Category: Stock Market

The Marley Spoon AG (ASX: MMM) share price slumped 5.6% lower on Thursday and could be on the move again today.

Shares in the Europe-based meal kit company slumped lower yesterday as the S&P/ASX 300 Index (ASX: XKO) fell 2.0% to 6,638.90 points.

However, the company’s latest quarterly update makes the Marley Spoon share price worth watching today.

Why is the Marley Spoon share price on watch?

Marley Spoon doubled its revenue in 2020 with strong growth driven by the United States market.

The company’s fourth quarter update (Q4 2020) for the period ended 31 December 2020 delivered a result broadly in line with guidance.

Marley Spoon expects to post revenue of 254 million euros (A$404.4 million), within the guidance range and up 96% year on year, or 101% on a constant currency basis.

Q4 revenue jumped 95% on Q4 2019 numbers to 69 million euros (A$109.9 million). US revenue surged in Q4, climbing 146% higher compared to Q4 2019 on a constant currency basis.

The Marley Spoon share price will be in focus today after the company posted its fourth consecutive quarter of active subscriber growth. Average active subscriber numbers climbed to ~233,000 compared to Q1 2020 figures of ~142,000.

Q4 2020 was also the third consecutive quarter of positive operating earnings before interest, tax, depreciation and amortisation (EBITDA). Operating EBITDA totalled 1 million euros (A$1.6 million) for the final quarter of 2020.

Marley Spoon reported unaudited quarterly operating cash flow of -3.6 million euros (-A$5.7 million). That saw the company book a total year-end cash balance of 34.4 million euros (A$54.8 million).

The company’s global contribution margin reached 29% despite Q4 impacts of COVID-19 and peak e-commerce holiday season.

The Marley Spoon share price has surged over the past year. In fact, shares in the meal kit delivery group are up 920% in the last 12 months. Strong growth in the lucrative US market has been key to the company’s robust earnings and share price gains. 

More reading

• The Marley Spoon (ASX:MMM) share price is up over 700% in 12 months

Motley Fool contributor Ken Hall 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.

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At the small end of the market there are a number of companies that are growing at a very strong rate.

Two small cap ASX shares that investors might want to get better acquainted with are listed below. Here’s how they have been performing:

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a leading provider of enterprise mobility software. This software allows sales and service organisations to increase their sales win rates, reduce expenditures, and improve customer satisfaction.

It has been experiencing very strong demand for its platform over the last couple of years and this has continued in FY 2021. In fact, just yesterday Bigtincan released its second quarter update and revealed annualised recurring revenue (ARR) of $48.4 million. This represents growth of 50% over the prior corresponding period. This comprised organic ARR of $40 million (up 42.9%) and ARR of $8.4 million from recently completed acquisitions.

In addition to this, management reiterated its organic ARR guidance of $49 million to $53 million for FY 2021. This will be an increase of up to 48% year on year, but is still only a fraction of its market opportunity. The company estimates that the sales engagement platform market will be worth $6 billion a year by 2021.

Nitro Software Ltd (ASX: NTO)

Another quick-growing small cap ASX share is Nitro Software. It is the software company behind the increasingly popular Nitro Productivity Suite. This software solution provides integrated PDF productivity, eSignature, and business intelligence (BI) tools to customers.

The highly scalable software solution is being used by individual users, small businesses, government agencies, and large multinational enterprises. In fact, Nitro is now serving 11,700 business customers, including 68% of the Fortune 500.

As with Bigtincan, Nitro has just released its latest quarterly update. That fourth quarter update revealed that its ARR reached US$27.7 million at the end of December. This was an impressive 64% increase on the prior corresponding period and came in ahead of its upgraded guidance.

More reading

• 2 fantastic ASX tech shares to buy in February
• Why Bigtincan, Bubs, LiveTiles, & Treasury Wine shares are storming higher
• Why the Bigtincan (ASX:BTH) share price is jumping higher today
• Why Booktopia, Nitro, Reliance, & Vulcan shares are charging higher
• Here’s why the Nitro Software (ASX:NTO) share price is surging 7% higher today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Are you looking to add a few ASX dividend shares to your portfolio in February? Then you might want to check out the two listed below.

There ASX dividend shares have both been tipped to as buys recently. Here’s what you need to know:

People Infrastructure Ltd (ASX: PPE)

The first ASX dividend share to look at is People Infrastructure. It is a leading workforce management company that provides companies with innovative solutions to workforce challenges.

