Fortescue Metals Group HY20 Results (ASX: FMG)
Rene Anthony
Fortescue Metals Group (ASX: FMG) has reported its first-half results for FY20. We take a look at the company's headline figures, key commentary and guidance outlook, plus review the share market's reaction across the trading day.
Headline result
Fortescue has reported record half-year revenue of US$6.5bn, which is 83% higher than HY19.Underlying EBITDA across HY20 was US$4.23bn, which is an increase of 159% on last year's corresponding period. Reported net profit after tax rose 281% to US$2.45bn.An interim dividend of $0.76 per share, fully franked, has been declared. The ex-dividend date will be 2nd March, 2020. The record date will be the 3rd March, 2020.Trading in FMG shares began sharply higher following the news, however, by the end of the day, excitement had subsided somewhat. The stock posted a gain of 0.7%, or 8 cents, to end the day at $11.14.
Key commentary
Underpinning the company's strong half-year revenue result was a record level of shipments, which grew 7% to reach 88.6mt. With the price of iron ore remaining high across the period, Fortescue reported an average realised price of US$80/dmt, up 73% on last year's result.EBITDA and net profits benefitted from an improvement in unit costs, with FMG reporting C1 cost of US$12.73/wmt, a 3% reduction compared with HY19. This remains an industry leading cost position.The company has noted that its growth projects, Eliwana and Iron Bridge, remain on track as far as budget and schedule. Meanwhile, operational efficiencies are helping the business generate strong margins. Management has emphasised that its "continued focus on disciplined capital management" and a "flexible balance sheet" has permitted it to more than double last year's corresponding dividend. Net debt stands at US$0.7bn, with US$3.3bn cash on hand at the end of the half.Importantly, the business has also seen a 38% improvement in its Total Recordable Injury Frequency Rate (TRIFR).
Guidance outlook
Fortescue Metals Group has provided an update on its FY20 guidance. This includes shipments forecast to come in at the upper-end of the range of 170-175mt, and C1 costs in the range of US$12.75-13.25/wmt.Total capital expenditure is expected to be US$2.4bn, while depreciation and amortisation is anticipated to be US$7.70/wmt.The board envisages a dividend payout ratio for FY20 between 50-80% of NPAT.
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