While Fortescue Metals will report another huge year in terms of revenue and profits next month for the year to June, that could be the peak.
Fortescue said yesterday that it hit records for iron ore shipments in the three months to June and in the 2019-20 financial year.
Exports rose 11 million tonnes or 6% from 2018-19 to 178.2 million for the year to June – that was just above the upper end of guidance of 177 million.
But the overall average price for all its exports leapt 21.5% to $US79 a tonne from $US65 a tonne.
The combination of the 6% rise in shipments and the 21.5% jump in average price will see total revenue top $US14 billion for the year to June or more than $A20 billion in 2018-19.
No wonder Fortescue shares hit another record high yesterday of $17.59. The shares ended the day up 4.1% at $17.55.
But it is doubtful the current year will see a similar surge unless prices go mad and jump another 20% which is highly unlikely given the weakness in the global and Chinese economies.
Analysts say shareholders can look forward to a big final payout to take the total for the year above the $1.14 a share in 2018-19 which included a 30 cents a share special payment to use up surplus franking credits.
Fortescue paid an interim of 76 cents a share and a final last year of 24 cents a share.
Fortescue’s 2020-21 forecast for the new financial year calls for no real improvement.
The forecast for the year to June 2021, issued in yesterday’s June quarter and full-year production and sales report, calls for shipments of 175 million to 180 million tonnes of ore.
That is little different to the 2019-20 forecast of 177 million and eventual outcome of 178.2 million tones, up 6% from 2018-19’s then record.
The new high for the year was only reached by Fortescue boosting shipments to a record 47.3 million tonnes in the June quarter (BHP and Rio Tinto also boosted June quarter shipments).
Fortescue CEO Elizabeth Gaines said the company was proud that its elevated sales of iron ore were helping to support Australia’s economy as it struggles through the coronavirus crisis.
“This was an outstanding performance which underpinned the operational excellence we delivered in the 2020 financial year, particularly during a quarter when we implemented a range of measures in response to COVID-19,” she said.
Like its rivals, BHP and Rio, Fortescue boosted shipments in June in particular as global iron ore prices climbed above $US110 a tonne and remained there.
Prices have stayed above $US100 a tonne for all of July and on Wednesday rose 3.6% or nearly $US4 to top $US110 a tonne for 62% Fe fines delivered to northern China.
Capex for the current financial year has been estimated at $US3.0 – $US3.4 billion “including investment in growth projects and energy infrastructure. The forecast investment in the Eliwana Mine and Rail Project is revised to $US1.325 – $US1.375 billion (from $US1.275 billion).
That’s up more than 50% from $US2 billion in 2019-20.
The company had cash on hand of $US4.9 billion on 30 June 2020 and net debt of $US300 million.