Anyone know what is holding up Fortescue's Quarterly Report?
There is no hold up, the calendar of events on their website says it's due on the 23rd of July.
You can see the dates of reports months in advance, he September report will be released on the 15th of oct
There is no hold up, the calendar of events on their website says it's due on the 23rd of July.
You can see the dates of reports months in advance, he September report will be released on the 15th of oct
I thought it was pretty impressive reading. Once again management has delivered all promised and even exceeded in some areas. Realised price of $52/mt - $39 delivered costs x 42m shipped = $551m gross for the quarter roughly but yet share price drops by 3%. lol go figure.
"Fortescue have felt the full force of the bears by admitting that the current strip mining rates are unsustainable and these will likely rise,"
The elephant in the room just blew it's trumpet.
Figured.
So what do you think? I thought it was pretty impressive reading. Once again management has delivered all promised and even exceeded in some areas. Realised price of $52/mt - $39 delivered costs x 42m shipped = $551m gross for the quarter roughly but yet share price drops by 3%. lol go figure.
The elephant in the room just blew it's trumpet.
Figured.
Strip ratios have been lower through the June 2015 quarter and will continue at low levels through the September 2015 quarter before gradually reverting to the life of mine averages in FY16.
The improvement in strip ratios is not expected to have any material impact on Reserves and Resources with an updated Reserve and Resources statement scheduled for release in the Annual Report on 24 August 2015.
Reading between the lines - what this says is that costs are unsustainably low and will rise. Margins are in danger over the medium term if the IO price remains subdued.
Did you read the report?
Break even Costs are still forecast to be $39 or less, any rise due to the strip ratio will be offset buy the continued reduction in other areas.
Did you read the report?
Break even Costs are still forecast to be $39 or less, any rise due to the strip ratio will be offset buy the continued reduction in other areas.
If FMG can't earn a decent margin, then a lot of other capacity is going to be making losses, that capacity will close and prices will rise to a sustainable margin for FMG, FMG is not atlas Iron.
You still on this or cutting your losses after such a sh*tty report?
It was roughly inline with what I expected, I mean this report includes the period with the biggest part of the price fall, and the cost cutting kind off lagged the price fall, So I wasn't expecting miracles, As I said this is a 3 year play, I expect future reports to be better from here on, I believe we have reduced cost to a low enough level to ensure sustainable margins.
What exactly was it that you thought was so sh*tty?
Free cash flow was 65cents pershare, for the year we have had that's pretty good.
To be honest I was expecting a much better net profit, but am struggling to make any great real sense of it as the true merit in the report can easily get convuluted in accounting. Broadly speaking $330m net profit in the previous six months with higher costs - I was expecting the same or better in the following six months
They actually made a lot more than that, the net profit figure is not an accurate representation of the value generation. The reason for this is because the depreciation and amortisation charges, are accounting charges that don't reflect the actual situation.
The D and A charges amount to about $8.5 per tonne, but the actual sustaining capital required to maintain the assets is only about $2 per tonne, in my numbers I increased this to $3.
The reason for this is that the depreciation charges is an accounting charge based on the original cost to build the infrastructure, such as the rail lines and port, so over a set period of time these costs will be written off, reducing the reported earnings each year.
What makes the difference in accounting charge and actual maintained cost, is the fact that it cost a lot more to build a green field rail line, than it does to maintain one, costs such as design, environmental studies, various other legal permitting etc, major earth works (carving through hill sides, leveling land), foundations for bridges etc are largely once of costs, which are written off against income each year, when the reality is all that really needs to be spent is the cost of replacing some track.
And a lot of the assets such as heavy duty bridges etc have lives much longer than their accounting life.
so the best way to deal with this is to add back the depreciation charges to the net profit after tax, and then minus a more realistic maintaince cost, they quote $2 per tonne in their break even price, I raised this to $3 in my numbers.
Fmg has build a lot of infrastructure, and it's all quite young, hence the depreciation charges on it are quite high, so you have to adjust you figures to take it into consideration.
Once again I appreciate your insight.
Do you know why there has been a discounting of finance and leases of $1.3b by $830 million? Why would this have been done?
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