Fortescue Metals Group (FMG) SNAPSHOT
Profile: Fortescue Metals Group (FMG) is one of the largest iron ore producers globally. It owns and operates three iron ore mine sites in the Pilbara (WA), the five-berth Herb Elliott Port in Port Headland and the fastest heavy haul railway in the world. It also holds the largest tenement portfolio in the Pilbara and undertakes exploration and development activity in the region as well as in South America.
History: FMG was founded in 2003 by its current chairman, Andrew Forrest. The company’s first commercial shipment of iron ore to China occurred in 2008. In April 2018, FMG shipped its billionth tonne of iron ore to China. In 2012, FMG became the first company in the world to use CAT autonomous haulage technology on a commercial scale.
Earnings composition: China is the largest consumer of FMG’s products, with 93% of the company’s FY19 revenue generated from the Asian nation.
Most recent result – FY19: FMG reported US$6.0bn in underlying EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), up 90% from US$3.2bn in the prior corresponding period (pcp). Underlying earnings were up 195% on the pcp to US$3.2bn, from $1.1bn. The strong result was primarily driven by an increased realised iron ore price of US$65 per dmt (dry metric tonne), up 48% from US$44 per dmt in FY18. The volume shipped was down slightly to 168 wmt (wet metric tonnes) of iron ore, from 170 wmt in the pcp. Basic earnings per share was US$1.03, up from US$0.28 in the pcp. A dividend of A$0.24 was declared, bringing total dividends for the year (including A$0.71 of special dividends) to A$1.14.
Company outlook: In FY20, FMG expects to ship 170-175Mt (million tonnes) of iron ore. It expects cash production costs (C1), which include the operating costs of mining, processing, rail, port, direct administration charges and production overheads, of US$13.25-13.75 per wmt. Capital spend is estimated at $US2.4bn. FMG expects to payout 50-80% of net profit after tax.
Important dates: Ex-dividend date is 2 September 2019. Payment date is 2 October 2019. 1Q20 results are scheduled for 24 October 2019. AGM is scheduled for 29 October 2019. 2Q20 results are scheduled for 30 January 2020. 1H20 results are scheduled for 19 February 2020.
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