Fortescue share price lifts on record first quarter operating performance

The ASX 200 miner plans to invest US$6.2 billion by 2030 to eliminate fossil fuel risks.

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Key points

  • The Fortescue share price is in the green morning trade
  • The miner reported record iron ore shipments for a first quarter
  • Fortescue said it’s “well positioned” to meet its FY23 guidance

The Fortescue Metals Group Ltd (ASX: FMG) share price is up slightly in morning trade on Thursday.

Fortescue shares are currently trading for $16.16 apiece after touching an intraday high of $16.36 earlier.

Below, we look at what the S&P/ASX 200 Index (ASX: XJO) iron ore miner just reported for the quarter ending 30 September (Q1 FY23).

Fortescue share price lifts on record first quarter operating performance

Investors are bidding up the Fortescue share price after the miner reported a 4% boost in iron ore shipments from the prior comparable period. The 47.5 million tonnes (mt) shipped in Q1 FY23 represent a record for a first quarter.

The company earned an average revenue of US$87 per dry metric tonne (dmt).

Direct costs (C1) were also up, climbing 3% quarter on quarter to US$17.69 per wet metric tonne (wmt). This was due to higher fuel costs and other industry-wide cost pressures.

As at 30 September, Fortescue had a cash balance of US$3.3 billion with a net debt of US$2.8 billion. This figure is post the payment of the FY22 final dividend of US$2.4 billion and capital expenditure of US$653 million.

What else happened during the quarter?

ESG investors may also be helping out the Fortescue share price today after the miner updated the market on its decarbonisation roadmap.

The company plans to invest US$6.2 billion by 2030 to eliminate fossil fuel risks. It forecasts this will save some US$3 billion by 2030. Annual savings are expected to reach US$818 million once the roadmap is fully in place.

Over the quarter Fortescue Future Industries (FFI) also entered a collaboration with Tree Energy Solutions. The partnership is intended to speed up the development of a green hydrogen and green energy import facility in Germany.

Atop this, FFI established a United States Technology Hub and inked a partnership with the US Department of Energy's National Renewable Energy Laboratory.

What did management say?

Commenting on the results that look to be helping boost the Fortescue share price today, CEO Andrew Forrest said:

We are establishing the building blocks of a new, global renewable energy value chain spanning technology, manufacturing, green energy generation and distribution which will deliver significant returns to our shareholders.

Last month at the United Nations General Assembly, Fortescue announced it would step beyond fossil fuels and lead heavy industry to achieve real zero emissions (Scope 1 and 2) across our iron ore operations by 2030…

Against this backdrop of a strong performance for the first quarter, we are well positioned to meet our guidance, execute on our strategy and ensure all our stakeholders continue to benefit from Fortescue's success.

What's next?

Looking ahead, Fortescue offered FY23 guidance of 187-192 mt of iron ore shipments, which includes around 1 mt from Iron Bridge.

The miner expects CI costs for hematite of US$18.00 – US$18.75/wmt, with capital expenditure of US$2.7 – US$3.1 billion.

The cap ex guidance excludes FFI, which Fortescue expects will come to US$500 – US$600 million of operating expenditure and US$230 million of capital expenditure.

The miner is assuming an average exchange rate for the financial year of 70 Aussie cents to the US dollar.

Fortescue share price snapshot

Atop some healthy dividends the miner paid out, the Fortescue share price is up around 16% over the past 12 months. That compares to an 8% loss posted by the ASX 200.

Motley Fool contributor Bernd Struben 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.

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