals Group FMG.AX said half-year net profit more than tripled to $1.7 billion, in line with market forecasts, as it raced to dig more iron ore to meet higher production targets.

The world's fourth-biggest iron ore producer set a guidance target to ship 127 million tonnes in the fiscal year to June 30, 2014, up from 81 million the previous year as it enters the final stages of an $11 billion expansion programme.

Fortescue said it lowered its cash cost of production over the period by more than a third to an average $33 per wet tonne, helped a weaker Australian dollar.

Spot iron ore prices .IO62-CNI=SI currently stand at $124.40 a tonne, according to data compiler Steel Index.

Iron ore continues to generate big returns and miners in Australia - the world's biggest supplier - are counting on greater economies of scale to maintain profits for the steel-making raw material.

Following in the path of other miners, such as BHP Billiton

BHP.AX BLT.L> and Rio Tinto RIO.AX RIO.L , Fortescue said it was reducing capital spending as construction work on new projects nears an end and concerns mount over cooling industrial growth in China, the main market for Australian iron ore.

Capital expenditure in fiscal 2014 is expected to shrink to $2.1 billion, $4.1 billion below the previous year, it said.

Fortescue is targeting debt repayments of between $4 billion and $5 billion in 2014, before setting up its next stage of growth in iron ore production beyond an annualised rate of 155 million tonnes.

"The ongoing strong demand for our products has allowed us to accelerate debt repayment, de-risk the balance sheet and increase returns to our shareholders," Fortescue Chief Executive Nev Power said in a statement.

The firm said its net debt stood at $8.6 billion as of Dec. 31.

BHP Billiton and Rio Tinto also reported sharply higher interim profits, with the bulk of the earnings coming from their iron ore divisions. News Search ID:nL6N0LN4HY

(Editing by Ed Davies)

((jim.regan@thomsonreuters.com)(+612 9373-1814)(Reuters Messaging: jim.regan.reuters.com@reuters.net))

Keywords: FORTESCUE RESULTS/