Fortescue share price lifts on record iron ore exports

How did Fortescue perform for the last quarter of FY22?

| More on:
happy mining worker fortescue share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Fortescue shares edge 1.71% higher to $18.49 during mid-morning trade 
  • The company reported record iron ore shipments of 49.5mt for the quarter despite a challenging operating environment 
  • Fortescue also maintained its industry cost leading position with C1 costs coming to US$17.19/dmt 

The Fortescue Metals Group Limited (ASX: FMG) share price is on the rise today.

This comes after the company released a trading update for the fourth quarter of the 2022 financial year.

In mid-morning trade, the iron ore miner's shares are up 1.71% to $18.49.

What did Fortescue report for Q4 FY22?

Here's a quick summary of how the company performed for the 3 months that ended 30 June 2022.

  • Record iron ore shipments of 49.5 million tonnes (mt), up 6% quarter on quarter
  • Average revenue of US$108 per dry metric tonne (dmt), up 8% quarter on quarter
  • C1 costs of US$17.19 per wet metric tonne (wmt), up 9% quarter on quarter
  • Cash on hand of US$5.2 billion and net debt of US$0.9 billion

What happened during the quarter?

For the final quarter of 2022, Fortescue delivered a 4% year on year increase in shipments to a record 49.5mt. This means that shipments for FY22 have now reached 189mt, exceeding its top end guidance of 188mt.

In addition, the average price of iron ore came to US$107.84/dmt for the quarter. This represents revenue realisation of 78% of the average Platts 62% CFR Index, up 70% in Q3 FY22.

The C1 cost in Q4 FY22 came to US$17.19/wmt, reflecting an increase of 9% against the previous quarter. This was on the back of higher diesel costs, labour rates and other consumables.

Nonetheless, the C1 cost in FY22 stood at US$15.91/wmt which Fortescue holds the spot as the industry's leading cost position.

Management commentary

Fortescue's CEO, Elizabeth Gaines touched on the company's quarterly performance. She said:

The Fortescue team has delivered excellent results for the June quarter, with record iron ore shipments of 49.5 million tonnes. This outstanding operating performance has resulted in record FY22 shipments of 189 million tonnes, exceeding the top end of guidance. This was achieved in a challenging operating environment due to the impact of COVID-19 throughout the financial year. Despite industry-wide and global headwinds, Fortescue's unique culture and Values has delivered these exceptional results and I am immensely proud of the performance of the team.

Ms Gaines continued on to talk about the near-term future, adding:

Building on another year of record performance, our guidance for FY23 reflects our ongoing commitment to optimising returns from our integrated operations and marketing strategy, with total shipments in the range of 187 – 192 million tonnes.

We remain focused on innovation and productivity to maintain our industry leading cost position and deliver strong operational performance. Together with our focus on investing in growth through the Iron Bridge Magnetite project and Fortescue Future Industries, we are well placed to advance our transition to a global green energy and resources company and ensure our stakeholders continue to benefit from Fortescue's success

FY23 outlook

Looking ahead, Fortescue revealed its FY23 guidance to the market. Here's a rundown of what to expect in the new financial year.

  • Iron ore shipments of 187 – 192mt, including approximately 1mt from Iron Bridge
  • C1 cost for hematite of US$18.00 – US$18.75/wmt
  • Capital expenditure (excluding FFI) of US$2.7 – US$3.1 billion, inclusive of sustaining and development capital, exploration and studies, decarbonisation and major projects
  • FFI's anticipated expenditure between US$600 – US$700 million, inclusive of US$100 million of capital expenditure and US$500 – US$600 million of operating expenditure

The above guidance is based on an assumed FY23 average exchange rate of AUD: USD 0.70.

Fortescue share price snapshot

Since 2022, the Fortescue share price has struggled to remain above the psychological $20 barrier consistently.

The company's shares are down almost 5% for the period after a volatile past few months.

Based on today's price, Fortescue presides a market capitalisation of approximately $57.58 billion.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

Here's why this ASX 200 healthcare stock is roaring 13% higher on Wednesday

This healthcare company is outperforming every other stock within the ASX 200 today.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock jumped 10% after posting strong half-year results

This ASX 200 delivered a finger lickin' good result.

Read more »

a group of tech people gather around a computer operated by a young woman while the group looks on in support.
Technology Shares

Nvidia shares in focus after Q3 earnings smash expectations thanks to AI boom

This tech giant is growing at a spectacular rate thanks to artificial intelligence.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Earnings Results

Webjet shares sink despite 120% half-year profit boost

This travel company delivered stunning growth during the first half. But it wasn't enough for some.

Read more »

A young woman with her mouth open and her hands out showing surprise and delight as uranium share prices skyrocket
Earnings Results

Guess which ASX 200 tech stock is rising after beating guidance and upgrading targets

TechnologyOne has beaten its guidance and brought forward its medium term targets.

Read more »

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
Earnings Results

Guess which ASX 200 stock is rising after announcing a special dividend with its FY23 results

Earnings are down but a special dividend is coming for shareholders.

Read more »

A boy is about to rocket from a copper-coloured field of hay into the sky.
Earnings Results

This ASX 200 stock just ripped 11% higher. Here's why

Investors are bidding up the ASX 200 stock following the release of its FY 2023 results.

Read more »

a woman in business wear looks at her phone against the window of a high rise space with a city landscape view of tall buildings outside.
Earnings Results

ASX 200 stock surges 11% on mega revenue gains

This ASX 200 tech company has just released its 3Q FY23 update... and the market likes it.

Read more »