Andrew Forrest has launched a sweeping restructure at Fortescue in the face of the company’s failure to deliver on its green energy promises, with as many as 700 jobs going in the massive cutbacks.
Dr Forrest is understood to have addressed Fortescue staff on Wednesday afternoon, flagging a major round of redundancies — including the departure of more of the company’s senior management. The changes include the departure of senior operational staff in the company’s iron ore division, sources say, including senior mine managers, amid a widespread understanding the company has failed to meet its annual production targets.
Sources say the changes affect far more than the company’s energy division, which has burned hundreds of millions in examining potential green hydrogen and ammonia sites across the world, but has so far only delivered three final investment decisions across the would-be green energy portfolio.
Fortescue’s failure to maintain the pace or exports at its flagship iron ore division is also understood to be at the heart of the changes, which will only add to the chaos which has engulfed the company over the last 18 months.
A derailment on its main Pilbara line over Christmas hit its export rates, as did heavy weather in the Pilbara in February. The company is also still struggling to get its troubled Iron Bridge magnetite project operating to anywhere close to full capacity, and has issued multiple downgrades to its expected output over the last year.
ASX 200 soars to record high on broad-based gains as 'rotation' continues; Zip to raise $267m
Gas like 'life insurance' in Labor plan: Bowen. BHP's record WA iron ore shipments. Maintenance fails cause of Callide tower collapse. Qantas Super to merge with ART. DroneShield dives again. Zip's debt raise.
Welcome to the Trading Day blog for Wednesday, July 17. The ASX 200 index ends up 0.7 per cent at a record high close of 8057.9 after rising to 8083.7 on broad gains. It follows strong gains in the US, headlined by the Dow's 743-point jump.
The Aussie dollar is trading near US67.32c at 5.10pm AEST.
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Updates
Fortescue to axe 700 jobs amid restructure
ASX 200 ends up 0.7pc at record high
Australia's share market soared to a record high as last week's rotation from US tech giants continue amid falling bond yields but US futures dive in late trading.
However, it shied off the high US futures dived 0.5-0.8 per cent and Singapore iron ore futures fell 1.7 per cent to a four-day low of $US105.50 a tonne.
The S&P/ASX 200 index closed up 59 points or 0.7 per cent at 8057.9 after rising as much as 1.1 per cent to 8083.7.
Bell Potter's Richard Coppleson said Macquarie handled a growth stock transition portfolio worth about $1bn on Tuesday and that continued to have an impact.
Mr Coppleson says to avoid domestic cyclicals amid risk of an RBA rate hike.
All sectors rose with property, tech, consumer staples, industrials, communications and financials outperforming. Amid standouts in those sectors, Goodman rose 1.2 per cent, WiseTech soared 3.3 per cent, Woolworths rose 1.3 per cent, Brambles rose 2 per cent, Telstra jumped 1.3 per cent and NAB and Westpac rose 1 per cent.
James Hardie rocketed up 6.3 per cent and Northern Star added 3.4 per cent after spot gold rose 1.9 per cent to a record high close of $US2468.92.
But BHP fell 0.9 per cent and Fortescue lost 1 per cent as iron ore prices fell.
US earnings reports and announcements from China's Third Plenum meetings are awaited. Australian employment data are due Thursday.
Renewable investors 'raised concerns': Bowen
Renewable energy investors have raised concerns with Coalition’s proposed tilt towards nuclear energy, Energy and Climate Change Minister Chris Bowen has claimed.
However, Mr Bowen said he was unaware of any cases where investors had been spooked from pouring money into renewable projects in their entirety. “It has been raised with me as a concern by renewable energy investors, yes. I'm not aware of any particular decision that has been taken to say we were going to invest,” Mr Bowen told the National Press Club on Wednesday.
The Albanese government is banking on a flood of private capital to reach its green goals, with Minister Bowen last year unveiling the Capacity Investment Scheme to provide a framework to encourage additional investment.
Asked how investors’ concerns could be eased, Mr Bowen gave a defiant response: “I think we need to win the next election and put that issue to bed.”
Magnis re-extends loan, appoints exec director
Suspended ASX-listed entity Magnis Energy's secured short term loan is now extended to October 16 under a new lender as it attempts to tap into the 'deep' China connections of new executive director David Wang.
The group and its chair Frank Poullas are facing financial regulator ASIC in court over alleged misleading disclosures to investors.
On Thursday, Magnis told investors it has a new "side deed" with new lender McEvoy Street (Alexandria) for the principal amount of $5.5m with a maturity date of October 16. Interest will accrue at 4.5 per cent per month payable on maturity.
Also, Mr Poullas said Mr Wang now has specific responsibilities for developing the company's "business activities in China including relationships with Chinese battery manufacturers". "David has very deep connections within the Chinese manufacturing industry, in particular with battery manufacturers which we intend to leverage for the benefit of our shareholders," he said.
Mr Wang will not initially receive any remuneration, but both parties will agree on a package "in due course" with investors to be informed. Meanwhile, board member Fabrizio Perilli has stepped down "to pursue his other business interests".
Gas like 'life insurance' in Labor plan: Bowen
Climate Change and Energy Minister Chris Bowen has reiterated that gas "will play an important role" under the future energy mix amid accusations that the Albanese government has given mixed signals over the importance of the power source.
Underlining the role for gas fired power generation, Mr Bowen pointed to the findings of the Australian Energy Market Operator’s most recent Integrated Systems Plan. “So they work on the basis that we will need 15 gigawatts of gas capacity in 2050, but that dispatch will fall from ten terawatt hours a year to around six terawatt hours,” Mr Bowen told the National Press Club.
