Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — H1 FY2013 Earnings Presentation
31 slides from Fortescue's earnings presentation, Feb 20, 2013
Slide 1: Half Year 2013 Financial Results
For personal use only Half Year 2013 Financial Results Investor Presentation February 2013
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This presentat
Slide 3: Company overview
For personal use only Company overview 3
Slide 4: Fortescue
Fortescue World’s 4th biggest seaborne exporter For personal use only Strong culture delivers record results 35.7mt Top 20 ASX listed company record shipped in 1H13 8.5mt shipped in Dec 2012 12bt resource 100 mtpa mtpa December run rate 155 target 4
Slide 5: A differentiated model
A differentiated model Delivering results For personal use only Culture Fortescue’s unique culture is the key Relationships Direct relationships with sub contractors and local suppliers China Leveraging China’s growth and manufacturing capability Speed Speed of delivery – time is money Planning Plan
Slide 6: Highlights
Highlights Half Year FY2013 For personal use only • Record production results with 35.7mt shipped • Key expansion milestones delivered • Kings development resumed • Continuing safety improvement TRIFR decreasing 17% • US$5.0bn refinancing completed • Significant progress in asset sale process 66
Slide 7: 30%+ growth across all areas
30%+ growth across all areas Continuing growth trajectory over FY2013 For personal use only Mining Processed Port Ore Mined (wmt) Ore Processed (wmt) Total Ore Shipped (wmt) 40.0 40.0 40.0 35.0 35.0 35.0 30.0 30.0 30.0 Million tonnes Million tonnes Million tonnes 25.0 25.0 25.0 20.0 20.0 20.0 15.0 1
Slide 8: Operations taking us to new levels
Operations taking us to new levels FY2013 is a year of incredible ramp up For personal use only 210mt shipped since 2008 20mtpa Firetail April 2013 Christmas 115mtpa ramp Creek 2 up run rate April 2013 100mtpa 155mtpa December 2013 run rate December 2012 88
Slide 9: Financials
For personal use only Financials 9
Slide 10: Financial Summary
Financial Summary Half Year FY2013 For personal use only • Revenue of US$3.3bn and EBITDA of US$1.1bn • Net profit after tax of US$478m • Tax US$263m and royalties US$194m paid • Refinancing US$5.0bn 10 10
Slide 11: EBITDA analysis
EBITDA analysis Increased volumes offset market volatility impact For personal use only 2,500 476 1,018 2,000 EBITDA variance (US$m) 1,534 1,500 156 1,134 10 7 26 43 1,000 500 - 1HFY12 Volume Price Costs Royalty Loan note Fx Other 1HFY13 re-estimation 32% increase in production offset by 42% decreas
Slide 12: Operating margins support
Operating margins support Fortescue’s average realised selling price and C1 costs For personal use only $200 $146 $150 $127 $127 US$/wmt $114 $100 $74 $96 $100 $57 $65 $45 $77 $44 $28 $64 $58 $32 $22 $22 $20 $18 $50 $8 $18 $24 $22 $21 $24 $19 $50 $48 $49 $50 $34 $39 $23 $26 $27 $0 1H2009 2H2009 1H20
Slide 13: Earnings analysis
Earnings analysis Half Year FY2013 For personal use only Return on equity maintained despite 61% 50% slide in 1H13 price 34% 1HFY12 2HFY12 1HFY13 Return on Equity Employed Earnings & cash flow per 52.1 38.1 share impacted by price, 25.7 24.4 volume and tax payments 15.4 15.4 1HFY12 2HFY12 1HFY13 EPS
Slide 14: Cash savings
Cash savings Half Year FY2013 For personal use only • Delivering on operating cost savings of $300m in FY2013 • Sustainable savings + $200m per annum • 4% cash cost reduction in Q2 v Q1 through ramp up • Continued focus on cash management through expansion phase 14 14
Slide 15: Capital Expenditure
Capital Expenditure Half Year FY2013 For personal use only FY2011 FY2012 FY2013 FY2014 US$bn Actual Actual Forecast Indicative 155mtpa expansion 0.5 4.1 3.8 0.6 Operational capital 0.3 0.9 0.9 0.7 Other capital projects 0.6 0.3 0.2 0.3 Exploration 0.3 0.4 0.1 0.1 Fleet ‐ 0.4 1.3 0.2 Total 1.7 6.1 6.
