The Fortescue Ltd (ASX: FMG) share price is under the spotlight after the iron miner reported a large increase of profit in FY24.
Fortescue FY24 result
Here are the highlights from the report for the 12 months to 30 June 2024:
- Revenue increased 8% to US$18.2 billion
- Underlying EBITDA grew by 7% to US$10.7 billion
- Underlying net profit after tax (NPAT) increased by 3% to US$5.7 billion
- NPAT went up 18% to US$5.7 billion
- Final dividend per share down 11% to A$0.89
- Total dividend per share higher by 13% to A$1.97
Fortescue said the amount of iron ore shipped for FY24 was virtually flat at 191.6 wet metric tonnes (wmt). The average revenue for hematite (iron ore) was US$103.01 per dry metric tonne (dmt), up 9% year on year, while the C1 (production) cost was US$18.24 per wmt (up 4%).
In terms of the company’s cashflow, which is just as important as profit for the Fortescue share price, net operating cashflow increased 7% to US$7.9 billion and free cashflow increased 18% to US$5.1 billion.
Energy and decarbonisation update
The company noted it now has several electric excavators operational across its mine sites and its aerodrome at Cloudbreak became the first in Australia to have a fully operational, solar-powered airfield lighting system.
It highlighted a new solar farm and the development of battery electric and hydrogen fuel cell haul truck prototypes.
‘Fortescue Zero’ has been established, with significant progress on green technology including its first contracts to sell electrolysers and a multi-year deal for battery intelligence software.
The company said its Arizona Hydrogen and Gladstone PEM50 projects achieved final investment decisions in FY24, while the Holmaneset and Pecem green energy projects advanced to the feasibility phase.
Balance sheet and dividend
Fortescue ended FY24 with a cash balance of US$4.9 billion and gross debt of US$5.4 billion, resulting in net debt of US$0.5 billion at 30 June 2024.
The full-year dividend of A$1.97 per share equates to a total payment of A$6.1 billion to shareholders, with a dividend payout ratio of 70% of net profit.
Outlook for the Fortescue share price
The company guided iron ore shipments of between 190mt to 200mt, including between 5mt to 9mt for Iron Bridge.
The C1 cost is expected to rise to between US$18.50 to US$19.75 per tonne.
Fortescue’s success in FY25 is largely dependent on the iron ore price, which is currently sitting below US$100 per tonne. It can still make a decent profit, but it won’t be rivers of cash at this price. This lower price could be a decent time to invest, whilst confidence is low, but there’s no guarantee there will be a recovery of the iron ore price.