In FY 2020, People Infrastructure was a strong performer, overcoming the pandemic to report a 49.2% increase in normalised EBITDA to $26.4 million.

One broker that appears confident that FY 2021 will be another strong year is Morgans. It recently put an add rating and $4.05 price target on its shares and is forecasting a dividend of 11 cents per share this year.

Based on the latest People Infrastructure share price, this will mean a fully franked 3.2% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share to look at is Telstra. With the end of the NBN rollout in sight, the company’s T22 strategy progressing very well, and 5G internet expected to boost its mobile revenues, things are looking a lot brighter for the telco giant.

In addition to this, it has recently announced provisional plans to split into three separate businesses. Management expects this to allow the company to take advantage of potential monetisation opportunities and unlock value for shareholders.

Analysts at Goldman Sachs are fans of this plan and remain positive on its outlook. The broker has a buy rating and $3.80 price target on Telstra’s shares. It is also forecasting a 16 cents per share fully franked dividend in FY 2021 and beyond.

Based on the current Telstra share price, this would provide investors with a 5.15% fully franked dividend yield.

More reading

• What to expect from the Telstra (ASX:TLS) first half result
• 2 cheap ASX shares to buy today
• 5 things to watch on the ASX 200 on Wednesday
• Experts want Big Tech to stop the spread of COVID-19 misinformation
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of People Infrastructure Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended People Infrastructure Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There may be some compelling reasons about why it may be worth looking into Bubs Australia Ltd (ASX: BUB) at today’s share price.

What is Bubs?

Bubs is primarily an infant formula business that sells products derived from goat milk. It also sells organic, gross-fed cow’s milk infant formula ranges, organic baby food, cereals and toddler snacks.

The company also recently launched ‘Vita Bubs’, which is a range of infant and children’s vitamin and mineral supplements formulated with goat milk.

It also says it’s the leading producer of goat dairy products in Australia with exclusive milk supply from the largest milking goat herds in the country.

What happened in the most recent update?

The Bubs share price rose by 23% yesterday after giving an update for the FY21 second quarter.

Bubs’ group quarterly gross revenue was $12.8 million, an increase of 36% over the first quarter of FY21, though it was down 12% on the prior year.

China cross border e-commerce (CBEC) sales were up 27% quarter on quarter and up 34% compared to the prior corresponding period.

Adult goat dairy gross revenue was up 45% quarter on quarter and up 25% against the prior corresponding period.

The Bubs infant nutrition portfolio, which represented 57% of the second quarter’s revenue, grew 27% compared to the FY21 first quarter.

The company said that Bubs Australia is the fastest growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse, with combined retail scan sales at the checkout up 41% quarter on quarter and up 67% compared to the prior corresponding period.

The company boasted that it was the leading goat infant formula brand in Chemist Warehouse.

Bubs also said that export sales to markets outside of China continue to strengthen, with sales rising 194% quarter on quarter and up 138% against the prior corresponding period.

One of the final things that Bubs said was that the corporate daigou trade channel was still softer than pre-COVID levels, but it was up 122% compared to the first quarter of FY21.

3 reasons why the Bubs share price may be interesting

1: Strong Australian store sales – In Australia, Bubs’ products are being sold in many of the largest retailers of infant formula, Coles, Woolworths and Chemist Warehouse. Indeed, Bubs has a strategic partnership with Chemist Warehouse which owns some Bubs shares. In yesterday’s update, Bubs said its sales growth in this category was 41%. Overall, Bubs said that it has seen a strong rebound in domestic sales revenue (including daigou), up 31% quarter on quarter.

2: International export markets – China is a very large addressable market for Bubs, which it is attempting to tackle with the help of Beingmate (and Alibaba). Not only was the overall Chinese CBEC sales growth strong at 35% quarter on quarter, but it achieved 174% growth of gross merchandise value on Tmall Global during ‘Double 11’.

In export markets outside of China, sales almost tripled quarter on quarter, contributing 17% of group revenue. The first shipments of Bubs infant formula and Bubs organic baby food products were exported to Malaysia during the second quarter. Bubs products are also now being sold on Redmart in Singapore and Lazada in Malaysia.

3: Secure supply chain – Bubs owns 100% of a canning facility called Deloraine which can make up to 10 million tins per year. It has exclusive access to the largest milking goat herds in the country.

