Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — 19th CLSA Investors' Forum (September 2012)
25 slides from Fortescue's conference presentation, Sep 13, 2012
Slide 1: 19th CLSA Investors' Forum
For personal use only 19th CLSA Investors’ Forum Nev Power CEO Fortescue Metals Group Ltd Hong Kong, September 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: The Fortescue story
The Fortescue story World’s 4th biggest seaborne exporter For personal use only Strong culture delivers record results 57.5mt Top 25 ASX listed company record shipped in FY2012 12bt resource Target run rate 155mtpa 60 mtpa current run rate 3
Slide 4: See our operations in the Pilbara
See our operations in the Pilbara Corporate DVD For personal use only 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: 2012 in review
For personal use only 2012 in review 6
Slide 7: 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 8: Financial highlights
Financial highlights Record FY12 performance For personal use only 55.8mt Fortescue tonnes shipped up 38% yoy $6.7bn Revenues up 23% yoy $48/wmt C1 average $3bn EBITDA up 14% yoy $1.6bn NPAT up 53% A$0.08 fully franked dividend 8
Slide 9: EBITDA analysis
EBITDA analysis EBITDA Variance For personal use only (US$m) 4,000 1,152 3,500 75 3,035 3,000 249 61 2,657 894 189 2,500 76 2,000 1,500 1,000 FY2011 Volume Price Costs Royalty Loan note Fx Other FY2012 re-estimation • Volume benefits offset by lower index prices • Higher costs from Christmas Creek r
Slide 10: 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$) 50.1 42.0 • 52% increase in earnings 32.9 per share 18.9 • Consistency in cash flow 2010 2011 2012 per share EPS CFPS 10
Slide 11: Expansion facilities structured for flexibility
Expansion facilities structured for flexibility 2500 For personal use only 2000 1500 US$m $750 1000 $2,040 $1,500 $866 500 $1,000 $1,000 $900 $750 $600 $600 $490 $154 $99 $100 0 CY2012 CY2013 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022 CAPEX Term Loan Revolving Credit Facility
Slide 12: Market
For personal use only Market 12
Slide 13: History shows price volatility
History shows price volatility Strong rebound in recent days For personal use only Iron Ore Price (62% Fe CFR – Platts IODEX China) $200.00 $180.00 $160.00 $140.00 $120.00 $100.00 $80.00 13
Slide 14: Decisive response to market conditions
Decisive response to market conditions Securing profitability and liquidity For personal use only $300m operating cost savings FY13 capital down US$1.6bn Chichester expansion 95mtpa Dec 2012 Solomon Firetail 20mtpa March 2013 March 2013 115mtpa Kings and 155mtpa on market recovery 14
Slide 15: Chinese cost curve to support prices
Chinese cost curve to support prices With Fortescue products at lower end of cost curve For personal use only 200 Domestic Chinese Ore Australia Brazil US$/dry tonne CFR equivalent India 150 South Africa Other Fortescue cost per tonne 155mtpa $55* 100 Firetail cost per tonne $40* 50 0 0 100 200 300
Slide 16: C1 cost
C1 cost Decreasing cost profile For personal use only $/wmt 50 45 40 35 30 25 20 15 10 5 0 Fortescue Firetail* RIO^ Industry BHP^leaders^ Vale^ * Estimated C1 costs at full production ^ C1 costs estimated from Metalytics industry US$/dry tonne CFR equivalent analysis 16
Slide 17: 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 • Stimulus packages • Regime change • Short term volatility rebound • De-stocking 17
Slide 18: Stimulus package announced
Stimulus package announced Approves US$157 billion infrastructure projects For personal use only Near term Additional approvals steel 25 consumption 7 port and channel projects growth 13 highway projects urban railway 10 urban waste plant projects projects infrastructure and US$133 billion urbanisat
Slide 19: Expansion and Development
For personal use only Expansion and Development 19
Slide 20: The quarterly milestone calendar
The quarterly milestone calendar Forging ahead For personal use only 115mtpa run rate Christmas Creek 2nd OPF JUN QTR SEP QTR FY MAR QTR 2013 DEC QTR Solomon Firetail Train unloaders 20
Slide 21: Financial strength will follow expansion
Financial strength will follow expansion Cashflow will be harnessed for financial de-risking For personal use only Strong operations: • Expanded product range • Low Solomon Strip Ratio < 2 : 1 • Target Solomon C1 cost of US$25 - 30/wmt* • C1 cost in lowest 1/3rd of global cost curve • Economies of s
Slide 22: Fortescue has the dominant Pilbara land position
Fortescue has the Fortescue: dominant Pilbara land 85,000km2 Rio: 14,230km2 For personal use only position BHP: 8,195km2 22
Slide 23: Resource portfolio sets expansion platform
Resource portfolio sets expansion platform To leverage existing assets for low cost growth For personal use only 14,000 Annualised growth of 12,000 1.5bt 3,236 Mineral Resources (Mt) 10,000 per annum 2,465 8,000 2,013 1,032 624 624 1,230 6,000 1,230 3,070 3,070 2,860 4,000 1,715 2,224 695 695 695 69
Slide 24: Building one of the world's great resource companies
Building one of the world’s great resource companies For personal use only Strong FY2012 results Expansion to 155mtpa Deleverage following expansion Flexible growth pipeline Unique culture drives performance 24
Slide 25: For personal use only
For personal use only Proudly supporting: Sign up to alerts online: www.fmgl.com.au
Fortescue Metals Group — 19th CLSA Investors' Forum (September 2012) on 6ix