FMG - Fortescue Ltd

[Prospector]

I saw the announcement in news.com.au re loss first and then checked the share price to see how much FMG had fallen as a result. It hadnt, so checked the announcements in NAB trading, and the only announcement they had there was the 54% increase in reserves. So maybe everyone hasn't heard about the loss, or perhaps the 54% rise is more than enough to counter it. Or maybe sellers in the last few days had thought the loss might have been higher.

 

[Nesa]

Fortescue reports $2.5 billion loss

* September 19, 2008 - 12:19PM

Iron ore miner Fortescue Metals Group Ltd has reported an annual bottom line net loss and said it will not provide a forecast for the current year because this may prejudice "the interests of the company".

Fortescue also said it does not expect to pay any dividends in the current year.

The company made a net loss of $2.52 billion for the 2008 financial year ended June 30, compared to a loss of $192.36 million in the previous year.

In line with accounting standards, Fortescue made adjustments to its books to reflect the total expected interest payable on a 13-year subordinated loan note supplied by major shareholder Leucadia National Corp Inc, a US investment group that has a 10 per cent stake in the company.

"Given improved variables since the last report [at the half year], Fortescue has adjusted the note to reflect higher iron ore prices, a lower Australian dollar/US dollar exchange rate and higher forecast sales tonnages building to 160 million tonnes per annum over the note period out to 2019," company secretary Rod Campbell said in a statement.

"The effect of the revaluation is a $3.46 billion adjustment to the profit and loss account which, after a tax adjustment, results in a net loss for the year of $2.8 billion."

http://www.watoday.com.au/business/fortescue-reports-25-billion-loss-20080919-4jyb.html

 

[adobee]

"1,625 Million Tonne Ore Reserve Estimate
Representing a 54% increase"

Twiggy - My Man..

He knows how to keep his share price up ..

The loss is not a big deal you would expect a loss.. it takes into account interest to 2019 for one project and they have only just started making money ....

Who knows by next week they might have 10 billion more tonnes of ore !! the way twiggy is going they will not need to ship it they will just drop it straight through the hole to china !

 

[nunthewiser]

Will the RBA bailout FMG from it's $2.5 billion dollar loss? ..... sorry just a bit of gutter humour to go with current lifesaving strategies
avaniceday

 

[renim]

"Funding for expansion to 80mtpa will be sourced from the Company’s strong
internal cash flows generated from our consistent production, which is
ramping up every day,” statement to ASX

i don't know how much of preference shares FMG will need to issue if any. It looks like Forrest has decided to keep the program smaller than desired due to current market conditions.

So overall this is modest if good news, little share dilution, but earnings to fund expansion instead of dividends.

 

[larrikin]

Excuse my ignorance, but what are we as investors to make of the following:
*The bad news = 2.5 billion loss
* good news? = 72 million profit

Being a newbie, Im struggling to understand how to decipher the 2.5 billion dollar paper loss and the 72 million profit. How is that you can have a loss of 2.5 billion, but a profit of 72 million.

Thanks for your help

 

[njc.corp]

Excuse my ignorance, but what are we as investors to make of the following:
*The bad news = 2.5 billion loss
* good news? = 72 million profit

Being a newbie, Im struggling to understand how to decipher the 2.5 billion dollar paper loss and the 72 million profit. How is that you can have a loss of 2.5 billion, but a profit of 72 million.

Thanks for your help

Larrikin-take the market out of it and u get a business-

so while they have only been operating for a short time-(not setting up)-meaning exporting the ore out-they have made 72 million since they first exported- which is pretty good for the time frame of so liitle ore out-

but they still owe 2 billion + because its a new business and they got money to start the busniess-

all in all its not bad news-

the only bad is the current share price-but that might change and maybe not-

Thats just a basic view of it

Thanks

Nick--

 

[renim]

Its even weirder than that

FMG in the past needed money, the aussies laughed at him, the chinese wanted 85% of the company, but a american wanted a 4% royalty for a few years.

That piece of money (debt) gets revalued in line with projected production.

If that projected production goes up that 4% royalty also goes up. So we have a paper loss being recorded against a paper profit. Its an attempt to give a 'true' picture.

It also happens to be approx. what FMG spent last year.

 

[larrikin]

Nick and Renim,

Thanks heaps guys for your help. It was very clear and informative. Its great that there is this forum for people like myself who can have their questions answered promptly and in a clear and concise manner.

