Fortescue 1Q25 Earnings Call Highlights

Fortescue (ASX: FMG) shares dipped around 3% after its September quarter update flagged lower-than-expected iron ore shipments at higher costs.

September Quarter Summary

Fortescue's first quarter shipments and C1 cost missed consensus expectations of 48.2Mt and US$19.2 a tonne.

• Iron ore shipments of 47.7Mt, up 4% compared to a year ago

• Hematite C1 cost of US$20.1/wmt, up 12% amid higher strip ratio and inflationary pressures

• Hematite average revenue of US$83/dmt, realising 83% of the average Platt's 62% CFR Index

• Cash of US$3.4 billion and net debt of US$2.1 billion

• Signed a US$2.8 billion partnership with Liebherr to jointly develop and validate a range of zero emission mining solutions

• Guidance for FY25 shipments, C1 cost and capex remains unchanged

Quarterly Briefing Highlights

The below topics have been answered by CEO Dino Otranto, CEO Mark Hutchinson and CFO Apple Paget.

Strip ratios and weather changes: "Hematite C1 cost was $20.16 per tonne. Now that was up 12% on 1Q24. It was impacted by a higher strip ratio in the quarter, together with some inflationary pressures."

FY25 guidance: "... guidance for FY 2025 shipments, C1 cost, and capital expenditure remains unchanged."

Green Iron Metal Project: "... a feasibility study assessing approximately 1 million tonne per annum Green iron metal project in the Pilbara is proposed to kick off next year."

FID for Green Projects: "Work continues on our four green hydrogen projects in Australia, the United States, Norway, and Brazil in particular feasibility studies continue to advance."

Electric trucks: "We made tangible progress towards transitioning Fortescue's diesel mining fleet to a zero-emission fleet, equipment partnerships were signed at Minexpo with Liebherr and MacLean."

Analyst Q&A Highlights

Why has the strip ratio increased so much: "Q1 was impacted by unseasonable weather impacts and sequence changes, resulting in more waste moved and less ore mined relative to recent quarters. This is a timing impact with no change to the outlook, as you mentioned, into FY25. So the full year, as you may recall, we've indicated approximately 1.8."

Explain the price realisation of 97% relative to the Platt's 65% index, considering Iron Bridge is 67% Fe content: "Our realisations, as you've mentioned, weren't in line with what we were expecting. A couple of factors changed recently — low steel volumes, depressed margins, and a slight oversupply of the concentrate market in China caused that. We have seen improvements in the last few weeks with better concentrate inventories and good movement on that product."

Is the underperformance of Iron Bridge due to the timing of sales or contractual price, or impurities in the product: "There are no issues with the quality of the product; it’s meeting and exceeding expectations. The dominant issue is the oversupply of concentrate, not impurities."

Will electric trucks impact production, volume or costs: "We don't anticipate any change at all in production profile. That's the name of all of the game ... We'll take that on note and take you through one of them at the next Investor Day."

Market strategy in China: "Iron Bridge is a different type of product that has a broader appeal ... clearly it does appeal to steelmakers outside of China as well as in China."

Why not eliminate lower-priority endeavors: "Exploration spend doesn't consume a lot of management time ... we’ve got some prospective targets in Latin America we’re excited about."

This article was generated with the support of AI and reviewed by an editor.