Fortescue Ltd

Welcome all. It's great to be back with you again. And with me today is Mark Hutchinson, Energy CEO and Apple Paget Acting CFO. We're joining you from Gabon in Central Africa. And it's been a really productive visit spending time with the team, the government and a variety of stakeholders around this beautiful country. We're out at the Linga site early this week, and I continue to be amazed by the energy of the team, the potential of the project and the support we have in country. Onto the results. Last month, we presented our quarterly production results, which included our second highest first half shipments of 94.6 million tonnes. We achieved this while standing by our absolute commitment to safety and keeping costs low to drive performance and ensure we set the business up for future success. We achieved a C1 cost of less than $18 per tonne in the half, and I promise you we remain laser-focused on maintaining our industry-leading cost position. That strong operating performance in the first half underpins the outstanding financial results we reported today, including underlying EBITDA of $5.9 billion, up 36%, and net profit after tax of $3.3 billion, up 41%. Reflecting these results, the board today declared a fully frank interim dividend of one Australian dollar and eight cents per share, representing a 65% payout of first half net profit after tax and a return of 3.3 billion Aussie dollars to shareholders. There were many highlights during the half. We shipped our two billion tonne of ore in September and achieved record shipments in December. Through the flexibility of our supply chain and use of innovation and technology, including AI, This has improved our rail capacity, which has helped to buffer against supply chain variability. You can see this in action through our recovery plan, which has positioned us to mitigate the impacts of the derailment that occurred in December. We are laying the foundations for our longer-term success through consistent progress and innovation. Our decarbonisation plan continues to gain momentum with the deployment of our 240-tonne battery electric haul truck, Roadrunner, and commissioning of Australia's first Electric Excavator. Our Pilbara Energy Connect project is progressing well with the completion of 320 kilometres of transmission lines to connect Solomon to Iron Bridge and through to Port Hedlands. And we've commenced on-site testing of our prototype mobile hydrogen power unit, which provides renewable energy for mining equipment in remote areas. We also have an exciting exploration pipeline with programs underway in the Pilbara, as well as globally here in Gabon and South America, including Argentina, Brazil, and Chile. The strong first half of FY24 positions Fortescue well to deliver on guidance for the full year. And before handing over to Hutch, I'd love to give a big shout out to the entire Fortescue team and all our partners for their huge effort in the first half. On that note, Hutch, over to you.

Thanks very much, Dino, and welcome. I'd also like to take the opportunity to thank the Fortescue team for an amazing result and all the efforts they put into achieving this. It's been a big first year, half year for the energy business as well. We took three projects to FID. We're progressing our global project pipeline with more to come. We've doubled down on our battery systems and manufacturing with Fortescue WAE. Our in-house electrolyzer technology was verified and will underpin our Gladstone PEM 50 green hydrogen project. And we launched Fortescue Capital. I think about the energy business in four parts. Firstly, green energy, that's electrons and molecule production. Secondly, battery technology development. Next, hydrogen systems. And lastly, capital. These four parts see us developing complementary capabilities across the green energy value chain. This means we can maximize efficiencies, improve innovation, and competitive advantage through the whole vertical integration. We have the knowledge base, adaptability, and optionality to quickly respond to shifts, as well as capitalize on emerging opportunities we see. There is just no one else doing what we are doing. And as you can see from our achievements, Over the first half, we're making really solid progress. I'm very happy to take some questions, but first I'd like to hand over to Apple, who will take us through the financials. Apple.

Thanks, Hutch, and a big hello to everyone. The team has delivered another set of clean and transparent financial results, and it's a pleasure to share some of the details. Starting on the P&L, revenue of $9.5 billion. was up 21% on the first half of FY23, driven by an increase in the realized price. This revenue, combined with strong cost management, contributed to underlying EBITDA of $5.9 billion, up 36% on the year, year on year. The high EBITDA flow through to NPAT, up 41% to US $3.3 billion. The EBITDA margin increased to 62%, and this equates to an EBITDA margin of $73 per tonne for the metal segment. For those following the webcast, you can see on this slide that Fortescue has continued to generate strong margins through the cycle and the average EBITDA in the past five years is over $60 per tonne. Moving to cash flow, this slide demonstrates that the business continues to generate strong operating and free cash flow. Net operating cash flow increased to $4.2 billion in the half and free cash flow was up 69% to $2.7 billion. This was after capital expenditure of $1.5 billion, comprising $1.3 billion in the metal segment and $165 million in the energy segment. In terms of our full year capex guidance, this is unchanged from the quarter. $2.8 to $3.2 billion in metals and $500 million in energy, with spend phased to the second half. Fortescue's balance sheets further strengthened in the period, with net debt of $0.6 billion at 31 December, inclusive of the $4.7 billion of cash on hand. Approximately $2.2 billion of this cash has been allocated for the payment of the interim dividend next month. For those on the webcast, you can see Fortescue's credit metrics on this slide. Debt to EBITDA of 0.5 times and growth gearing of 22%. We are committed to maintaining strong credit metrics through the cycle. Our capital allocation framework also prioritises returning capital to shareholders based on our dividend policy to pay out 50% to 80% of underlying impact. As you've heard, the fully franked interim dividend declared by the board today of $1.08 per share represents a 65% payout ratio. In closing, we have delivered a very strong set of financial results in the first half and are really well positioned heading into the second half. We're pleased to take your questions and I'll hand over to the Q&A part of the call. Back to the operator.