Fortescue (ASX:FMG) shares rise on record shipments

Fortescue (ASX: FMG) shares are up more than 2% after announcing record shipments in FY20.

Fortescue is one of the biggest iron ore miners on the ASX.

FY20 and Q4

Fortescue said that it achieved record iron ore shipments of 47.3 million tonnes (mt) for the quarter and 178.2mt for FY20. This exceeded the top end of guidance of 177mt and it was 6% higher than FY19.

C1 costs for the fourth quarter of FY20 were US$13.02 per wet metric tonne (wmt). C1 costs for FY20 were US$12.94 per wmt including COVID-19 related costs of approximately US$0.22 per wmt.

On the revenue side of things, Fortescue achieved revenue of US$81 per dry metric tonne (dmt) in FY20’s fourth quarter. The average revenue for FY20 was US$79 per dmt.

The ASX miner finished with cash of US$4.9 billion and net debt of US$0.3 billion.

Fortescue has changed its climate change target. It’s aiming to achieving net zero operational emissions by 2040, including a 26% reduction in emissions from existing operations from 2020 levels, by 2030.

Fortescue CEO Elizabeth Gaines said: “This was an outstanding performance which underpinned the operational excellence we delivered in FY20, particularly during a quarter when we implemented a range of measures in response to COVID-19.”

FY21 guidance

Fortescue is guiding that FY21 shipments will be between 175mt to 180mt and C1 costs will be between US$13 per wmt to US$13.50 per wmt. It’s also going to spend $3 billion to $3.4 billion on capital expenditure.

Summary

Fortescue continues to impress, it’s no wonder the share price keeps rising. However, I think the best time to buy commodity businesses is when the resource is at a lower price, not a high price. For income, I think I would rather go for more stable ASX dividend shares.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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