Fortescue share price plummets 5% amid weaker production

The market is bidding the iron ore giant's stock lower despite an exciting update on its Iron Bridge project.

| More on:
Female worker sitting desk with head in hand and looking fed up

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Fortescue share price is down 5% right now, trading at $20.42
  • Its tumble comes as the company revealed its mined production fell 16% quarter-on-quarter over the three months ended 31 March
  • On a more positive note, its Iron Bridge project achieved its maiden wet concentrate production last week

The Fortescue Metals Group Limited (ASX: FMG) share price is tumbling on the back of the iron ore giant's latest quarterly production results.

Right now, Fortescue stock is trading at $20.42 – 5% lower than its previous close.

Fortescue share price falls as iron ore production slumps

Here are the key takeaways from the S&P/ASX 200 Index (ASX: XJO) giant's production for the March quarter:

  • Ore mined fell 16% quarter-on-quarter (QoQ) and 3% year-on-year (YoY) to 50.3 million wet metric tonnes (wmt)
  • Processed 46.1 million wmt of ore – down 8% QoQ but up 17% YoY
  • Shipped 46.3 million wmt of ore – a 6% QoQ fall and flat YoY
  • C1 cost (representing the 'direct' production costs of iron ore) jumped 3% QoQ and 12% YoY to US$17.73 per wmt
  • Average revenue came in at US$109 per dry metric tonne (dmt) ­– a 25% QoQ improvement and 9% higher YoY

Fortescue's shipments for the first nine months of financial year 2023 came in at a record 143.1 million tonnes – a 3% jump on the prior comparable period.

The company ended the period with US$4 billion of cash and $6.1 billion of debt.

What else happened last quarter?

Perhaps the most exciting update in today's release concerns its majority-owned Iron Bridge Magnetite Project.

Several key milestones were achieved at the project last quarter, culminating in its maiden wet concentrate production last week. Its production will now be pumped to Port Hedland.

The project is expected to produce 22 million tonnes of high-grade 67% iron magnetite concentrate annually, while Fortescue's share of its capital estimate is around US$3 billion.

Fortescue's green energy leg Fortescue Future Industries (FFI), also has a busy quarter. It completed construction works at its Gladstone electrolyser manufacturing facility, advanced the Norwegian Holmaneset Project, and signed an investment support and implementation agreement with the Government of Kenya.

What did management say?

Fortescue CEO Fiona Hick commented on the update driving the company's share price today, saying:

On the Iron Bridge Magnetite Project, I am pleased to report that the first wet concentrate was produced on Friday.

This is a significant milestone for Fortescue as Iron Bridge represents our entry into the highest grade segment of the iron ore market, providing an enhanced product range while also increasing production and shipping capacity.

Together with our strong balance sheet and focus on investing in growth, we are well placed to advance our transition to a global green metals and energy company and ensure all stakeholders continue to benefit from Fortescue's success.

What's next?

The ASX 200 mining giant's full-year guidance hasn't been changed today. It still expects to ship between 187 million tonnes and 192 million tonnes of iron ore in financial year 2023.

Fortescue's C1 cost for hematite is tipped to come in between US$18 per wmt and US$18.75 per wmt while its capital expenditure (excluding FFI) is forecast to reach US$2.7 billion to US$3.1 billion.

Finally, FFI is anticipated to demand between US$500 million and US$600 million of operating expenditure and US$230 million of capital expenditure.

Fortescue share price snapshot

Today's fall sees the Fortescue share price handing back much of its 2023 gains.

The stock has risen just 0.1% higher than it was at the start of this year. Meanwhile, it's gained 3% since this time last year.

For comparison, the ASX 200 has gained 5% so far this year and is trading flat over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

Up 74% in 2024, why is this ASX 200 stock rallying today?

Recurring revenues continue to grow.

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

Guess which ASX All Ords share is soaring on 21% FY 2024 growth

Investors are piling into the ASX All Ords share today. Let’s find out why.

Read more »

Girl sliding down on snow with arms spread out.
Earnings Results

Elders shares on ice for a $475 million acquisition after profits plunge 55%

What on earth is going on with Elders shares today?

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Energy Shares

This ASX 200 mining stock just reported a 40% earnings jump

Investors appear pleased with this miner's performance during the first quarter.

Read more »

Business people discussing project on digital tablet.
Earnings Results

2 ASX All Ords shares surging over 10% on strong results

Investors are buying these shares in response to strong results this morning.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Earnings Results

Xero share price rockets to record high on explosive half-year growth

The tech star delivered another impressive half year results this morning.

Read more »

A man cheers after winning computer game while woman sitting next to him looks upset.
Earnings Results

2 high-flying ASX 200 gaming shares splitting ways today

Which gaming giant is winning the admiration of investors amid results?

Read more »

Male building supervisor wearing high vis vest and hard hat stands and smiles with his arms crossed at a building site
Industrials Shares

This $23 billion ASX 200 stock is surging 6% while the market sinks. Here's why

This ASX 200 stock is shrugging off the wider market sell down today and racing higher. But why?

Read more »