Weak performance in FY 18: Fortescue Metals Group Limited’s (ASX: FMG) stock edged up 0.594% on August 20, 2018 (before market close) after falling initially while the company reported weak performance in FY 18 with 58% fall in annual profit after tax to $878 million on the back of declining prices and demand for its iron ore from China. The underlying EBITDA fell by 33% and the underlying net profit after tax fell by 49% to $1080 million in 2018. C1 operating costs fell to average US$12.36/wmt in FY18, which is a four per cent reduction compared to FY17.
The company has posted US$0.5 billion reduction in debt and restructured the terms to the investment grade. The company has declared total FY18 dividends of A$0.23 per share, which represents a dividend payout ratio of 62 per cent of net profit after tax. The company’s cash on hand at 30 June 2018 is US$863 million. Additionally, for FY 19, the company expects 165-173mt in shipments, capex to be $1.2 billion and C1 cost to be in the range of US$12-13.00/wmt. A 60% iron content product, named West Pilbara Fines, is expected to be produced in the second half of FY19 in advance of the development of the Eliwana mine and rail project. In 2019, the company will maintain dividend pay-out ratio at 50 to 80 per cent of net profit after tax of full year earnings. Therefore, FMG stock has fallen 14.08% in three months as on August 17, 2018 and is trading at a P/E of 6.87x.
FY 18 Financial Performance (Source: Company Reports)
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