Fortescue Ltd. FSUGY reported underlying earnings per share of $1.85 for fiscal 2024 (ended June 30, 2024), up 3% from $1.80 in fiscal 2023.
Underlying net income was $5.68 billion, up 3% from fiscal 2023, driven by an increase in average hematite prices. It was the third-highest earnings in Fortescue’s history.
FSUGY’s Revenues Rise on Higher Prices
Operating revenues rose 8% year over year to $18.2 billion. The figure, however, missed the Zacks Consensus Estimate of $18.3 billion.
Fortescue reported shipments of 191.6 million tons (Mt), flat with the prior fiscal. Hematite average prices rose 9% year over year to $103.01 per dry metric ton (dmt).
Fortescue’s EBITDA Increases 7%
Hematite C1 costs (unit operating costs of mining, processing, rail and port, including allocation of direct administration charges and production overheads) were $18.24 per wet metric ton (wmt), 4% higher than fiscal 2023. Higher labor rates and mine plan-driven cost escalation led to higher costs. Fortescue’s continued focus on cost control offset some of the impact.
Fortescue’s underlying EBITDA was $10.71 billion, up 7% from $9.96 billion in the last fiscal year as higher revenues offset the increase in costs. The underlying EBITDA margin was 59%, in line with fiscal 2023.
FSUGY’s Cash Position in FY24
Net cash flow from operating activities was $7.9 billion compared with $7.4 billion in fiscal 2023. Free cash flow increased 16% year over year to $5.1 billion, the second highest in the company’s history. Fortescue ended fiscal 2024 with cash on hand of $4.9 billion and net debt of $0.5 billion.
Fortescue declared a final dividend of AUD$0.89 per share (60 cents). Including its interim dividend, the total dividend declared for fiscal 2024 is AUD$1.97 ($134), translating to a 70% payout of FSUGY’s net profit after tax. This is consistent with its target of maintaining a payout in the range of 50- 80% of net profit after tax.
Fortescue’s Guidance for FY25
Fortescue projects iron ore shipments to be in the range of 190-200 mt on a 100% basis. C1 cost for hematite is projected to be between $18.50 and $19.75 per wmt.
Fortescue’s Peer Performance
BHP Group BHP reported a 2% year-over-year increase in underlying attributable profit from continuing operations at $13.7 billion for fiscal 2024 (ended June 30, 2024). BHP’s underlying earnings per share were $2.70 compared with $2.65 in fiscal 2023. Earnings per American Depositary Share were $5.39, higher than $5.30 in the previous fiscal year.
The growth was driven by higher prices and sales volumes in BHP’s iron ore and copper operations, productivity initiatives, cost discipline and favorable raw material costs. This offset the impact of lower energy coal and nickel prices and higher labor costs on profits. Revenues for fiscal 2024 totaled $55.7 billion, 3.4% higher than the prior fiscal year.
Price Performance of FSUGY Stock
In the past year, shares of Fortescue have fallen 5.9% compared with the industry’s 4.5% decline.
Image Source: Zacks Investment Research
FSUGY’s Zacks Rank & Stocks to Consider
Fortescue currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS and IAMGOLD Corporation IAG. CRS and IAG sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.06 per share. The consensus estimate for earnings has moved 17% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS shares have gained 102.5% year to date.
The consensus estimate for IAMGOLD’s 2024 earnings is pegged at 39 cents per share. The consensus estimate for earnings has moved 44% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG shares have gained 104% so far this year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
