Slide 1: 2012 Full Year Results
For personal use only 2012 Full Year Results 23rd August 2012
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: Highlights
Highlights For personal use only • Continuing safety improvement; injury frequency rate TRIFR down 36% • Record operational result with 55.8 million Fortescue tonnes shipped • Construction advances for near term delivery of mine, port and rail expansions • US$5.0 billion in capital raisings confirms
Slide 4: Operations + 30% growth across all areas
Operations + 30% growth across all areas Continuing growth trajectory over FY13 For personal use only Mining Processed Port Ore Mined (wmt) Ore Processed (wmt) Total Ore Shipped (wmt) 70.0 60.0 60.0 60.0 50.0 50.0 50.0 46% 33% 41% Million tonnes Million tonnes Million tonnes 40.0 40.0 40.0 30.0 30.0
Slide 5: Financial summary
Financial summary For personal use only • Record revenues of US$6.7bn and EBITDA of US$3.0bn • Net profit after tax of US$1.6bn • Tax expense of US$704m and no MRRT obligation • Final fully franked dividend of A$0.04 per share declared. Total 2012 dividends declared A$0.08 per share, fully franked.
Slide 6: EBITDA analysis
EBITDA analysis For personal use only EBITDA Variance (US$m) • Volume benefits offset by lower index prices • Higher costs from Christmas Creek ramp up, strip ratio and strong AUD 6
Slide 7: Net profit after tax – key impacts
Net profit after tax – key impacts For personal use only Record net profit after tax of US$1.6bn includes: • Depreciation increase to US$267m as expansion assets commissioned • Reduction in loan note of US$156m on lower forecast iron ore prices • Net finance expenses of US$505m 7
Slide 8: Earnings analysis
Earnings analysis For personal use only 52.1% 50.3% 49.9% Return on equity • Sustained ~ 50% ROE 2010 2011 2012 Earnings and cash flow 89.3 90.2 per share (US$) 50.1 42.0 • 52% increase in earnings 32.9 per share 18.9 • Consistency in cash flow 2010 2011 2012 per share EPS CFPS 8
Slide 9: Tax
Tax For personal use only US$m FY12 FY11 Income Tax Position: Profit before income tax 2,263 1,332 Income tax expense 704 313 Effective tax rate 31.1% 23.4% Income tax paid 123 0 MRRT initial recognition Nil N/A • Effective tax rate of around 30% reflects maturity as a tax payer • MRRT deferred tax
Slide 10: Capital expenditure
Capital expenditure For personal use only US$bn FY2011 FY2012 FY2013 FY2014 Actual Actual Guidance Indicative 155mtpa expansion 0.5 4.1 4.2 0.2 Operational capital 0.3 0.9 0.6 0.7 Other capital projects 0.6 0.3 0.3 0.3 Exploration 0.3 0.4 0.1 0.1 Fleet - 0.4 1.0 0.2 Total * 1.7 6.1 6.2 1.5 *Excludes
Slide 11: Expansion facilities structured for flexibility
Expansion facilities structured for flexibility For personal use only 2500 2000 1500 US$m $750 1000 $2,040 $1,500 500 $1,000 $900 $965 $1,000 $750 $600 $600 $490 $154 $100 0 CY2012 CY2013 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 CY2020 CY2021 CAPEX Term Loan Revolving Credit Facility Senior U
Slide 12: FY2012 - The year in review
FY2012 - The year in review Operations & construction teams combine for major advances For personal use only June Quarter 2012 JUN QTR September Quarter 2011 US$1.5bn mine fleet funding raised Christmas Creek OPF ramps up Third berth fully commissioned Fifth train consist on-line Christmas Creek pro
Slide 13: The quarterly milestone calendar
The quarterly milestone calendar The countdown to re-rating! For personal use only Solomon Kings Christmas Creek 2nd OPF JUN QTR SEP QTR FY MAR QTR 2013 DEC QTR Solomon Firetail Train unloaders 13
Slide 14: September Qtr 2012
September Qtr 2012 2nd Christmas Creek OPF comes alive 1Q FY For personal use only 2013 Mining Rail • Christmas Creek stage 1 to 25mtpa • Duplication of main line • Christmas Creek airport completion • New rail yard facilities • Christmas Creek stage 2 OPF completion • Additional 2 consists in ope
Slide 15: December Qtr 2012
December Qtr 2012 Port, rail and mine together for 95mtpa 2Q FY For personal use only 2013 Mining Rail • Christmas Creek second OPF ramps to • Solomon spur line completion 25mtpa • Additional two rail consists • Solomon Firetail production on line • First ore shipped from Solomon Port operations • T
Slide 16: March Qtr 2013
March Qtr 2013 Solomon steps up 3Q FY For personal use only 2013 Mining Rail • Solomon Kings production on line • Final 3 consists delivered • Solomon Firetail OPF ramps up to • Solomon rail line commissioned 20mtpa capacity Port • Fourth berth complete • Third out-load circuit commissioning 16
Slide 17: June Qtr 2013
June Qtr 2013 It’s all about ramp up! 4Q FY For personal use only 2013 Mining Rail • Kings OPF ramps to 40mtpa target • Full 13 consists in operation • Solomon operations pushing to run rate • Fully commissioned 650km of track of 60mtpa by period end Port • Chichester mines steady state of 90mtpa •
Slide 18: Market snapshot
Market snapshot Lower growth rates but still strong in absolute volumes For personal use only • Fortescue continues to sell all its iron ore to expanding customer base • Chinese domestic iron ore production volumes falling, seaborne imports rising • Chinese iron ore destocking to very low average da
Slide 19: A value proposition of near term growth
A value proposition of near term growth Current business powers the expansion For personal use only • Record financial performance over FY2012 • Growth profile to 155mtpa just around the corner • Superior infrastructure will drive productivity • Cost curve reduction with low strip ratio at Solomon •
Slide 20: Appendix: FY12 Financial Report Summaries
Appendix FY12 Financial Report Summaries For personal use only JUN QTR SEP QTR FY 2012 MAR QTR DEC QTR 20
Slide 21: Financial summary – income statement
Financial summary – income statement For personal use only US$m FY12 FY11 % Fortescue tonnes shipped (millions - wmt) 55.8 39.4 42% Average realised price (US$/wmt) 120.2 136.8 (12%) Operating sales revenue 6,681 5,442 23% EBITDA 3,035 2,657 14% Net finance costs (505) (429) 18% Refinancing costs 0
Slide 22: Financial summary – cash flow statement
Financial summary – cash flow statement For personal use only US$m FY12 FY11 Cash receipts from customers 6,625 5,405 Payments to suppliers and employees (3,694) (2,627) Income tax paid (123) 0 Net cash inflow from operating activities 2,808 2,778 Net cash outflow from investing activities (5,990) (
Slide 23: Financial summary – balance sheet
Financial summary – balance sheet For personal use only US$m FY12 FY11 PP&E, intangibles, development and 11,376 5,114 exploration Cash & other assets 3,687 3,513 Total assets 15,063 8,627 Senior unsecured notes (7,082) (3,565) Unsecured loan notes (Leucadia) (897) (944) Unsecured bank facility (100
Slide 24: Glossary – Definition of non-IFRS terms
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 average equity Cash flow per share (CFPS) = net ca
Slide 25: Sign up to alerts online
For personal use only Sign up to alerts online www.fmgl.com.au