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Fortescue posts record shipments and solid results

29th August 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Iron-ore major Fortescue Metals on Monday announced that record shipments during the 2022 financial year contributed to the company’s second highest earnings and operating cash flow in the company’s history.

Fortescue shipped 189-million tonnes of iron-ore during the full year ended June, exceeding the top-end of the guidance, delivering a net profit after tax of $6.2-billion and earnings per share of $2.01.

Underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) were reported at $10.6-billion with an underlying Ebitda margin of 61%. Underlying Ebitda was 36% lower than the 2021 figures, driven by lower revenues.

Revenue of $17.4-billion decreased 22% on the 2021 financial year, owing to the reduction in the iron-ore benchmark price and average price realisation. Average revenue of $100/t represented a 72% realisation of the Platts 62 CFR Index.

Meanwhile, C1 costs of $15.91/t were 14% higher than the 2021 financial year, primarily owing to an increase in diesel prices, labour rates and other consumables.

“During the year, the industry faced some confronting truths as we worked to better understand people’s experiences of sexual harassment at mining operations in Western Australia,” said CEO Elizabeth Gaines on Monday.

“The findings from the Western Australian Parliamentary Inquiry were deeply concerning for the industry. Fortescue has a zero tolerance approach to bullying, harassment and discrimination and through our ongoing Workplace Integrity Review, we continue to implement a range of initiatives to further enhance the health and wellbeing of all team members, aligned with our unique culture which embraces diversity and inclusiveness.”

Gaines, meanwhile, said that the company was progressing on its journey to decarbonise operations, with the energisation of the 60 MW Chichester solar gas hybrid project which is providing stationary energy for the Christmas Creek and Cloudbreak sites and, displaced 78-million litres of diesel usage in 2022.

“The execution of our decarbonisation strategy was further enhanced through Fortescue’s acquisition of Williams Advanced Engineering and the strategic partnership with Tier 1 global heavy equipment manufacturer, Liebherr for the development and supply of zero emission green mining haul trucks.

“Our targets to achieve carbon neutrality for Scope 1 and 2 emissions by 2030 and net zero Scope 3 emissions by 2040 are industry leading, and together with Fortescue Future Industries, we are investing in renewable energy and new technologies to remove our reliance on fossil fuels, creating significant long-term value for shareholders.

“Reflecting our ongoing commitment to delivering enhanced shareholder returns, the Board has declared a fully franked final dividend of A$1.21 per share, bringing total dividends declared for 2022 to A$2.07 per share. This represents a 75% pay-out of full-year net profit after tax, consistent with our stated intent to target the upper end of our policy to pay out a range of 50% to 80% of net profit after tax.

“We are accelerating our transition to a vertically integrated green energy and resources company and are leading the way in decarbonisation. In 2022 our global economic contribution was A$27.6-billion demonstrating our important contribution to the economy and the communities in which we operate.

“We have experienced a strong start to 2023 and through operational excellence, a sustained focus on productivity and a disciplined approach to capital allocation, we will continue to deliver benefits to all our stakeholders,” Gaines said.

Looking at 2023, Fortescue has set a shipment target of between 187-million and 192-million tonnes of iron, including some 1-million tonnes from its Iron Bridge project, with C1 costs expected to be between $18/t and $18.75/t.

Capital expenditure for the iron-ore business is expected to range between $2.7-billion and $3.1-billion, with Fortescue Future Industries planning a further $600-million to $700-million spend.

Edited by Creamer Media Reporter

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