Thanks once again guys and all the best for Fortescue's future!

 

[ROE]

My first post on FMG
but this is my take.. I dont like it one little bit

so you forgo a few billion dollar lost a year in hope making money back at some stage in the future... it's like .dot com bull****.

and why I dont like it, I like logic
say I got 16 Bill buck spare and I have an option of invest in FMG or BXB (could be any business I just pick one)

people predict FMG will make $2 Billion a year at some stage, $4 Billion even
any number, use valuation, DCF and what have you to come up with it.

mean while my BXB racked in $1Billion a year from day one.

every year FMG not making money they fall further behind and they must make more and more money faster in the future to catch up to my BXB $1Billion profit... my $1B a year profit also compound and grow so the gap is widen thick and fast each year.

When can FMG catch up to BXB?
maybe 2 years, maybe 5 years, maybe never
too many uncertainty and too many unknown make you lose sleep at night.

 

[agro]

where's MichaelD and friends now?

with the short selling ban the buyer volume is 3m vs 1.6m selling..

uptrend huh?!

or gone hiding...?

 

[adobee]

what is everyone so negative.. before they made any money and were borrowing heaps they took the stock price from $7 to $100 (pre 10:1 split) and now they are generating money you are going to be negative.. if they didnt borrow $billions they wouldnt have been able to get to where they are so fast..

 

[njc.corp]

what is everyone so negative.. before they made any money and were borrowing heaps they took the stock price from $7 to $100 (pre 10:1 split) and now they are generating money you are going to be negative.. if they didnt borrow $billions they wouldnt have been able to get to where they are so fast..

i think his/her comments are saying if they have the money to buy that he/she finds other stocks to be better value then fmg-

wether thats right or wrong is someone else view-

but i must agree with u and say i am yet to know anyone to start a business and make profit with-out debt-

their is no chance they (fmg) would got this far without the money help from who-ever-not that type of operation

Thanks

Nick--

 

[Trembling Hand]

where's MichaelD and friends now?

with the short selling ban the buyer volume is 3m vs 1.6m selling..

uptrend huh?!

or gone hiding...?

Agro your smugness it a bit silly considering you had to spew out your holdings on pretty much the lowest day in 52 weeks because of a margin call.

And now you are trying to dive back in on the biggest open in a long time. Quite the trader.

But anyway hope it turns out well for you.

 

[prawn_86]

Agro your smugness it a bit silly considering you had to spew out your holdings on pretty much the lowest day in 52 weeks because of a margin call.

And now you are trying to dive back in on the biggest open in a long time. Quite the trader.

But anyway hope it turns out well for you.

To add to this:

Do short sellers actually turn up in the sell queue? If they already have their positions then their orders would only be 'dummy' sell orders anyway and they will have to create a short cover rally when they want to buy back in anyway

 

[Miner]

As published in Marcus Today newsletter today

FMG – Fortescue – Were’s maintain BUY and 1227c target. Have upped their earnings guidance slightly on the improved production forecasts of 39.5mt vrs previous 38mt. See FMG as perfectly positioned to supply the Chinese market. Say FMG meeting its targets and generating cash flow is crucial. Due the ramp up phase and the high debt levels sees the stock as high risk compared to other iron ore majors.

Interestingly very high asking rate to buy FMG today when the market is to open delayed. Certainly asking to buy at $10 about and to sell at $5.75 about is a bit fishy to me unless I get education how it can happen ? Why should I sell at a lower price when another wants to buy it a higher price.

Probably some one will cancel the buy order just before market opening

On another point, I was amazed at Agro's comment when he or she sold the holding when FMG were diving down ? Charity begins at home but I am not a trader so do not know the style of their functioning either. Good luck so long as every one is making money today and tomorrow and thereafter and no one is making loss

 

[gav]

Open at $7.50!




And I still HOLD! :

 

[MR_B]

Open at $7.50!




And I still HOLD! :

$5.70 maybe?
Anyway, as long as its up by next year ^^

 

[gav]

Nope, definitely opened at $7.50

Got as low as $6.75, and currently sitting at $7.18 (up 26%)



Gav

 

[LeeTV]

Bugger the shorters I say! 26% woot! All my stocks are up today and up at least 9%, makes a refreshing change too I might add.