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Here’s What You Missed In The Fortescue Metals Group (ASX:FMG) Report

Fortescue Metals Group (ASX: FMG) yesterday released their quarterly activities report, sending the share price over 4% higher. Today, it has opened higher again.

Headquartered in Perth, Fortescue is the fourth largest iron-ore producer in the world, up there with the likes of BHP Billiton Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO). They are now the lowest cost provider of iron ore to China and they continue to expand their operations into Japan, South Korea and India.

What You Missed

Yesterday, Fortescue released their activities report for the quarter ending 31st December 2018. The report showed solid increases in production with a reduction in costs. The result has garnered a positive response from shareholders who continue to lift the share price higher today.

Key metrics from the report show improvements in the quantity of ore mined, processed and shipped when compared to Q2 FY18. Total shipments for the quarter was reported as 42.5 million tonnes, up from 40.2 million in Q1 FY19 and 40.5 million in Q2 FY18. This increase in iron ore shipments came despite the total amount mined being 5% down from Q1.

In other news, cash production costs were given as $13.02 per wet metric tonne, down from Q1 FY19 but up a total of 8% from Q2 FY18. Fortescue stated that costs were lower for the quarter due to, “a lower exchange rate and the continued focus on productivity and efficiency.”

Speaking of efficiency, Fortescue continued its progress towards automation during the quarter, and now has a total of 44 autonomous trucks at their Christmas Creek facility.

West Pilbara Fines is a new product from Fortescue that was shipped to China for the first time during the quarter in small quantities. The activities report stated, “Feedback on the West Pilbara Fines product has been excellent with strong interest from numerous customers in China and other key markets.” They take a positive outlook to the future of their new product and are hopeful it may become a source of consistent revenue.

What Next? 

Fortescue gave guidance for FY19 in their quarterly report, stating total shipments are expected to be between 165-173 million tonnes, in line with last year’s result of 170 million tonnes. Costs for FY18 were $12.36 per wet metric tonne, and for FY19 they expect costs to be, “towards the upper end of the US$12-$13/wmt range.” Cash on hand in FY18 was $863 million, and this figure has increased to $962 million as of 31st December 2018.

Is There Any Growth Left In Fortescue?

The guidance does not suggest much growth for Fortescue for FY19, but the quarterly report, for the most part, was positive. If you’re considering buying shares in Fortescue, I think you might also want to consider BHP Billiton or Rio Tinto before you invest.

We recently covered BHP dividend, growth and debt in this article and spoke to the prospects for Rio Tinto in this article.

Forget Mining – Here’s 3 Proven Dividend + Growth Shares

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Disclaimer: At the time of writing, Max does not have a financial interest in any of the companies mentioned.

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