Fortescue posts strong results for FY 2024

Australian mining company Fortescue has announced strong financial results for the fiscal year 2024 ending 30 June.

The company delivered a robust operational performance, including iron ore shipments reaching 191.6 million tonnes, contributing to the third-highest earnings in its history.

Net profit US$5.7 billion

Fortescue’s underlying EBITDA stood at US$10.7 billion, representing a 7% increase from FY 23, and the underlying EBITDA margin was a strong 59 per cent. Net profit after tax (NPAT) for FY 24 was US$5.7 billion, with earnings per share at US$1.85 (A$2.82).

The company reported net cash flow from operating activities of US$7.9 billion and free cash flow of US$5.1 billion, following a capital expenditure of US$2.9 billion.

In terms of dividends, Fortescue declared a fully franked final dividend of A$0.89 per share, payable on 27 September 2024, with an ex-dividend date of 4 September 2024.

This brings the total dividends for FY24 to A$1.97 per share, amounting to A$6.1 billion, and represents a 70 per cent payout of NPAT. This aligns with the company’s policy of distributing 50 to 80 per cent of its full-year underlying NPAT.

Fortescue’s balance sheet remains strong, with cash reserves of US$4.9 billion and net debt of US$0.5 billion as of 30 June 2024. The company’s gross debt to last 12 months EBITDA ratio is 0.5 times, and its gross gearing stands at 22 per cent.

Progress on decarbonisation

On the decarbonisation front, Fortescue has made notable progress. This includes the construction of a new solar farm, the deployment of electric excavators, and the development of prototypes for battery electric and hydrogen fuel cell haul trucks.

The establishment of Fortescue Zero highlights the company’s commitment to green technology, with significant advancements such as the first contracts for electrolysers and a multi-year deal for battery intelligence software.

Additionally, the Arizona Hydrogen and Gladstone PEM50 projects reached Final Investment Decisions, and the Holmaneset and Pecém green energy projects have moved to the feasibility phase.

Higher labour rates

Operationally, Fortescue saw a strong performance across its hematite supply chain, with the first shipments from Iron Bridge contributing to total iron ore shipments of 191.6 million tonnes in FY 24. Revenue increased by 8% to US$18.2 billion, driven by a rise in Hematite average revenue.

The Hematite C1 cost was US$18.24 per wet metric tonne, up four per cent from FY 23, largely due to higher labour rates and cost escalation, although cost control measures helped mitigate the increase.

Outlook for FY 2025

Looking ahead, Fortescue has provided guidance for FY 25, projecting iron ore shipments between 190 and 200 million tonnes, including 5 to 9 million tonnes from Iron Bridge. The expected C1 cost for Hematite is between US$18.50 and US$19.75 per wet metric tonne.

Capital expenditure is anticipated to be between US$3.2 and US$3.8 billion, while Fortescue Energy is expected to have a net operating expenditure of approximately US$700 million and capital expenditure of around US$500 million. This guidance assumes an average exchange rate of AU$0.68 for FY 25.