FMG share price rises 2.65% following ‘strong start’ to FY20
FMG today provided commentary on its first quarter performance for the 2020 fiscal year. Its share price rose in response.
It was a good start to FY20 by the looks of things.
Prior to today’s release, bullish activity around the stock saw the Fortescue Metals Group share price rise 5.58%, over the last five trading sessions. And when the market opened today, FMG’s share price rose another 2.18% in the first 15-minutes of trade. General market optimism likely helped, with the ASX 200 also up 39.1pts.
Overall, the first quarter production report shows that Fortescue Metals Group (ASX: FMG) has maintained its world-class cost profile, that shipments were up on a YoY basis (but down QoQ) and that net debt has been lowered significantly in the last quarter.
The broad strokes
FMG’s key metrics all moved well, with Q1 iron ore shipments coming in at 42.2mt, a shade ahead of the average analyst estimate of 42.0mt, according to Bloomberg News. In saying that, while shipments were up on a year-over-year basis (+5%), they were actually 9% lower than in FY19’s fourth quarter.
Ore mined was also lower on a YoY and QoQ basis.
Even so, like iron ore shipments, C1 costs also beat expectations – hitting $12.95 per wmt – compared to the $13.25 per wmt consensus – based on three estimates and according to Bloomberg News.
The top-line view also looks promising for the pure play iron ore miner, with Fortescue’s management commenting that the ‘average revenue received of US$85 per dry metric tonne (dmt), [was] 89 per cent higher than Q1 FY19 of US$45/dmt.’
Net debt has also steadily fallen, finishing the period out at $500m. This compares favourably to the June 2019 period, where net debt stood at $2.1bn.
Speaking to these reductions, Fortescue’s savvy Chief Executive Officer, Elizabeth Gaines, commented that:
‘The combination of operational performance and realised price has generated exceptional operating cashflows and lowered net debt to US$0.5 billion at 30 September 2019. This has provided the capacity to further strengthen the balance sheet through debt reduction and refinancing of the Term Loan on improved terms.’
FMG also used today’s media release to reiterate its FY20 guidance: citing an iron ore shipment range of between 170-175mt, average C1 costs of between $13.25 – $13.75 per wmt and noted that full-year CAPEX was expected to reach $2.4bn.
FMG share price: analysts look uncertain
Regardless of these production and operational achievements, the macro background remains a challenging one – with concerns of a volatile iron ore price in the medium-term still bubbling below the surface. Such a view looks well reflected in the current analyst consensus.
Here, seven analysts rate FMG a buy, while five and ten rate it a hold and a sell respectively, according to Bloomberg News.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.