“Obviously, predictions beyond 2050 start to get more difficult, because we're talking so much further away. That shows you clearly the direction of travel, but those six terawatt hours are still going to be important.” Mr Bowen described the future role gas would play as being akin to "life insurance".
"You don't need it very often, but when you need it, you really need it. That's the underpinning role of gas in the system,” he said.
2035 emissions target in Feb: Bowen
Australia’s 2035 emissions reduction target will be provided by February next year as required by the Paris Agreement, Climate Change and Energy Minister Chris Bowen has flagged.
“We'll abide by our Paris commitments, absolutely,” Mr Bowen told the National Press Club on Thursday, signalling that the government would unveil its fresh target in line with its international commitments. Asked last month if his government would provide a guarantee that it would unveil its 2035 target ahead of the next federal election, which is due by May at the latest, Anthony Albanese sidestepped the question.
“I’m guaranteeing the 2030 target that we have legislated, as well as net zero by 2050,” the Prime Minister said at the time. “What we’re concentrating on is delivering 43 per cent [emissions reduction] by 2030, and we’ve got a mechanism to get there.”
The Climate Change Authority will provide official advice to the Albanese government regarding the 2035 target, with industry and climate experts speculating that a reduction of between 65 and 75 per cent on 2005 emissions levels will be adopted.
Day of swings for Cettire, Step One
It's a day of sharp swings for small-cap online retailers Step One Clothing and short favourite Cettire.
Innerwear specialist Step One touched a top of $1.95 in trading on Wednesday and is up 17.5 per cent to $1.72 at 1.15pm AEST on its FY24 guidance. The group expects FY24 revenue to come in 29 per cent stronger at $84m with earnings before interest, taxes, depreciation and amortisation at $17m, up 42 per cent on FY23.
Step One founder and CEO Greg Taylor was pleased to report "another period of profitable growth" and expects "to continue its profitable growth". FY24 audited results are out on August 21.
For under-pressure and heavily-scrutinised luxury brands retailer Cettire, it's been a tale of two halves. Updated earnings disclosures first took it to a high of $1.65, but it's now down nearly 2 per cent to $1.45.
The group, led by reclusive entrepreneur Dean Mintz expects to pull in FY24 gross revenues of $975m-$980m, up 81-81 per cent on its $539m result in FY23 with its active customers now totalling 692,287, a jump of 64 per cent on the shoppers in FY23.
AMP lifts ASX 200 yearend target to 8100
AMP lifts its S&P/ASX 200 year end target to 8100 from 7900.
The S&P/ASX 200 is up 1 per cent at a record high of 8081.2 points Wednesday.
"We have revised up our year-end target for the ASX 200 to 8100 from 7900 reflecting prospects for lower interest rates globally and eventually in Australia boosting the 2025 growth outlook," says AMP chief economist and head of investment strategy, Shane Oliver.
"But in view of the risks around valuations, near term growth and geopolitics, we are not yet prepared to go further."
He expects a "more volatile and constrained" performance from Australian shares.
Dr Oliver sees a "high risk of a correction" in the seasonally weak August-September period, "particularly if investors start to factor in the potentially more negative economic implications for a Trump victory."
'Nuttier, fringe' Coalition members talked nuclear: Turnbull
Only fringe, "nuttier" members of the previous Coalition government spoke in support of nuclear, former prime minister Malcolm Turnbull told the Australian Clean Energy summit on Wednesday.
The Coalition has said it will build seven nuclear power stations to reach net zero by 2050.
Mr Turnbull said the policy was not grounded in reality and demonstrated how the Coalition has moved. "I can tell you that for the nine years that the Coalition government was in power, under Abbott, myself and Morrison, the only people who talked about nuclear power in Australia were on the nuttier fringe,” said Mr Turnbull.
FWC to review Smith 'conflict of interest'
The workplace umpire has voiced its deep concern with allegations of criminal activity inside the CFMEU and has moved to review "conflict of interest" concerns after the union's national secretary Zach Smith took over administration of its Victorian branch.
In a statement released on Wednesday, the Fair Work Commission said it was undertaking "careful analysis" of media reporting that revealed widespread allegations of criminal conduct by CFMEU officials, including links to organised crime and bikie gangs.
"I am deeply concerned about the alleged conduct and commentary that organised crime has infiltrated several state branches of the Division, including that it appears to be embedded and ongoing,” the commission’s general manager Murray Furlong said.
"While the alleged criminal conduct reported in the media falls outside of my jurisdiction, alleged conduct involving repeated, opportunistic or deliberate contraventions of the Registered Organisations Act, including misappropriation of funds or unlawful conduct of elected officials, will be met by swift, well-resourced and significant enforcement action."
Mr Furlong said he was carefully reviewing information provided by the union, including if there were "any conflict of interest issues arising after Smith assumed multiple roles at the same time" when he took charge of CFMEU’s Victorian branch.
ASX 200 down 0.6pc after record high but CBA hits another record
Australia's stock market retreats from a record high, but CBA does it again with another record high close, Analysts unpack Amcor's Berry buy. Freight issue risks Nick Scali profit. EV volatility hits PWR Holdings profit margins.
ASX 200 at all-time high; CBA hits record
ASX 200 soars to record high on large scale buying before a late selloff. RBA 'vigilant' on inflation risks. Goyder to chair Perron Group. TechOne hits record after profit jump on a strong day for tech stocks. CBA, Xero, WiseTech also hit records. Elders dives after capital raise. Santos buoyant on higher returns promise