Slide 16: Simplified debt capital structure
Simplified debt capital structure Increased flexibility with new debt maturity schedule For personal use only $5.0 $4.5 $4.0 NO DEBT REPAYMENT $3.5 until November 2015 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 CY2012 CY2013 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022 Senior Secured Credi
Slide 17: Capital management
Capital management Half Year FY2013 For personal use only • Flexible debt maturity profile • Continued drive to reduce operating costs • Disciplined capital allocation to key projects • De-gear balance sheet • Adopt a profit payout ratio dividend policy 17 17
Slide 18: Market
For personal use only Market 18
Slide 19: Long term confidence in China
Long term confidence in China Lower growth rates but still strong in absolute volumes For personal use only • Strong underlying economy >7% GDP growth • New leaders committed to growth • Urbanisation & infrastructure driving steel demand • Targeted infrastructure stimulus packages • Short term steel
Slide 20: China steel intensity below global averages
China steel intensity below global averages Developed economies have spent 40+ years consuming more than 500kg of For personal use only steel per person – China is yet to reach this level Steel Intensity & GDP 1850-2012 (smoothed) kg/capita 1,400 Korea 1,200 1,000 Taiwan 800 Japan 600 Germany China
Slide 21: Strong rebounds follow price drops
For personal use only $80.00 $100.00 $120.00 $140.00 $160.00 $180.00 $200.00 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Strong rebounds follow price drops Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 History shows price volatility Apr-12 May
Slide 22: Clear strategy
Clear strategy For personal use only • Deliver 155mtpa • Reduce debt • Incremental growth • Costs and efficiency 22
Slide 23: Moving down the global cost curve
Moving down the global cost curve Targeting bottom quartile For personal use only 200 Domestic Chinese Ore Australia Brazil US$/dry tonne CFR equivalent India 150 South Africa Other Firetail & Kings to reset the cost base 100 50 0 0 100 200 300 400 500 600 700 800 900 1,000 Cumulative mt (wet, as de
Slide 24: Flexible design for future growth
Flexible design for future growth Fifth berth approved For personal use only Fortescue * 120mtpa minimum guaranteed allocated priority capacity 24 24
Slide 25: Fortescue's dominant Pilbara land position
Fortescue’s dominant Pilbara land position For personal use only Fortescue: 85,000km2 Rio: 14,230km2 BHP: 8,195km2 25
Slide 26: Resource portfolio sets expansion platform
Resource portfolio sets expansion platform To leverage existing assets for low cost growth For personal use only 16,000 Annualised growth of 14,000 1.5bt 5,205 Mineral Resources (Mt) 12,000 per annum 3,236 10,000 2,465 2,013 8,000 2,013 1,032 624 624 624 1,230 6,000 1,230 3,247 3,070 3,070 2,860 4,0
Slide 27: Supporting the community
Supporting For personal use only the community 27
Slide 28: Making a difference
Making a difference Fortescue is changing lives through training and employment For personal use only Direct Aboriginal 426 employees 11.2% Aboriginal people in Fortescue workforce 350 Aboriginal people employed by contractors $618m Contracts to Aboriginal contractors VTEC Operating in Roebourne and
Slide 29: Delivering on targets
Delivering on targets For personal use only Strong financial results Expansion to 155mtpa Deleverage following expansion Flexible incremental growth Unique culture drives performance 29
Slide 30: Proudly supporting
For personal use only Proudly supporting: Sign up to alerts online: www.fmgl.com.au
Slide 31: Glossary
Glossary Definition of non-IFRS terms For personal use only EBITDA = profit before income tax adjusted for depreciation and amortisation, net finance expenses and refinancing costs Return on equity = profit for the year after income tax divided by total equity Cash flow per share (CFPS) = net cash i
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