Fortescue Ltd (ASX: FMG) shares are sinking on Wednesday morning.
At the time of writing, the iron ore giant's shares are down 4% to $20.43.
This follows the release of the miner's fourth quarter update.
Fortescue shares sink on Q4 update
For the three months ended 30 June, Fortescue smashed the market's expectations with record iron ore shipments of 53.7 million tonnes (Mt). This represents a 10% increase over the prior corresponding period.
As a comparison, Goldman Sachs was forecasting iron ore shipments of 51.9Mt for the three months and the consensus estimate was for shipments of 51.6Mt.
This means that Fortescue achieved total shipments of 191.6Mt in FY 2024, which is down slightly year on year from 192Mt.
The company notes that it achieved Pilbara Hematite average revenue of US$92 per dry metric tonne (dmt) for the quarter. This equates to 82% of the average Platts 62% CFR Index. For the full year, its average revenue was US$103 per dmt.
What about costs?
Pleasingly, Fortescue continues to boast an industry leading cost position. Its Pilbara Hematite C1 cost was US$18.53 per wet metric tonne (wmt) in the fourth quarter and US$18.24 per wmt in FY 2024.
This ultimately led to Fortescue generating strong cashflow during the quarter. This contributed to a cash balance of US$4.9 billion and net debt of US$0.5 billion at 30 June 2024. This is after spending US$2.9 billion on capital expenditure in FY 2024.
'Outstanding quarter'
Fortescue Metals' CEO, Dino Otranto, was very pleased with the way the company finished the financial year. Otranto said:
It's been an outstanding quarter by the team who rallied together to deliver record iron ore shipments of 53.7Mt which was 10 per cent higher than the June quarter last year. This record result demonstrated the efficiencies gained through our recovery plan following the ore car derailment in December 2023.
Importantly, we achieved this while maintaining our laser focus on safety with our Total Recordable Injury Frequency Rate improving to 1.3 for the financial year. This is an incredible achievement and shows a 28 per cent improvement from the previous year.
Commenting on the company's outlook, Otranto adds:
Looking ahead to FY25, we're seeking to achieve record shipments with guidance of 190 – 200Mt. As part of bringing together Metals and Energy into One Fortescue, we are simplifying our structure and removing duplication that will ensure Fortescue is lean, impactful and can move quickly to seize opportunities.
Fortescue expects to achieve its record shipments in FY 2025 with a C1 cost for Pilbara Hematite of US$18.50 to US$19.75 per wmt.
Fortescue shares are now down 30% since the start of the year.