Outlook

Bubs Chair Dennis Lin said: “While a degree of uncertainty exists considering the continuing COVID-19 disruption, we take the significant quarter on quarter turnaround in sales momentum as a positive indicator for the long-term.

“Importantly, we expect our total China CBEC and corporate daigou channel sales momentum to continue to reflect the ongoing Chinese consumer demand for our premium quality infant nutrition and adult goat dairy products.

“Global expansion remains a key focus with continued export sales momentum throughout the quarter. We anticipate revenue contribution from South East Asia will substantially increase with our recent launch in Malaysia building on existing business in Vietnam, Hong Kong, Macau and Singapore.”

More reading

• ASX 200 drops 2%, IOOF and Afterpay shares sink, Bubs jumps
• Why Bigtincan, Bubs, LiveTiles, & Treasury Wine shares are storming higher
• Here’s why the Bubs (ASX:BUB) share price is surging 10% higher
• Here’s why the Bubs (ASX:BUB) share price crashed 40% lower in 2020

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Thursday the S&P/ASX 200 Index (ASX: XJO) was a sea of red after having its worst day in months. The benchmark index fell 1.9% to 6,649.7 points.

Will the market be able to bounce back from this on Friday? Here are five things to watch:

ASX 200 poised to rebound

The ASX 200 looks set to rebound strongly from Thursday’s selloff. According to the latest SPI futures, the ASX 200 is poised to open the day 95 points or 1.45% higher this morning. In late trade on Wall Street, the Dow Jones is up 1.8%, the S&P 500 is up 1.9%, and the Nasdaq index is 1.5% higher.

ResMed Q2 update

The ResMed Inc (ASX: RMD) share price will be one to watch this morning when it releases its second quarter update. The market is expecting the medical device company to report another year on year jump in ventilator sales because of the pandemic. All eyes will be on how its core sleep treatment business is performing in the current environment.

Oil prices fall

Energy producers such as Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could end the week in the red after oil prices softened. According to Bloomberg, the WTI crude oil price is down 0.7% to US$52.49 a barrel and the Brent crude oil price has fallen 0.3% to US$55.65 a barrel. Demand fears and a stronger U.S. dollar weighed on prices.

Gold price softens

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price dropped lower again. According to CNBC, the spot gold price is down 0.25% to US$1,840.70 an ounce. The precious metal came under pressure after safe-haven appeal shifted to the US dollar.

Fortescue given neutral rating

The Fortescue Metals Group Limited (ASX: FMG) share price could be fully valued according to one leading broker. Analysts at Goldman Sachs have responded to its second quarter update by reaffirming their neutral rating and $19.70 price target. The broker is, however, forecasting a very attractive 11% dividend yield for FY 2021.

More reading

• ASX 200 drops 2%, IOOF and Afterpay shares sink, Bubs jumps
• Why the Fortescue (ASX:FMG) share price sank 4% lower today
• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• Up in smoke! Why ASX cannabis shares are having a bleary day
• Why the Amcor (ASX:AMC) share price is having a rough start to 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) declined by more than 1.9% today, it dropped to 6,650 points.

Here are some of the highlights from the ASX:

IOOF Holdings Limited (ASX: IFL)

The IOOF share price fell by 10.6% today after delivering its quarterly update for the three months to 31 December 2020.

IOOF announced that its funds under management, advice and administration (FUMA) fell by $0.4 billion to $202.4 billion. Management said this reflected an uplift of $12.7 billion due to market movements, largely offset by one-off negative movements of $10 billion including $8.1 billion from the termination of the BT relationship, $1.5 billion from the liquidation of IOOF’s cash management fund and a $0.4 billion one-off transfer from the cash management trust.

The ASX 200 company said that ‘financial advice’ suffered $1.3 billion of net outflows, ‘portfolio and estate administration’ received $40 million of net inflows, ‘pensions and investments’ saw $625 million of net outflows and ‘investment management’ experienced $2.2 billion of net inflows – though that included $1.9 billion of net outflows due to reinvestment simplification into external interest-bearing cash accounts delivering improved client outcomes, but the revenue differential for IOOF was negligible.

Talking about IOOF’s plan with financial advice, IOOF CEO Renato Mota said: “Advice 2.0 has resulted in changes to the way that advisers choose to utilise IOOF’s services. We have seen practices with $363 million in funds under advice choose to become self-licensed and continue to utilise services under the IOOF Group. We have also seen 22 advisers with $869 million in funds under advice transition from IOOF licences due to various reasons including some practices that we don’t view as economically sustainable under our future advice model. The financial impact of the total $1.3 billion advice outflows is not material.”

