The Fortescue Metals Group Ltd (ASX: FMG) share price is slipping lower on Wednesday morning. This comes as the iron ore miner released its half-year results for the 2022 financial year.
At the time of writing, the mining giant's shares are swapping hands for $20.81, down 3.61%.
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Fortescue share price backtracks on half-year result
The Fortescue share price is in the red today after the company delivered its result for the six months ending 31 December 2021. Here are some of the key highlights:
- Total revenue of US$8.1 billion, down 13% (H1 FY22 US$9.3 billion)
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$4.76 billion, down 28% (H1 FY21 US$6.64 billion)
- Underlying net profit after tax (NPAT) of US$2.8 billion, down 32% (H1 FY21 US$4.08 billion)
- Earnings per share (EPS) of US 90 cents, down 32% (H1 FY21 US$1.33 per share)
- Fully-franked interim dividend of 86 cents per share, 70% of H1 FY22 NPAT dividend payout
What happened in H1 FY22 for Fortescue?
Fortescue recorded its highest ever half-year shipments of 93.1 million tonnes, following the integration of its Eliwana project.
In addition, the company achieved industry-leading C1 costs of US$15.28 per wet metric tonne. This was 20% higher than the H1 FY21 result due to price increases of key input costs such as diesel, other consumables, labour rates, the integration of Eliwana as well as mine plan-driven cost escalation.
Overall, the miner recorded an average revenue of US$96 per dry metric tonne, a 70% realisation of the average Platts 62% CFR Index (H1 FY21 US$114/dmt, 90% realisation).
The board declared a cash position of US$2.9 billion and gross debt of US$4.6 billion at the end of the calendar year.
However, a possible catalyst for today's fall appears to be the company's dividend cut. Shareholders will receive an interim dividend of 86 cents per share, down 41% from the $1.47 paid in the prior corresponding period.
What did management say?
Fortescue CEO Elizabeth Gaines commented on the milestone accomplishment, saying:
Fortescue's performance for the first half of FY22 has been outstanding and we are proud of the entire team who have delivered record half year shipments and contributed to net profit after tax of US$2.8 billion, the third highest in Fortescue's history.
… We have continued to reinvest in the business and invest in growth. Our major project, Iron Bridge is progressing well with first production scheduled in December 2022. We remain focused on managing industry cost pressures and challenges posed by Western Australia's ongoing border restrictions, and we are working closely with the Western Australian Government and relevant authorities to ensure we have access to the specialist skills required.
What's the outlook for Fortescue?
Looking ahead, Fortescue provided guidance for FY22, stating the following:
- Iron ore shipments in the range of 180 million tonnes to 185 million tonnes
- C1 costs between US$15.00 to US$15.50 per wet metric tonne (based on assumed average exchange rate of AUD: USD 0.72)
- Capital expenditure (excluding FFI) of US$3 billion to US$3.4 billion.
