Fortescue Ltd (ASX: ASX:FMG) has reported a noteworthy performance in its fourth-quarter update, yet the company's shares have faced a decline of 4% to $20.43 on Wednesday morning. This drop follows the release of the miner's latest operational results, which, despite showing strong performance metrics, have led to some market disappointment.
For the three-month period ending June 30, Fortescue, an ASX-listed mining stock, achieved a record iron ore shipment of 53.7 million tonnes (Mt), surpassing market expectations. This represents a 10% increase compared to the same period last year. The company’s performance for the quarter exceeded earlier forecasts, including predictions from major financial institutions, which had estimated shipments of around 51.6 Mt. For the entire fiscal year 2024, Fortescue’s total iron ore shipments reached 191.6 Mt, slightly down from the 192 Mt recorded in the previous year.
In terms of revenue, Fortescue reported a Pilbara Hematite average revenue of US$92 per dry metric tonne (dmt) for the quarter, which equates to 82% of the average Platts 62% CFR Index. This was a notable achievement given the fluctuating market conditions. Over the full fiscal year, the average revenue stood at US$103 per dmt.
Fortescue's cost management remains robust, with the Pilbara Hematite C1 cost reported at US$18.53 per wet metric tonne (wmt) for the fourth quarter, and US$18.24 per wmt for the fiscal year. This efficient cost management contributed to a strong cash flow during the quarter, leading to a substantial cash balance of US$4.9 billion. The company's net debt stood at US$0.5 billion as of June 30, 2024, following a capital expenditure of US$2.9 billion throughout the fiscal year.
The company’s CEO, Dino Otranto, expressed satisfaction with the quarter’s performance, emphasizing that the results were achieved despite operational challenges. Otranto highlighted the record iron ore shipments and improvements in safety, noting a significant 28% improvement in the Total Recordable Injury Frequency Rate, which dropped to 1.3 for the financial year. He praised the team for their efficiency and resilience, particularly in the wake of disruptions such as the ore car derailment that occurred in December 2023.
Looking forward to fiscal year 2025, Fortescue is optimistic about its growth prospects. The company has set an ambitious goal to achieve record shipments ranging between 190 and 200 Mt. Additionally, it anticipates maintaining a C1 cost for Pilbara Hematite within the range of US$18.50 to US$19.75 per wmt. The company is also focusing on streamlining its structure and removing duplication as part of its strategy to ensure operational efficiency and capitalize on future opportunities.
Despite the impressive operational achievements and a strong financial position, Fortescue's shares have seen a 30% decline since the start of the year. The recent drop in share price suggests that market reactions are influenced by a range of factors beyond the company's operational performance.