He says that even as Fortescue spends $9bn-plus on going green, there’s enough cash, and savings, to keep the dividend payouts coming.
Dr Forrest said Fortescue Metals Group already had enough cash on hand to fund the fullAnalysts have questioned whether Andrew Forrest’s green ambitions could get in the way of dividends.
Fortescue’s dividend policy is to pay out between 50 per cent and 80 per cent of full-year net profit, with the payout ratio sitting at about 75 per cent for the past five years.Macquarie said this could fall to 60 per cent and Goldman Sachs said 50 per cent. Morgans said the company risked generating less free cash flow over the next decade.
“This is not like those huge construction programs you’ve always seen me do: scoping, feasibility study, definitive feasibility study, front-end engineering design, construction; then commissioning, might work, might not, all the repairs when it doesn’t, then ramp up. Then you might get a cheque,” he said.“That’s not how renewable works. You roll it out like a carpet. And every time you do that, you plug it in. It’s simple, it’s proven, and you start saving money immediately.
“It’s unrealistic to compare them [the fossil fuel and renewable power stations], but we applied the same cost just to be very conservative. Make sure no one could argue,” he said.
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