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.
Image source: Getty Images
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.
