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Jun 30, 2023

Australian iron ore miner Fortescue's profit falls in FY23 as Iron Bridge impairment weighs in

(Kitco News) - Australian mining group Fortescue (ASX: FMG) today reported record shipments of 192 million tonnes of iron ore in its fiscal 2023 (FY23), up 2% compared to FY22 and at the top end of

(Kitco News) - Australian mining group Fortescue (ASX: FMG) today reported record shipments of 192 million tonnes of iron ore in its fiscal 2023 (FY23), up 2% compared to FY22 and at the top end of market guidance.

However, Fortescue said its C1 production costs of US$17.54/wet metric tonne (wmt) were 10% higher than the previous year, primarily reflecting an increase in diesel prices, labor rates and other consumables.

The company's FY23 revenue of US$16.9 billion decreased 3% on FY22 as the increase in iron ore sales was more than offset by a 5% decrease in average revenue. Underlying EBITDA of US$10.0 billion was 6% lower than FY22 with an underlying EBITDA margin of 59%.

Importantly, Fortescue reported that its underlying net profit after tax (NPAT) of US$5.5 billion was 11 % lower than FY22, while statutory NPAT of US$4.8 billion decreased by 23% compared to FY22, reflecting the decrease in underlying EBITDA and an impairment charge of US$726 million relating to Iron Bridge.

The company said that Iron Bridge achieved first concentrate loaded on ship in July 2023, adding that the updated life of mine C1 cost attributable to Fortescue is estimated at US$45/wet metric tonne.

Fortescue noted that its balance sheet remains strong with a cash balance of US$4.3 billion and gross debt of US$5.3 billion, resulting in net debt of US$1.0 billion as at 30 June 2023.

The company also announced that its Board has declared a fully franked final dividend of A$1.00 per share. Including the interim dividend of A$0.75 per share, the total dividends declared for FY23 are A$1.75 per share (FY22: total dividends of A$2.07 per share).

Fortescue‘s FY24 guidance for total iron ore shipments is 192 – 197 million tonnes, including approximately 7 million tonnes from Iron Bridge (100% basis) and C1 cost for Pilbara hematite of US$18.00 - US$19.00/wmt.

Fortescue is one of the world's largest and lowest cost iron ore producers. With world-class infrastructure and mining assets in the Pilbara, Western Australia, the company has shipped more than 1.7 billion tonnes of iron ore to its customers since 2008. The company also invests in green metals, green energy and green technologies.

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