@minval
You wrote;
I understand future projects and being at the leading edge in IO technology are important but the core IO business has to be financially robust and credible to support future development and share price growth.
I don't know if what you mean by "financiallly robust" fits in with Fortescue's underlying net profit after tax (NPAT) of US$5.5 billion for FY23.
Last quarter Fortescue highlighted a strong cashflow generation contributed to their cash balance of US$4.9 billion and net debt of US$0.5 billion at 30 June 2024. This is after capital expenditure of US$2.9 billion in FY24.
Their FY25 guidance for total shipments of 190 - 200Mt, including 5-9Mt from Iron Bridge (100 per cent basis) and a C1 cost for Pilbara Hematite of US$18.50 - US$19.75/wmt.
You do realise that the IO game is cyclical yeah, there's going to be ups and downs, but when you stretch things out a bit, it all looks perfectly ok to me. More importantly, Fortescue have the financial discipline and experience to ride these waves, they've proven it time and time again.
Fortescue have entered a whole new playing field now, and they're showing FIRST HAND what can be achieved and proven to work in-house. It's what is taking place in-house that people are not putting too much attention on, but I am.
Another thing that traders put little to no attention on is that Fortescue's in-house decarbonisation fully costed plan over the next 5.5 years is going to save them US$818 million per annum in net operating cost from 2030, at prevailing market prices of diesel, gas and Australian Carbon Credit Units.
Cumulative operating cost savings of US$3 billion by 2030 and payback of capital by 2034, at prevailing market prices.That will mean that their US$6.2bn capex will only cost them US$3bn thereabouts.
As I've highlighted numerous times now, that expenditure will be between FY24-28 and that maximum annual expenditure will be US$1.5bn. Note, that expenditure has already started this year. FY25, FY26, and FY27 will be where the higher amounts will be spent but they've outlined the maximum expenditure.
BUT, it's what offsets that expenditure in the next five years that matters to me. I don't see a big contribution this FY24 (too early they've just gotten off the ground this past year) from the sub-sectors businesses that they're already building customers/contracts with, but come next year I do. And get this, their in-house decarbonisation plan will have a dual commercial effect on the overall business going forward.
Tony
(20min delay)