Fortescue Ltd · ASX:FMG
Fortescue — FY2021 Earnings Presentation
46 slides from Fortescue's earnings presentation, Aug 30, 2021
Slide 1: Results Presentation
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Slide 2: Forward Looking Statements Disclaimer
Forward Looking Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd Statements (“Fortescue”). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This presentation co
Slide 3: World class company
World class company Thriving communities | Global force 3
Slide 4: Integrated mine to market infrastructure
Integrated mine to market infrastructure 4
Slide 5: FY21 Results
FY21 Results
Slide 6: Safety and unique culture
Safety and unique culture Unwavering focus on health and safety of the Fortescue family 2.0 TRIFR Total Recordable Injury Frequency Rate 9.2 Total Recordable Injury Frequency Rate at 30 June 2021 7.6 6.0 17% improvement 5.1 4.3 From 30 June 2020 3.7 2.9 2.8 2.4 2.0 99% participation Safety Excellenc
Slide 7: FY21 production highlights
FY21 production Outstanding operating performance delivers highlights record annual shipments 182.2 mt US $13.93 /wmt Record annual shipments Industry leading C1 cost 2% increase on FY20 US $135 /dmt 88% Average revenue Average revenue realisation 72% increase on FY20 7
Slide 8: FY21 financial highlights
FY21 financial highlights US $22.3 bn 73% Revenue Underlying EBITDA margin 74% increase on FY20 US $16.4 bn US $99 /dmt Underlying EBITDA Underlying EBITDA per tonne 96% increase on FY20 US $10.3 bn US $3.35 Net profit after tax Earnings per share (A$4.48) 117% increase on FY20 8
Slide 9: FY21 financial highlights
FY21 financial highlights US $12.6 bn US $9.0 bn Net operating cashflow Free cashflow US $6.9 bn US $4.3 bn Cash on hand Gross debt US $2.7 bn 19% Net cash Gross gearing 9
Slide 10: Shareholder returns
Shareholder returns Dividend policy to payout 50 to 80 per cent of full year net profit after tax A $2.11 per share Fully franked final dividend A $3.58 per share FY21 total dividends 80% payout ratio US $8.2 billion Value of FY21 dividends 10
Slide 11: Revenue and earnings
Revenue and earnings Record full year revenue and earnings Revenue (US$m) Underlying EBITDA (US$m) NPAT (US$m) Underlying EBITDA 22,284 NPAT 16,375 10,295 12,820 8,375 9,965 4,735 8,447 6,047 6,887 4,744 3,187 3,182 2,093 878 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
Slide 12: Underlying EBITDA
Underlying EBITDA Strong prices, volume growth and disciplined cost control Underlying EBITDA and NPAT reconciliation (US$m) Underlying EBITDA margin (%) 9,376 73 8,000 (198) 34 65 (715) (223) (144) (2) 61 56 10,295 46 (2,472) 4,735 200 (296) FY20 NPAT Underlying EBITDA Volume Costs Price Cashflow h
Slide 13: Price and margins
Price and margins Strong margins through all market cycles Prices and Underlying EBITDA margin (US$/dmt) Underlying EBITDA Realised price Platts 62% Fe CFR Index Average Underlying EBITDA Average realised price (US$/dmt) 160 140 120 100 991 80 60 40 52 39 20 30 20 0 FY17 FY18 FY19 FY20 FY21 1Exclude
Slide 14: Cash generation
Cash generation Strong operating performance, disciplined investment and free cash flow Net cash from operations (US$m) Capital expenditure (US$m) Free cash flow (US$m) 12,594 3,633 8,961 6,415 1,966 4,449 3,539 3,328 4,256 4,373 1,045 897 717 1,601 704 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 F
Slide 15: Capital expenditure
Capital expenditure Reinvesting in the business and growth FY21 capital expenditure (US$m) FY22 capital expenditure guidance1 (US$m) 873 1,100 1,100- 1,400 US$2,800m - US$3,633m 192 US$3,200m 2,103 279 186 200 180 250- 300 Sustaining Hub development Sustaining Hub development Operational development
Slide 16: Robust balance sheet
Robust balance sheet Credit metrics below target range, with future capacity Gross debt (US$m) Debt maturity profile excluding leases (US$m) 5,113 1,500 Syndicated Term Loan Senior Unsecured Notes 4,471 4,252 3,975 3,952 750 600 600 FY17 FY18 FY19 FY20 FY21 CY22 CY23 CY24 CY25 CY26 CY27 CY28 CY29 CY
Slide 17: Disciplined capital management
Disciplined capital management Aggregate earnings and cashflows FY14 – FY21 1 Includes share buyback 17
Slide 18: Return on capital
Return on capital Profitable and capital efficient Return on equity (%) Return on capital employed1 (%) 66 66 40 37 31 29 23 20 11 9 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 1 ROCE is calculated as earnings before interest and tax divided by average capital (total assets minus current liabi
Slide 19: Delivering dividends
Delivering dividends Fully franked dividend of A$3.58 per share, representing an 80 per cent payout of FY21 NPAT Dividends (A$/share) and payout ratio (%) 4.50 90% 78% 80% 4.00 77% 80% 3.58 3.50 70% 62% 3.00 60% 52% 2.50 50% 38% 36% 2.00 1.76 40% 1.50 30% 21% 21% 1.14 17% 16% 1.00 20% 0.45 0.50 0.23
Slide 20: FY22 guidance
FY22 guidance 180 – 185 mt Iron ore shipments US $15.00 – US $15.50 /wmt C1 cost based on assumed exchange rate of AUD:USD 0.75 US $2.8 – US $3.2 billion Capital expenditure, excluding Fortescue Future Industries 20
Slide 21: Integrated operations and marketing
Integrated operations and marketing
Slide 22: Supply chain
Supply chain IN Fortescue ¥ =) Extracti p<4 Shippin Extract ion ay ° Mine to port °- loading ° aa a aes ° Rehabilitation @—®—_®—_®_®—_®_©®__©__®__®—® : Modelling i Blending and F and plsnning l Processing L stockpiling l Marketing 4 gine port Exploration and discovery 22
