Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — H1 FY2011 Earnings Presentation
22 slides from Fortescue's earnings presentation, Feb 18, 2011
Slide 1: Half Year Results - December 2010
For personal use only Half Year Results - December 2010 18th February 2011
Slide 2: Important notice
Important notice For personal use only Disclaimer 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 • Record $1.3bn underlying EBITDA from solid operations • Board approves $8.4bn of expansion capex • Project debt refinance and strong cashflows provide a growth platform • Maiden three cent dividend reflects solid result, delivering shareholder reward • Net profit a
Slide 4: Finance
For personal use only Finance 4
Slide 5: Group performance
Group performance For personal use only Half year to 31 December ($m) 2010 2009 % Tonnes shipped including 3rd party ore1 (millions -wmt) 20.9 19.3 8 Group Performance Average CFR price ($/dmt) 138.50 67.58 105 Underlying EBITDA 1,316 380 246 Re-estimation of unsecured loan note (7) (55) (87) Net fo
Slide 6: Underlying EBITDA
Underlying EBITDA For personal use only Strong iron ore market - the key driver 6
Slide 7: Net profit after tax
Net profit after tax For personal use only Operating NPAT of $817m before refinancing costs (tax affected) 7
Slide 8: Earnings
Earnings For personal use only 1,400 1,200 1,000 800 $m 600 400 200 - 1HFY10 2HFY10 1HFY11 Underlying EBITDA NPAT bef ore ref inancing costs Record earnings driven by strong demand 8
Slide 9: Earnings and cash flow per share
Earnings and cash flow per share For personal use only 30 25 20 Cents 15 10 5 - 1HFY10 2HFY10 1HFY11 EPS before refinancing costs CFPS Fast growing Asian economies driving continued demand 9
Slide 10: Strengthening financial position
Strengthening financial position For personal use only • Strong earnings deliver period Cash on Hand (US$m) on period growth in cash flow $2,382 • Improvement in credit metrics $1,236 and balance sheet strength $655 • Measured approach to expansion funding FY09 FY10 CY10 EBITDA Interest Coverage x D
Slide 11: Debt maturity profile
Debt maturity profile For personal use only Pre October 2010 profile: Post October 2010 profile: • Majority of debt due by 2016 • Extended repayment profile • Lack of flexibility • Unsecured debt includes call option flexibility $1,080 $2,147 Unsecured Notes $2,040 $2,040 $900 Unsecured Notes: Optio
Slide 12: Refinancing costs
Refinancing costs For personal use only Costs associated with the refinancing Half year ended 31 December ($m) 2010 Premium on buy back of the senior secured notes 668 Bridging facility fees and interest 31 Loss on redemption of borrowings 20 Refinancing costs 719 • Refinancing generates significant
Slide 13: Long term debt restructure
Long term debt restructure For personal use only • Original project bonds refinanced in October 2010 • New unsecured bonds (US$2.0bn) provide lower cost of capital • Corporate/unsecured terms match growth plans • Additional US$1.5bn bonds issued to fund further growth • Gross debt of US$4.5bn - net
Slide 14: Unsecured loan note
Unsecured loan note For personal use only Half year ended 31 December ($m) 2010 2009 Balance sheet value 795 826 Re-estimation – Income statement (7) (280) Effective interest expense (127) (164) • Unsecured instrument with face value of $100m • Interest at four per cent of revenue net of royalties f
Slide 15: Foreign exchange
Foreign exchange For personal use only Half year ended 31 December ($m) 2010 2009 A$/US$ closing rate 1.0170 0.8523 Net forex gain/(loss) - $m (21) 99 • Fortescue adopted US Dollar as functional currency on 1 January 2009 to reflect primary economic environment • Change to US$ reduces impact of curr
Slide 16: Tax
Tax For personal use only Half year ended 31 December ($m) 2010 Income Tax Position: Tax on accounting profit at 30% 81 Impact of adopting US$ functional currency for tax (93) Permanent adjustments (3) Prior period ‘true up’ (30) Income tax benefit (45) Tax Losses: Utilisation of tax losses against
Slide 17: Business Update
For personal use only Update Business 17
Slide 18: Operations – strong performance
Operations – strong performance For personal use only • Safety is the highest operational priority with lagging safety incident rates better than industry average • Strong operating performance with 40mtpa run rate delivering record earnings • Christmas Creek mine ramping up in preparation for ore p
Slide 19: Marketing – index pricing transition
Marketing – index pricing transition use only Benchmark regime - FOB Index pricing - CFR 160 150 140 130 120 Average CFR selling price per dry tonne 125 US$ per dry tonne 100 Average C1 costs per dry tonne For personal 80 83 72 69 70 60 66 40 20 0 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec
Slide 20: Development - capturing the opportunity
Development - capturing the opportunity For personal use only • Project pipeline positioned for growth: • Short term: Chichester 55mtpa on schedule for March Qtr 2011 commissioning • Medium term: Hedland port and rail expansion underway and Solomon approvals advancing • Long term: Anketell Port deve
Slide 21: Outlook – forging ahead
Outlook – forging ahead For personal use only • Index prices hitting new highs – analysts upgrades longer term prices • Strong cash flows create funding flexibility • The three mines two export hub expansion strategy will optimise operational flexibility and leverage infrastructure footprint • Exper
Slide 22: Sign up to alerts online
For personal use only Sign up to alerts online www.fmgl.com.au
Fortescue Metals Group — H1 FY2011 Earnings Presentation on 6ix