Fortescue Ltd

It's great to be back with you. And I can say that I have loved my time again, simply that it might be being this company's chief executive. As you know, we've only had three chief executives in our 20 year history. And I will be gladly handing over to Hutch and Fiona for our next quarterly half yearly annual results team. So you won't hear that much of me, but all of you can contact me anytime you like. I've loved this short period being able to speak with you like this. So look, it was only two weeks ago that we presented results which included our highest ever half-year shipments of 96.9 million tonnes. I won't repeat what we discussed then, but I would like to say we are consistent. We deliver very strong results. while at the same time we challenge ourselves further to step beyond fossil fuel to deliver across society's highest expectations. This, of course, has made us one of the highest, if not the highest, value-returning companies on the Australian Stock Exchange over 20 years. We've consistently delivered returns to our shareholders, building on the almost US$22 billion investment since we started this company from scratch. Two men and a dog, and we used to argue which one was the dog. Today, we've announced a 40-franc interim dividend of 75 cents, exactly in line with our guidance of between 50 and 80%. We've also maintained our position as the world's lowest-cost iron ore producer while decarbonising our operations profitably and becoming a global green energy metals and products business. And this is all team, all while delivering record iron ore shipments and finishing off construction on the massive groundbreaking Iron Bridge project. As you know, this has been a mammoth effort by our own construction teams, who I'm immensely proud of, and who, with the successful experience of turning Iron Bridge around, executing Iliwana and all our other very successful projects, match fit to go into arguably the highest growth period in this company's history through consolidating our Turbara and our African operations and delivering major construction projects around the world for green energy. Now, I have to say that with Ironbridge in particular, Like with FFI, we do the technical hard work first. We have been working furiously on green technology testing now for three years. You all know that we successfully piloted, at commercial scale, Ironbridge, because it's breakthrough technology, never been brought on in such a large plant, and certainly not in magnetite, but it worked perfectly at our commercial scale, 500 million US dollar pilot plant. So we are expecting great things when we start to fully commission and ramp up Ironbridge. In Gabon, and I don't want to undercook Gabon, Gabon is a huge iron ore province, undeveloped, and the Gabonese government didn't put us up to tender, didn't ask us to compete. They simply did what some great governments do and do their own research, their own global investigation. And then they invite the company they think is the best to develop their iron ore industry. And we're deeply honoured that the Gabonese government invited Fortescue to develop the Belinga project, which will, I believe, because this is how we roll, have a very positive impact both on the Australian hematite iron ore industry and three, the differences in minerals and metals within each other's ores have a very positive effect on the Gabonese iron ore industry as well. It will dovetail into our Pilbara operations, maximising the mineral content to our customers' satisfaction and extend and optimise the mine lives and efficiency of both our Pilbara and emerging Gabon metal complexes. And to do this, very fortescue this, to do this we're implementing a production plan now. A production plan that with our extreme sensitivity to community and endemic fauna and fauna studies, we believe we'll see our first iron ore shipped this year. Not this decade, not next decade, this year. This is possible because we're using an existing road and we're using an existing rail line, which limits the possibility of environmental delays, as these have already, of course, been approved because they're already operating. The necessary equipment, which normally has very long lead times, for a new start could be many, many years, is available to Port Askew right now. We're utilising our residual crushing and screening plant residual haul trucks, rail cars and our own locomotives. And it's due to Fortescue's clear and unambiguous industrial leadership away from climate change that we've attracted respect from governments around the world. Together, we're now switching on the world's first green iron facility through an electrolyser and expanding our major automation centre and our green fleet tech hub in WA that has been responsible for breakthroughs that our companies made in zero pollution trucks and mobile equipment, including advancing train and ship engines. Remarkably, this is the key, ladies and gentlemen, remarkably over this intense period of growth, we've actually reduced our debt. We've improved on what was already a very strong balance sheet and continue to create great value for all our stakeholders, including our shareholders. When Fortescue does well, ladies and gentlemen, the entire Australian community does well. We consistently contribute hundreds of millions to our state and federal government coffers every month. I'll now pass to Hutch. Hutch, how's FFI going, mate?

