All about green H2
FY22 result
Need To Know
- Final dividend 121cps fully franked, payment date 29 September
- FY22 EBITDA US$10,561m -35% on pcp as lower iron ore price -25% on last year
- Free cash flow US$3.6bn on capex of US$3.1bn (guidance US$2.7-3.1bn FY23f)
Investment implications
FMG FY22 earnings largely known from production report, so no major surprises. FY22 dividends totalled A$6.4bn, net yield 10.2%.
Iron ore price: Subtracted US$6bn from EBITDA this year after adding US$9bn in FY21. Average realised price of US$100/dmt in FY22 down 25% on FY21. Outlook uncertain, depends on Chinese steel production profile.
C1 costs (Mining, rail and port): US$15.91/wmt in FY22, guiding to US$18-18.75/wmt in FY23f.
Balance sheet: Very strong with net debt US$0.9bn, gearing 0.1x.
Capex: Guidance as per 4Q22 production report US$2.7-3.1bn includes US$2.1-2.4bn on operational and hub development spending.
FFI: Appointed Mark Hutchison as CEO, total FY22 spend US$534m including US$148m capex. FMG allocating 10% of earnings to FFI, cumulative available funding now up to US$1.1bn on that basis.
The Executive Chairman is determined to become the Saudi Arabia of green hydrogen. What will it cost FMG shareholders?
This commentary reflects our initial view. For detailed reports for companies under Sandstone Insights coverage, see our latest research notes for our investment view and specific risks associated with investing in these companies.
FIGURE 1: RMG EBITDA
Stock overview
Share Price
Company overview
FMG is a West Australian iron ore producer. Its Pilbara operations produced 182mt of iron ore in FY21. FFI is aiming to produce 15mt of green hydrogen annually by 2030 to align with the strategy of achieving carbon neutrality by 2030.
Disclaimers and Disclosures
Issuer
The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").
Reliance
Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.
General Advice
Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs.
General Disclosures
This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au.
Currency of Research
The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.
Access and Use
Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.
Equities Research Methodology
Please click here for information about MST equities research methodology.
Related Reports
Now for the hard part
FY23 result. An extraordinary year for PLS in terms of the cash and earnings generated by the combination of higher production and elevated commodity prices.
Milling about
A record year of cash earnings has prompted the Board to extend the buyback and lift the final dividend for shareholders.
Backyard cookup
Mineral Resources has effectively swapped out the downstream China risk to develop lithium battery chemicals with a more domestic pathway forward. This is likely to take longer and perhaps may rely on government support.