Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — JP Morgan Global High Yield & Leverage Finance Conference 2020
28 slides from Fortescue's conference presentation, Feb 26, 2020
Slide 1: JP Morgan Global High Yield & Leverage Finance Conference
For personal use only JP Morgan Global High Yield & Leverage Finance Conference February 2020 Global force Thriving communities
Slide 2: Important Notice
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 presentation contains certain statements w
Slide 3: Integrated mine to market infrastructure
Integrated mine to For personal use only market infrastructure Delivering sustained operational efficiencies 3
Slide 4: Video
For personal use only Video
Slide 5: 1H20 Highlights
1H20 Highlights For personal use only 88.6 million tonnes US $80 /dmt Shipped Realised price US $4.2 billion US $2.5 billion Underlying EBITDA Net profit after tax (NPAT) A US $0.76 per share $0.7billion Fully franked interim dividend Net debt at 31 December 2019 5
Slide 6: Financial results
For personal use only results Financial 6
Slide 7: 1H20 Highlights: Generating strong earnings
1H20 Highlights For personal use only Generating strong earnings 65% EBITDA margin Revenue (US$m) Underlying EBITDA (US$m) NPAT (US$m) 4,414 4,228 • Delivering strong results 6,425 6,485 2,543 2,453 3,540 1,633 644 1H19 2H19 1H20 1H19 2H19 1H20 1H19 2H19 1H20 7
Slide 8: Price and margins
Price and margins For personal use only Strong underlying EBITDA margins through all market cycles US$/dmt 100 80 60 40 20 17 24 33 27 24 17 21 57 53 0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 Underlying EBITDA margin Avg Underlying EBITDA 62 Platts CFR Index 8 Fortescue realised price Avg Forte
Slide 9: Cashflow
Cashflow For personal use only Strong free cash flow and investment in growth Net cash from operations Capital expenditure Free cash flows (US$m) (US$m) (US$m) 852 3,426 3,114 2,909 2,262 531 517 948 417 1H19 2H19 1H20 1H19 2H19 1H20 1H19 2H19 1H20 9
Slide 10: Credit metrics
Credit metrics For personal use only Target investment and credit metrics Gearing % Debt maturities profile (US$m) Target 30 – 40 % (Gross debt) (excluding leases) 69% 71% 56% 56% 45% 31% 62% 29% 750 750 49% 38% 21% 24% 16% 5% FY12 FY15 FY16 FY17 FY18 FY19 1H20 600 600 Net gearing Gross gearing 500
Slide 11: Capital allocation
Capital allocation For personal use only To date, Fortescue has generated NPAT of US$17bn and allocated US$9bn of capital to debt repayment and US$6bn to dividends Capital allocation to debt and dividends Cumulative Allocation of NPAT: FY05-HY20 US$m US$m 4000 18,000 3000 13,000 2000 8,000 1000 3,00
Slide 12: Integrated operations and marketing
For personal use only Integrated operations and marketing 12
Slide 13: Fully integrated supply chain
Fully integrated supply chain For personal use only Supported by a culture of innovation 13
Slide 14: Direct customer engagement driving deep market insights
Direct customer engagement For personal use only driving deep market insights A product mix that meets customers’ needs Aligning delivery with Marketing customers’ needs Ongoing operation and Responsive to marketing collaboration changing markets Co-location of key decision makers 14
Slide 15: Crude steel production
Crude steel production For personal use only China Monthly Crude Steel Output 95 Strong growth in China’s 90 85 crude steel production Million tonnes 80 75 996 million tonnes in 2019 70 65 8.3% increase compared to 60 2018 55 50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2018 2019 Source:
Slide 16: Enhanced product mix
Enhanced product mix For personal use only Average realised price of US$80/dmt for 1H20 Product mix optimisation delivers value: Tonnes shipped Product Mix Product Mix West Pilbara Fines well millions (wmt) 1H20 % 1H19 % established West Pilbara Fines 9.0 10 0.4 0 Kings Fines 7.6 9 6.7 8 Fortescue L
Slide 17: Sustainability
For personal use only Sustainability 17
Slide 18: Setting high standards
Setting high For personal use only standards Safety, diversity and integrity TRIFR 2.5 Social Change Improved by 38% from 1H19 Building strong communities 19% UN Framework Female employment Convention on Climate Change 18
Slide 19: Growth and development
For personal use only Growth and development 19
Slide 20: Eliwana project
Eliwana project For personal use only US$1.275 billion capital investment Progressing on schedule and budget Infrastructure Efficient design 143km rail; 30mtpa dry OPF Significantly smaller footprint compared to Firetail OPF Rail license granted Rail fleet Enabling construction and operation 126 ore
Slide 21: Iron Bridge Magnetite Project
Iron Bridge Magnetite Project For personal use only $2.6 billion investment delivering enhanced returns to shareholders and JV partners 22 mpta 67% Fe First ore on ship mid-2022 Low impurity premium concentrate product Design and procurement Bulk earthworks advanced commenced 21
Slide 22: Investing in growth
Investing in growth For personal use only Eliwana Mine and Rail (US$m) Iron Bridge Magnetite (US$m) Pilbara Energy Connect (US$m) 700 - 800 1,200–- 1,300 1,200 1,300 350 - 400 Disciplined allocation to core business, innovation and growth 250 - 300 350 - 450 400 - 500 300 - 400 50 FY20 FY21 FY22 FY2
Slide 23: World class exploration
World class exploration For personal use only Opportunities will be driven by market demand across iron ore and other commodities Pilbara Extensive tenement footprint Australia NSW 3,000km2 tenure SA 15,000km2 tenure South America Ecuador, Argentina, Colombia 23
Slide 24: Guidance
For personal use only 170-175mt FY20 Shipments expected to be at the upper end of range Guidance US$12.75-$13.25 C1 cost / wmt US$2.4 billion Capital investment 24
Slide 25: Key strategic focus
For personal use only Key strategic focus Balance sheet Long term strength sustainability Growth and Enhanced returns development to shareholders 25
Slide 26: For personal use only
ae > a om ~ J Our 7 } atd he f\ e °@ - Ni S re] n 7 << 4 Renesas ~The safest, lowest “cost, most profitable / ¢ } | f it —nining company. S (©) “Fortescue’s Values =e
Slide 27: For personal use only
For personal use only
Slide 28: Glossary
Glossary For personal use only C1 - Operating costs of mining, processing, rail and port on a per tonne basis, Underlying EBITDA - Earnings before interest, tax, depreciation and amortisation, including allocation of direct administration charges and production overheads. exploration, development an
Fortescue Metals Group — JP Morgan Global High Yield & Leverage Finance Conference 2020 on 6ix