Evolution Mining Ltd (ASX: EVN)

ASX 200 gold miner Evolution Mining gave its quarterly update to 31 December 2020 today as well.

In terms of cash generation, Evolution Mining said that it made $258.9 million of mine operating cash flow. Net mine cash flow generation was $170.5 million. Group cash flow was $99.3 million.

The cashflow allowed Evolution Mining to reduce its net bank debt by $93.4 million to $86.9 million.

Its gold production increased 6% quarter on quarter to 180,305 ounces, whilst the all-in cost (AIC) declined by 5% to A$1,582 per announce, for an AIC margin of A$834 per ounce.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price went up 23% today after announcing its performance for the three months to 31 December 2020.

Bubs’ group quarterly gross revenue was $12.8 million, an increase of 36% over the first quarter of FY21, though it was down 12% on the prior year.

China cross border e-commerce (CBEC) sales were up 27% quarter on quarter and up 34% compared to the prior corresponding period.

Adult goat dairy gross revenue was up 45% quarter on quarter and up 25% against the prior corresponding period.

The Bubs infant nutrition portfolio, which represented 57% of the second quarter’s revenue, grew 27% compared to the FY21 first quarter.

The company said that Bubs Australia is the fastest growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse, with combined retail scan sales at the checkout up 41% quarter on quarter and up 67% compared to the prior corresponding period.

Bubs also said that export sales to markets outside of China continue to strengthen, with sales rising 194% quarter on quarter and up 138% against the prior corresponding period.

Other movements

With the ASX 200 being down by almost 2%, there were some big sell downs.

Some of the WAAAX shares were among the biggest fallers. The Xero Limited (ASX: XRO) share price dropped 6.3%, the Afterpay Ltd (ASX: APT) share price declined 6.2% and the WiseTech Global Ltd (ASX: WTC) share price fell 6.1%.

More reading

• 2 fantastic ASX tech shares to buy in February
• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• Up in smoke! Why ASX cannabis shares are having a bleary day
• Why Bigtincan, Bubs, LiveTiles, & Treasury Wine shares are storming higher
• Why the Amcor (ASX:AMC) share price is having a rough start to 2021

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, and WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Zebit Inc (ASX: ZBT) share price had some ups and downs today after the company announced its quarterly and half year reports. Shares in the e-commerce company went up as high as $1.13 in afternoon trade before retreating to close at $1.10, up 0.45%.

Zebit is a California based e-commerce company that enables customers to pay for products in instalments over six months.

The small cap retailer operates in both retail e-commerce and financial services. Zebit sells products as a merchant and provides the financing for its customers (via a BNPL solution) for those products over time.

What’s driving the Zebit share price?

The Zebit share price was up today on the back of its solid quarterly report ending 31 December which exceeded the prospectus forecast.

In particular, the company increased revenue by 34.2% compared to this period last year. This resulted in quarterly revenue coming in at $44.2 million. Contribution margins also climbed to 15.8%, a significant improvement compared to the 7.3% achieved during December of FY19.

Zebit reduced its bad debts metric to 9.4%. While the level is still high, it’s well below the 19.1% recorded in the prior corresponding period.

Management comments

Zebit president and CEO Marc Schneider welcomed the news, saying:

I am extremely pleased with the company’s performance and continued strong operational execution of Q4 and H2 FY20. We saw positive trends with strong revenue growth and improved credit performance.

Zebit continues to be the one-stop e-commerce solution for millions of US consumers who do not qualify for mainstream credit and need a longer duration to finance sizable purchases.

In over 30 years of operating companies, I have never seen such a strong demand and repeat usage of a product offering. The company continues to be focused on high growth in 2021.

About the Zebit share price

Zebit plans to expand its solid quarterly report by adding new products. The company is piloting an e-commerce solution for prime credit customers. This will allow them to move up the market with a differentiated product.

Listing on the ASX in October last year, the Zebit share price has returned 5.5%. In comparison, the All Ordinaries Index (ASX: XAO) has returned 10.5% over the same period.

More reading

• Why Atomos, BOD Australia, Galaxy, & Zebit shares are racing higher
• Why the Zebit (ASX:ZBT) share price is jumping 12% today

Motley Fool contributor Daniel Ewing 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.