Slide 23: Forefront of innovation
Forefront of innovation Delivering safety, productivity and efficiency benefits 23
Slide 24: Marketing strategy
Marketing strategy Aligned with needs of customers and market Direct engagement Customers and stakeholders Flexible and innovative Product and logistics offering Long term relationships Product suite Aligns with needs of the market 24
Slide 25: Strong demand for steel and iron ore
Strong demand for steel and iron ore Global economic growth supporting elevated steel prices and incentivising crude steel production Monthly global crude steel production (mt) 110 Steel prices Supported by strong demand 100 90 Iron ore supply 80 Constrained from traditional producers 70 60 Iron ore
Slide 26: Strong realisations
Strong realisations Fortescue’s FY21 average revenue of US$135/dmt, 88% of the Platts 62% CFR Index 250 (US$/dmt) 200 150 100 50 -0 Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20 Jul 20 Oct 20 Jan 21 Apr 21 92% 91% 89% 86% 86% 86% 86% 84% 83% 82% Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2
Slide 27: Growth and development
Growth and development
Slide 28: Eliwana operations
Eliwana operations Ramp up and integration of Eliwana contributed to record performance in FY21 First ore Achieved in December 2020 30 mtpa dry OPF Running at annualised rate of production Low capital intensity Fast payback on investment 143km rail First east-west line through Hamersley Ranges 28
Slide 29: Iron Bridge
Iron Bridge Strategic investment providing enhanced product range to meet customer demand US$3.3 – US$3.5bn Capital estimate 67% Fe High grade magnetite concentrate 22 mpta First production by December 2022 US$33 – US$38/wmt Competitive C1 cost 29
Slide 30: Iron Bridge progress
Iron Bridge progress Construction of primary crusher Delivery of large modules to Iron Bridge 30
Slide 31: Exploration
Exploration Focus on iron ore and commodities that support decarbonisation Pilbara Extensive iron ore tenement footprint providing further optionality Australia Early stage target generation for copper- gold in WA, NSW and SA International Argentina >300,000ha of tenements Ecuador 135,000ha of tenem
Slide 32: Fortescue Future Industries
Fortescue Future Industries
Slide 33: Industry leader in addressing climate change
Industry leader in addressing climate change Carbon neutral by 2030 Clear short term priorities on pathway to decarbonisation Stationary energy Energy infrastructure supporting incorporation of large scale renewables Green fleet development Heavy industry decarbonisation initiatives underway at Fort
Slide 34: Fortescue Future Industries
Fortescue Future Industries 100 per cent renewable energy and green industry company Enabler of 2030 target Investing in decarbonisation technologies Supplier of green energy New energy business Assessing global portfolio of renewable energy and green industry opportunities Capital allocation 10 per
Slide 35: Global demand for green hydrogen
Global demand for green Accelerated global commitment to emissions reduction, increasing future demand for green hydrogen hydrogen US$12 trillion US$70 billion Estimated global market for Public funding committed green hydrogen by 2050 worldwide for hydrogen projects Net zero targets Global transpor
Slide 36: Fortescue Future Industries flywheel
Fortescue Future Industries flywheel 36
Slide 37: Emissions reduction pathway
Emissions reduction Investing in renewables and decarbonisation technologies pathway 37
Slide 38: Green fleet development
Green fleet development Progress at Fortescue Future Industries testing facility in Perth Systems testing on hydrogen powered drill rig for technology Construction of hydrogen powered haul truck for technology demonstration demonstration completed 38
Slide 39: FY22 priorities
FY22 priorities Anticipated expenditure of US$400 – US$600 million in FY22 39
Slide 40: Sustainability
BM Fortescue Sustainabilit a tg
Slide 41: Approach to sustainability
Approach to sustainability Ensuring communities benefit from Fortescue’s success 41
Slide 42: Setting high standards
Setting high standards A focus on safety and building a diverse workforce reflective of our community 2.0 TRIFR 17% improvement from 2.4 in FY20 21% female Employment rate 14% Aboriginal Employment rate across Pilbara operations 42
Slide 43: Safeguarding the environment
Safeguarding the environment Minimising the impact of our operations on the environment Zero Significant environment incidents A$2.6 million Invested in research and conservation 98% water reinjected Innovative managed aquifer recharge scheme 87% non-mineral waste Recycled across all operational sit
Slide 44: Creating positive social change
Creating positive social change Empowering thriving communities and creating opportunities through training, employment and business development Billion Opportunities >A$3 billion in contracts awarded to Aboriginal businesses and joint ventures since 2011 >A$63 million Social investment in communiti
Slide 45: Safety Integrity
Safety Integrity Family Enthusiasm Empowerment Courage and determination Frugality Generating ideas Stretch targets Humility Thriving Communities | Global force
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