Fortescue Metals - FY24 Financial Results and Decarbonization Efforts
FMG (FMG) Share Update August 2024 Tuesday 27th
Fortescue Metals Reports Strong FY24 Financial Results and Decarbonization Progress
Fortescue Metals Group Ltd (ASX: FMG) has reported robust financial results for FY24, alongside notable advancements in their decarbonization initiatives.
Instant Summary:
- Net profit after tax of US$5.7 billion.
- Fully franked FY24 total dividends of A$1.97 per share.
- Iron ore shipments of 191.6 million tonnes.
- Underlying EBITDA of US$10.7 billion, a 7% increase from FY23.
- Construction of a new solar farm and deployment of electric excavators.
- Final Investment Decisions for Arizona Hydrogen and Gladstone PEM50 Projects.
Financial Performance
Fortescue Metals reported a net profit after tax (NPAT) of US$5.7 billion for FY24, reflecting a strong operating performance. The company achieved iron ore shipments of 191.6 million tonnes, contributing to the third highest earnings in its history.
Underlying EBITDA increased by 7% to US$10.7 billion, with an EBITDA margin of 59%. The company also reported a net cash flow from operating activities of US$7.9 billion and free cash flow of US$5.1 billion after investing US$2.9 billion in capital expenditure.
Dividends and Balance Sheet
Fortescue declared a fully franked final dividend of A$0.89 per share, bringing the total dividends for FY24 to A$1.97 per share. This represents a payout ratio of 70% of NPAT. The company's balance sheet remains strong with US$4.9 billion in cash and net debt of US$0.5 billion as of 30 June 2024.
Decarbonization and Sustainability
Fortescue made significant progress in its decarbonization efforts, including the construction of a new solar farm and the deployment of electric excavators. The company also advanced its green energy projects, with Final Investment Decisions for the Arizona Hydrogen and Gladstone PEM50 Projects.
Fortescue's commitment to sustainability is evident in its FY24 Sustainability Report, which highlights a Total Recordable Injury Frequency Rate (TRIFR) of 1.3, marking a 28% improvement from the previous year. The company also achieved significant milestones in diversity and inclusion, with women representing 24% of the workforce and 29% of leadership roles.
Operational Review
Fortescue's strong operational performance was driven by its hematite supply chain and first shipments from Iron Bridge. The company reported revenue of US$18.2 billion, an 8% increase from FY23, and a Hematite average revenue of US$103 per dry metric tonne.
Despite a 4% increase in Hematite C1 cost to US$18.24 per wet metric tonne, the company's focus on cost control helped maintain a strong EBITDA margin. The company's total global economic contribution for FY24 was A$27.5 billion, including A$6.1 billion in corporate taxes and State royalties.
Fortescue's strong financial performance and commitment to decarbonization are likely to positively impact its stock price. The company's robust balance sheet and significant dividend payout will appeal to investors. Additionally, Fortescue's advancements in green technology position it well for future growth.
Investor Reaction:
Analysts are likely to react positively to Fortescue's strong financial results and commitment to sustainability. The company's progress in decarbonization and green energy projects is expected to enhance investor confidence and attract environmentally conscious investors.
Conclusion:
Fortescue Metals has delivered impressive financial results for FY24, underpinned by strong operational performance and significant advancements in decarbonization. Investors should consider the company's robust balance sheet, attractive dividend payout, and commitment to sustainability when making investment decisions.