The Fortescue Metals Group Limited (ASX: FMG) share price was out of form on Thursday and tumbled lower despite the release of a solid quarterly update.
The iron ore producer's shares were caught up in the market selloff and dropped 4% to $22.73.
How did Fortescue perform in the second quarter?
For the three months ended 31 December, Fortscue achieved iron ore shipments of 46.4 million tonnes (mt), bringing its half year shipments to a record of 90.7mt.
The former was achieved with C1 costs of US$12.81 per wet metric tonne (wmt), which were largely in line with the previous quarter.
Thanks to the appreciation in the iron ore price during the quarter, Fortescue recorded average revenue of US$122 per dry metric tonne (dmt). This was 91% of the average Platts 62% CFR Index for the quarter.
The strong free cash flow that this generated led to Fortescue finishing the period with net debt of just US$0.1 billion. This includes the payment of the FY 2020 final dividend and the FY 2020 final tax instalment.
Fortescue's Chief Executive Officer, Elizabeth Gaines, commented: "Record shipments of 90.7mt surpassed any half year since Fortescue's inception, and we are very well placed to meet the sustained strength in demand from our customers."
"Fortescue is continuing to deliver strong results for FY21 across all key measures of safety, production and cost; and during the quarter the team achieved a key milestone of first ore at our Eliwana mine," she added.
Outlook
Fortescue has held firm with its guidance for FY 2021.
It continues to forecast iron ore shipments of 175mt to 180mt with C1 costs of US$13.00 to US$13.50 per wmt.
Capital expenditure is expected in the range of US$3 billion to US$3.4 billion. This is all based on an assumed exchange rate of AUD:USD 0.70.
The company is scheduled to release its half year results on 18 February. Its preliminary net profit after tax for the six months on an unaudited basis is expected in the range of US$4 billion to US$4.1 billion.
