FMG +1.90%: posted FY21 and June quarter 21 production scorecard today and the numbers were very strong. They had record production of 182.2mt, up 2% on FY20 which was itself a record year up ~6% on FY19. Looking forward they have introduced FY22 guidance which is for FY22 shipments of between 180-185mt which is broadly inline with the 182.2mt in FY21. One aspect that was notable was a big step up in costs to US$15.00-$15.50 from FY21’s $13.93 (up ~10%) although it still compares favourably to RIO’s revised CY21 cost guidance of $18-18.50. Also of note was price realisation which is a result of FMG’s lower quality Iron Ore. The last two quarters have registered a declining price realisation trend, now sitting closer to 80% given greater demand for higher quality product. All in all, a great FY21 banked by FMG in terms of production, sales and of course a handy iron ore price tailwind which should filter into record earnings (and dividend).
MM is neutral / bullish FMG
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