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The Chinese state-owned Shandong Gold’s acquisition of Cardinal Resources Ltd (ASX:CDV) is just about complete.

Shandong is one of the world’s largest gold miners, and the company announced today that it now has a relevant interest in 95.62% of all Cardinal shares. Shandong will acquire all remaining shares by 3 February 2021.

Five business days later, Cardinal’s shares will be suspended and the ASX will remove Cardinal from its official list.

A fight to the finish: China and Russia duke it out over Cardinal

The path to where we are has not been straight forward. Just a few months ago, there was a public bidding war between Shandong and Russian mining giant Nord Gold S.E. over the acquisition of Cardinal Resources.

Back in September, Nord Gold put out a public offer of 90 cents a share to acquire Cardinal Resources. Shandong bid $1 and that’s what set off the war over Cardinal. 

Russia and China continued to haggle for around three months in an effort to outbid the other. Finally, at the end of December, Shandong reigned victorious with the winning offer of $1.07 a share. 

Now here we are, nearly a month later, and the deal is coming to a close.

Why won’t Canada sell to Shandong?

Meanwhile, Shandong has also been making moves to buy another gold mine located in the Canadian Arctic. However, as reported in Wall Street Journal (WSJ), the effort was blocked last month by Canadian Prime Minister Justin Trudeau.

The reason the purchase was blocked is due to growing concern about the rising influence Beijing is having in both Canada and the polar region. According to the WSJ, advice for this action came from former Canadian national security and military officials.

The Australian also mentions Canada’s concerns over national security and notes that if relations between Canada and China remain tense over this issue, it may open new opportunities for Australian coking coal exports in Beijing.

How has this impacted the Cardinal Resources share price?

The Cardinal Resources share price currently sits at $1.06 having gained around 187% over the past 12-month period. Looking at a five-year window, Cardinal Resources shares are up close to 800%.

More reading

• Here are the best All Ordinaries performers of 2020
• Cardinal (ASX:CDV) takeover battle over after winner announced

Motley Fool contributor Gretchen Kennedy 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.

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The Western Areas Ltd (ASX:WSA) share price closed over 16% lower today at $2.46, making the company one of the biggest losers on the ASX for the day. The S&P/ASX 200 Index (ASX: XJO) finished off 2.7% lower.

Western Areas is one of Australia’s top nickel producers with a current market capitalisation of approximately $811 million. Its shares came under pressure today after the company released its most recent quarterly report. Here’s a closer look at its performance for the quarter ending 31 December 2020.

Mining activity updates

Within Western Areas’ Forrestania operation there are four separate mine sites — Flying Fox, Spotted Quoll, Cosmos and Odysseus. The Flying Fox site is Western Areas first producing underground mine. According to Western Areas, it’s one of the highest grade nickel mines in the world. The mine has been operating since 2006.

At the end of the December 2020 quarter, Western Areas advised that its Flying Fox operation produced 38,255 tonnes of ore at an average grade of 2.5% nickel for 939 nickel tonnes.

The Spotted Quoll mine was discovered by Western Areas in 2007. The company estimates it currently has a mine life exceeding six years, based on reserves. Spotted Quoll produced 86,204 tonnes of ore at an average grade of 3.0% nickel for 2,579 nickel tonnes during the period.

The other two sites, Cosmos and Odysseus, both received capital injections during the period as the company continues to expand and develop its programmes. In total, $35.6 million was invested in the Forrestania operation during the December quarter.

Financial position

Western Areas finished off the December quarter with a cash total plus nickel sales receivables and liquid assets totalling $168.6 million. This is around $12 million less than the preceding quarter.

‘Cash at bank’ was $98 million at the December quarter end. This compares to $120.3 million in the quarter prior.

The company attributed the spending increase to a few different events across the quarter, including the $18 million spend on the Odysseus Mine development and shaft haulage infrastructure construction.

Additionally, the company paid $13.4 million toward mine development and capital expenditure at its Forrestania site. It spent $4.3 million on exploration and feasibility expenditures, and $2.1 million went to FY20 final dividends.

Today’s steep plummet puts the Western Areas share price at $2.46, down more than 7% on this time last year.

More reading

• These ASX stocks just got a big upgrade on the back of Tesla (NASDAQ:TSLA)
• These are the 10 most shorted shares on the ASX

Motley Fool contributor Gretchen Kennedy 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.

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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.

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.

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