The Fortescue Metals Group Limited (ASX: FMG) share price was out of form on Thursday and tumbled lower despite the release of a solid quarterly update.
The iron ore producer’s shares were caught up in the market selloff and dropped 4% to $22.73.
How did Fortescue perform in the second quarter?
For the three months ended 31 December, Fortscue achieved iron ore shipments of 46.4 million tonnes (mt), bringing its half year shipments to a record of 90.7mt.
The former was achieved with C1 costs of US$12.81 per wet metric tonne (wmt), which were largely in line with the previous quarter.
Thanks to the appreciation in the iron ore price during the quarter, Fortescue recorded average revenue of US$122 per dry metric tonne (dmt). This was 91% of the average Platts 62% CFR Index for the quarter.
The strong free cash flow that this generated led to Fortescue finishing the period with net debt of just US$0.1 billion. This includes the payment of the FY 2020 final dividend and the FY 2020 final tax instalment.
Fortescue’s Chief Executive Officer, Elizabeth Gaines, commented: “Record shipments of 90.7mt surpassed any half year since Fortescue’s inception, and we are very well placed to meet the sustained strength in demand from our customers.”
“Fortescue is continuing to deliver strong results for FY21 across all key measures of safety, production and cost; and during the quarter the team achieved a key milestone of first ore at our Eliwana mine,” she added.
Outlook
Fortescue has held firm with its guidance for FY 2021.
It continues to forecast iron ore shipments of 175mt to 180mt with C1 costs of US$13.00 to US$13.50 per wmt.
Capital expenditure is expected in the range of US$3 billion to US$3.4 billion. This is all based on an assumed exchange rate of AUD:USD 0.70.
The company is scheduled to release its half year results on 18 February. Its preliminary net profit after tax for the six months on an unaudited basis is expected in the range of US$4 billion to US$4.1 billion.
This Tiny ASX Stock Could Be the Next Afterpay
One little-known Australian IPO has doubled in value since January, and renowned Australian Moonshot stock picker Anirban Mahanti sees a potential millionaire-maker in waiting…
Because ‘Doc’ Mahanti believes this fast-growing company has all the hallmarks of genuine Moonshot potential, forget ‘buy now pay later’, this stock could be the next hot stock on the ASX.
Doc and his team have published a detailed report on this tiny ASX stock. Find out how you can access what could be the NEXT Afterpay today!
See how you can find out the name of this stock
Returns as of 6th October 2020
More reading
- Why the IGO (ASX:IGO) share price is tanking today
- Why Beach, Fortescue, Iluka, & Temple & Webster shares are dropping lower
- ASX 200 down 0.7%: BHP & Fortescue tumble, Reliance rockets, CSL downgraded
- ASX property stocks are likely to beat property investments in 2021
- ASX 200 rises 0.4%
Motley Fool contributor James Mickleboro 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 Bruce Jackson.
The post Why the Fortescue (ASX:FMG) share price sank 4% lower today appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/3oqiIQv
Leave a Reply