The Fortecue Metals Group Limited (ASX: FMG) share price has fallen after its HY23 result, which included a dividend reduction.
Fortescue is one of the world’s biggest iron ore miners. It’s also looking to build a global portfolio of green energy initiatives, with a focus on green hydrogen.
Fortescue FY23 half-year result
Here are some of the main numbers to dig into:
- Revenue fell 4% to US$7.8 billion
- Average revenue per dry metric tonne (dmt) dropped 9% to US$87.18
- C1 (mining) cost per wet metric tonne (wmt) increased 14% to US$17.43
- Underlying EBITDA (EBITDA explained) dropped 9% to US$4.35 billion
- Net profit after tax (NPAT) down 15% to US$2.37 billion
- Free cash flow up 142% to US$1.57 billion
- Interim dividend down 13% to A$0.75 per share
Other highlights
This result was helped by the fact that it delivered half-year iron ore shipments of 96.9 million tonnes (mt), which was 4% higher than the FY22 first half. You can read more about the operational side of things from its recent update.
The business was pleased to say that it ‘switched on’ the world’s first green iron facility through an electrolyser and expanded its major automation centre and green fleet tech hub in WA.
Fortescue also noted its news about advancing its Belinga project in Gabon, Africa. It’s expecting the first iron ore to be shipped because it’s using existing road and rail infrastructure, which limits the possibility of environmental delays.
Green efforts
In the UK, it has established a manufacturing facility in Banbury and a prototype facility in Kidlington for batteries. In Australia, its Gladstone 2GW electrolyser facility will commence commissioning shortly.
Fortescue also mentioned that it continues to develop its Iron Bridge Magnetite project, with the first production scheduled for the end of the March 2023 quarter.
It is also working on its solar and large battery project as part of the Pilbara Energy Connect, which includes the commissioning of the 42MW network-connected battery energy storage systems. The business has also started work on the North Star Junction 100MW solar farm near Iron Bridge.
Fortescue Future Industries (FFI) also announced that it advanced the Holmaneset project in Norway, which could have the potential development of a 300MW green hydrogen and green ammonia facility and support infrastructure.
Thoughts on the Fortescue share price and outlook
The business is still guiding iron ore shipments of between 187mt to 192mt, while the C1 cost could be between US$18 per wmt to US$18.75 per wmt.
I think the short-term will be heavily influenced by the iron ore price, which is where all of its profit is being generated.
With the Fortescue share price being up 15% in six months, I think it is valued quite highly and it’s not a great time to buy. A lower iron ore price could push down the share price.
But, I like the progress that the business is making with FFI and the decarbonisation of the business. I’d want to wait for a lower valuation, perhaps under $18, before investing.
