Report Date and Period:
- Date of Report: 31 August 2024
- Financial Year: Second Quarter (2Q) and Six Months ending 31 August 2024 (FY2025)
Key Financial Highlights:
- Revenue: The company recorded a revenue of US$15.5 million for 2Q FY2025, which is a 10.4% decline from US$17.3 million in 2Q FY2024.
- Gross Profit: The gross profit decreased by 10.3% to US$10.3 million compared to the previous year.
- Net Profit: Profit after tax for the financial period was US$4.5 million, showing a slight decrease of 1% year-on-year.
- Other Income: A significant increase in other income was observed at US$1.5 million, primarily driven by unrealized foreign exchange gains and contract termination compensation.
- Earnings per Share (EPS): The basic and diluted earnings per share dropped slightly by 3.4% to 0.85 US cents in 2Q FY2025.
Dividends:
- Dividend Declared: The company declared a final one-tier tax-exempt dividend of 0.60 Singapore cents (equivalent to 0.46 US cents) per ordinary share for FY2024, amounting to US$2.4 million, which has been paid.
Special Investor Considerations:
- Iron Ore Production: Fortress continues its focus on iron ore exploration, production, and sale with ongoing improvements at the Bukit Besi and CASB mines.
- Operational Efficiency: There has been a focus on operational efficiency improvements, with production and cost optimizations contributing to lower cost of sales by 10.5%.
- Foreign Exchange Gains: The strengthening of the Malaysian ringgit against the US dollar led to unrealized foreign exchange gains, which significantly contributed to other income.
- Expansion Efforts: The company is advancing exploration at the Sabah mine and improving the processing capacity at the CASB mine, positioning it for long-term growth.
Strategic Actions:
- New Investments: Fortress is increasing its capital expenditure on its mining properties and plant and equipment to ensure sustained operations and growth. This includes US$1.8 million spent on new plant and equipment.
- Debt and Liabilities: Fortress continues to manage its borrowings, showing a reduction in short-term liabilities due to loan repayments, but also taking on new hire purchase borrowings.
Recommendations for Investors:
- For Current Stockholders: Investors currently holding the stock may consider maintaining their position, as the company’s long-term strategy of expanding mining operations and focusing on operational efficiency could enhance profitability. However, there has been a slight decline in net profits and revenue, indicating a cautious approach.
- For Potential Investors: Those not currently holding the stock may wish to adopt a wait-and-see approach, particularly considering the current revenue decline and net profit reduction. However, Fortress’s strategic efforts in improving production capacity and its iron ore portfolio expansion could present a buying opportunity once these initiatives yield results.
Disclaimer:
This analysis is based solely on the financial data provided in the Fortress Minerals Limited 2Q FY2025 report. It does not constitute financial advice, and investors should conduct their own research or consult a financial advisor before making investment decisions.
