McMillan Shakespeare Limited (ASX: MMS)
In FY24, McMillan Shakespeare Limited (ASX: MMS) achieved strong financial performance, with Normalised Revenue rising 11.5% to $525.8 million, Normalised EBITDA growing 34.8% to $177.0 million, and Normalised UNPATA increasing by 38.2% to $107.6 million. The company’s capital-light model allowed for impressive cash conversion of 136% of UNPATA and a return on capital employed (ROCE) of 62.1%. MMS maintained a solid balance sheet with low debt, reflected by a debt-to-EBITDA ratio of 0.5 times. Additionally, the company raised its fully franked dividend by 24.2% to 154 cents per share, marking a 100% payout ratio in line with its policy. The company’s commitment to sustainability and reducing its environmental footprint was evident, with a 19% reduction in net greenhouse gas emissions and a notable increase in its ESG rating from A to AA.
MMS also made significant strides in its customer-focused initiatives. The Group’s Remuneration Services (GRS) segment saw a 4.7% growth in salary packages, while the Asset Management Services (AMS) segment benefited from improved vehicle supply, contributing to a 4.9% increase in managed units. The company’s Plan and Support Services (PSS) segment grew organically, with a 10.3% increase in plan management and support coordination customers. The rise of electric vehicle (EV) adoption continued, with EVs accounting for 43.2% of new novated lease orders in GRS. The company introduced several technology-driven solutions, including the successful launch of the Employer Connect portal and the soft-launch of Oly, a digitized novated leasing platform targeting small and medium businesses.
For FY25, MMS expects market conditions such as inflation and cost-of-living pressures to persist, alongside increased auto supply and EV growth. The company will continue to prioritize organic growth across all segments, with particular focus on the further rollout of Oly and the completion of its Simply Stronger program, which includes $11 million in capital expenditure. Key strategic priorities for the year ahead include enhancing customer experience, boosting technology-enabled productivity, and expanding competency-led solutions.
Fortescue Limited (ASX: FMG)
Fortescue Limited (ASX: FMG) reported strong operational performance in Q1 FY25, with total iron ore shipments of 47.7Mt, a 4% increase YoY, marking a record for a first quarter. Shipments included 1.6Mt from Iron Bridge, exceeding full-year shipments from the project in FY24. Total ore mined increased 2% YoY to 57.1Mt, while ore processed remained steady at 48.0Mt. Hematite C1 costs rose 12% YoY to US$20.16/wmt, driven by a higher strip ratio (2.0x vs. 1.7x in Q1 FY24) and inflationary pressures. Hematite average revenue was US$83/dmt, realizing 83% of the Platts 62% CFR Index, while Iron Bridge concentrate achieved US$111/dmt, 97% of the Platts 65% CFR Index. The company has been giving continuous dividends and has a high dividend yield of 10.55%.
Notable milestones included the commencement of the Green Metal Project at Christmas Creek, targeting initial production in 2025, and progress on the Billion Opportunities program, with over A$5 billion awarded to First Nations businesses since inception. Fortescue’s climate ambitions were underscored by its externally verified Climate Transition Plan aiming for Real Zero by 2030. The green technology division made strides with the unveiling of the battery-electric T 264 truck and a US$2.8 billion partnership with Liebherr for zero-emission mining equipment. This agreement includes battery power systems developed by Fortescue Zero and a collaboration to design autonomous electric haulage solutions.
Cash and net debt were US$3.4 billion and US$2.1 billion, respectively, at September 30, 2024, after a US$1.9 billion dividend and US$0.8 billion in capex. FY25 guidance remains unchanged with iron ore shipments of 190-200Mt, hematite C1 costs of US$18.50-$19.75/wmt, and total capex of US$3.2-$3.8 billion. Exploration activities advanced in the Pilbara, Gabon, and South America, while green hydrogen projects progressed globally. Notably, Fortescue Zero plans to commence operations at its U.S. Advanced Manufacturing Centre, producing high-voltage marine battery packs. Fortescue’s solid performance and strategic initiatives position it well to meet FY25 guidance and advance its decarbonization and growth objectives.
Source: Company’s Report
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