The Fortescue Ltd (ASX: FMG) share price is higher after revealing an impressive HY24 report.
Fortescue is one of the world’s largest iron ore miners, and it’s also working on becoming a major player in the new industry of green hydrogen.
HY24 result
Here are some of the main highlights from the first half of FY24:
- Iron ore shipped of 94.5mt, down 2%
- Average revenue increased 24% to US$108.2 per dry metric tonne (dmt)
- Total revenue increased 21% to US$9.5 billion
- Underlying EBITDA up by 36% to US$5.9 billion
- Net profit after tax (NPAT) rose 41% to US$3.3 billion
- Dividend per share up 44% to AU$1.08
Fortescue said its FY24 first-half performance was “excellent”, with a focus on keeping costs low.
The strength of its operating and financial performance allowed the business to pay 65% of its net profit as a dividend. Even at the heightened Fortescue share price, this payment amounts to a dividend yield of 5.5% when including the franking credits.
Fortescue made progress in a number of areas with its ‘green’ efforts, including the deployment of its 240 tonne battery electric haul truck and the commissioning of Australia’s first operational electric excavator.
It recently launched Fortescue Capital, to help funding with its green energy projects. The company has announced final investment decision (FID) for the Phoenix hydrogen hub, the Gladstone PEM50 project in Australia and the green iron trial commercial plant in the Pilbara (Australia).
Fortescue’s cash balance rose 11% to US$4.75 billion, while net debt sank 45% to US$569 million. It was helped by a 41% rise of operating cashflow and free cashflow growth of 68% to US$2.65 billion.
Fortescue dividend
As mentioned, the Fortescue dividend has been hiked by 44% to AU$1.08 per share. Its dividend payout ratio was 65%, just like last year.
Its policy is to pay between 50% to 80% of underlying net profit. Its earnings per share (EPS) in Australian terms increased by 44% to AU$1.66, so the dividend increased at the same rate as EPS.
Final thoughts on the Fortescue share price
The company is expecting to ship between 192mt to 197mt in FY24, including between 2mt to 4mt for Iron Bridge.
I think the company has a very promising future, but its strong rise over the last few months makes me believe it’d be better to wait for a better price. I’m not sure if the Fortescue share price is going to go under $20 or $17 this year, but as I already own shares I’m looking for a much better entry point.