Good. Thanks, Andrew. We really are quite a unique inflection point for our business at the moment. We work extremely hard to bring at least five projects to FID this calendar year. No one has done what we are on track to do, and that's really to deliver green energy and green molecules of scale on a global basis. We totally believe that the global market is ready and waiting for our product. And actually, Andrew and I have traveled a bit over the last few weeks, including Davos, And it was really clear to us that, really, we're the only game in town doing multiple projects globally. As we see the world, and we kind of learn every day, really, we see four ecosystems building. The first is the United States. And there we have the Inflation Reduction Act, which has really created a serious advantage for product in America. This will be a very domestic focus market, and they will produce green energy and green hydrogen locally for that market. The second market is Europe, and this week we saw very positive signs from Europe with a long-awaited delegated act published by the European Commission. This act will create a clear definition for renewable and green hydrogen, providing the certainty that is needed for producers, manufacturers and investments to do business in the EU. We will be very much part of the EU ecosystem, and we also will supply Europe from places like Canada, Latin America, North Africa, and the Middle East. The third ecosystem developing is in Asia, where Singapore, Korea, and Japan will be big markets. We will supply these markets from Australia and India as well as possibly Canada and Latin America. The fourth market is China, which we just can't simply afford to forget. We will be traveling to China later this year and to better understand and gauge the local markets there. So in the United States, we're very much going to focus on Texas, Arizona, California, and this is where there's an immediate need for product. In Europe, we plan to focus initially on places like Norway, Because what we're looking for is really good, affordable energy. And we see some really wonderful opportunities in Norway to get going. In Latin America, Brazil is going to be a focus. In Africa, we're looking at places like Namibia and Kenya. In North Africa, Morocco is a target. And the Middle East, we've made great progress in Egypt and Jordan. And of course, Australia is a big priority for us. So as you can see, we're really creating a global business here. Now just projects aside, it's also important to acknowledge that we're making great progress on technology. This week, our research and development team had a major breakthrough on green iron and produced some in our Western Australia facility. So we're making great progress on many breakthroughs. And all this is to aim to build a global business that will continue to deliver returns for our shareholders well into the future.

And with that, I'll pass over to Andy. Thank you, Hutch. Good morning, all. And look, it's a real privilege for me to represent the finance team and step you through the key highlights of what was another period of strong earnings and cash flow generation. Starting at the top line, revenue for the half was $7.8 billion. Our focus on cost management, on productivity, contributed to EBITDA of $4.4 billion at a margin of 56%. Now, this represents EBITDA of $52 per dry ton sold. And in fact, it's the eighth consecutive half-year period generating a margin north of $50 a ton. And that's a result of Fortescue's industry-leading cost position and our integrated sales and marketing strategy. and it's achieved by focusing on what we can control. We reported NPAT of 2.4 billion for the half, and for those on the webcast, you can view the reconciliation to the first half of last year to H1FY23 in the waterfall on this slide. It's a clean and transparent set of numbers. You can see all the moving parts, including the impacts of price, volume, and costs. Now on the next slide, Next slide. It's clear that the business continues to generate exceptional cash flows with free cash flow generation of $1.6 billion in the half. Now that's capital investment including growth after capital investment including growth of $1.4 billion. The balance sheet remains really strong with cash on hand of $4 billion which includes reserved cash of about $1.6 billion for payment of the interim dividend that was declared today and a commitment of around $1 billion to FFI that's consistent with our capital allocation framework. Now, gross debt was unchanged over the period at $6 billion. You can see that we're positioned inside of our targeted investment grade credit metrics, and we have a well-balanced debt maturity profile. And our liquidity is further supported by an undrawn revolving credit facility and an undrawn term loan. Disciplined capital allocation is a core competency and it's really important to us. You can see from this slide on the webcast that since FY14, and that's the first year that production exceeded 100 million tonnes, Fortescue's generated $48 billion of operating cash flow. We've invested $16 billion. We've repaid $9 billion of debt and declared $23 billion of dividends That equates to almost 70% of net profit after tax over the period. So as you can hear, we've achieved outstanding operating and financial results for the first half of FY23 and we're really well placed to again deliver on our guidance. On that note, Ashley, I'll hand back to you to facilitate the Q&A where we welcome your questions.