Whilst both of the chosen companies, Iluka Resources and Fortescue Metals Group can be broadly categorised as resources companies, there are a number of key differences between the companies, which determine how global factors affect their performance.
Fortescue Metals Group (FMG) is an Iron Ore mining company with operations in the Pilbara Region of Western Australia. Focusing solely on Iron Ore production, the company has two main hubs from where Iron Ore is mined: the Chichester Hub and Solomon Hub, which produce a combined total of 155 mtpa of Iron Ore. The ore is crushed and screened and then railed to the Herb Elliott Port in Port Hedland for export. (Fortescue Metals Group 2015)
Iluka Resources (ILU) is the largest domestic and international
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FMG mines Iron Ore whilst ILU mines Zircon, Titanium Dioxide and Monazite as well as holding royalties over Iron Ore produced at BHP Billiton’s Area C Mine (Iluka Resources Limited 2012). The second difference is that FMG only has operations in Australia, whilst ILU has both domestic and international operations. Another key difference is that FMG is a company that focuses solely on the production of Iron Ore whereas ILU is a diversified company involved in mineral sands exploration, project development, operations and …show more content…
The cyclical nature of the resources industry means that both FMG and ILU’s performance will be positively affected when world economies are strong and minerals are in high demand, and adversely affected in economic slowdowns. Whilst both companies’ performance will be negatively impacted by China’s slowing economic growth in the short term, the severity of the consequences are different for FMG and ILU. For FMG, China’s slowing economic growth means that there is less ‘end user’ demand for Iron Ore, leading to a further reduction in prices, negatively impacting FMG’s results (Oliver 2014). For ILU their significant market share affords the company to ramp down production and allow inventories to build, keeping earnings before interest, tax, depreciation and amortisation margin at sustainable figures to offset reduced demand (McArthur
The first observation from the financial data in appendix one is that General Motors has a low profit margin and is generally less than the industry average each year. The firm is able to keep a low profit margin because they have such high sales volumes throughout the world. This strategy can be both an asset and liability in business planning. The plus side of the strategy is that GM is able to sell a large number of vehicles in the marketplace due to the lower selling price as compared to the competitor. However, the down side of the strategy is that there is a possibility that if sales volumes decrease, the firm can incur a significant decline in the EPS because the profit margin on each item sold is very low. If the global economy sours, GM can have a very difficult time meeting shareholder expectations.
The global oversupply of crude affects Exxon. In the fourth quarters of last year, Brent and other crudes price were down sharply more than a third to an average of cost of $80 a barrel. This affected fourth quarter earnings. Exxon’s fourth quarter earnings fell 16%. Fortunately, most experts doubt the oil price will recover until half of the year although it recently increased more than 10 percent. Although the company experienced decline in revenue, it face to positive. Exxon faces to positive from its drilling, and has in a global-wide expansion and development plan.
The company is known as the largest iron ore, coal and manganese producer in Australia, Brazil, and South Africa. They own one of the major suppliers or copper, silver, lead, and uranium in Australia and continuously looking for ways to expand globally. As of 2016 BHP Billiton has been announced to be the third largest nickel producer and the sixth largest producer of aluminum
MCI current capital structure is x% debt and y% equity. Their key ratios are a, b, and c. Comparing to other firms in the utilities industry they appear to be underutilizing (debt/equity). (See exhibit D). Referencing the forecast there is expected to b...
Exxon and Mobil were two big competitors in the oil industry. In the 20th century, Exxon and Mobil operated with relatively low-price, and in low-margin environments. The market in the United States and Europe have grown and matured, allowing them both to grow with great success. The competitiveness has tightened worldwide in the crude oil business. Both companies have continued to advance new technologies, introducing new marketing innovations. They have extend there reach into high-growth markets. The two companies became more efficient, reduced costs, and increased shareholder’s value by there merge.
In assessing Du Pont’s capital structure after the Conoco merger that significantly increased the company’s debt to equity ratio, an analyst must look at all benefits and drawbacks of a high debt ratio. The main reason why Du Pont ended up with a high debt to equity ratio after acquiring Conoco was due to the timing and price at which they bought Conoco. Du Pont ended up buying the firm at its peak, just before coal and oil prices started to fall and at a time when economic recession hurt the chemical industry of Du Pont. The additional response from analysts and Du Pont stockholders also forced Du Pont to think twice about their new expansion. The thought of bringing the debt ratio back to 25% was brought on by the fact that the company saw that high levels of capital spending were vital to the success of the firm and that high debt levels may put them at higher risk for defaulting.
- Nucor Corporation is the largest steel producer in the United States and had net sales of $11.3 billion in 2004.
population, 2/3 of its coal mines and oil fields and 1/2 of its heavy industry
This financial ratio analysis will help to identify Rolls-Royce’s strength and weaknesses during three years period from 2011 until the end of 2013. While it is a helpful tool for investors to make investment decisions base on profitability of the company, managers can make strategic decisions of the company. However, there are some limitations in using financial ratio analysis alone when make decisions. Comparing ratios with the industry norm and with the company’s rivals, the user of the financial ratio analysis will be able to anticipate future prospects. Rolls-Royce’s nearest rivals are General Electric (GE) and Pratt & Whitney, owned by United Technologies Corporation (UTC). These world 's top three companies are investing massively in R&D to satisfy demand of a booming global market for environmentally cleaner, energy efficient power engines that result in a huge number of orders of commercial airliners. All top
Firstly, based on the profitability, P&G has earned higher profit from each dollar of revenue which is 13.4% compared to C-P 12.9% for the recent year 2013. In addition, P&G also has higher EPS of US$4.04 compare to C-P US$2.41. In contrast, C-P register a Gross Profit of 58.7% and Return on Equity of 91.0% as opposed to P&G’s 49.6% and 17.0% respectively. C-P seems to rely heavily on debt and this has helped to improve the Return of Equity. P&G also has its downside in asset turnover ratio (0.62) and fixed turnover
From the 1850’s – 1900’s gold, silver, lead and zinc were discovered in South and West Australia. In the early 20th century mining started to decline because the only major finds were lead, zinc and copper but their full potential was later realized. Today Australia is one of the leading nations in the mining industry as they have a lot of resources to mine.
In 1997, Australia produced 158 million tonnes of iron ore. However, in 2007, this figure had more than doubled with a total of 320 million tonnes (U.S. Geological Survey, 2008). Such a significant change is partly attributed to the continuous expansion and diversification of the industry’s two key players, Rio Tinto Group and BHP Billiton, into the Pilbara region of northwestern Australia. Other sensitivities include environmental and social demands, technological advancements, and research and development amongst others. It must be noted that each of these factors can be drawn back to a single title that is a major influence on industries worldwide: globalisation. ‘Figure 2’ shows the production levels of iron ore over the 2006-07 period, and its export value compared to other mined minerals.
Important factors of a company’s outlook are its financial strength and weaknesses. These factors can be evaluated by reviewing the firm’s financial statements and using ratios to help measure a company’s liquidity, leverage, activity, profitability, and growth. Financial ratios are computed by using the information found in a company’s financial statements: primarily income statement and balance sheet. The calculations from the current year, previous years, and other companies in the industry are used as a basis to identify and ev...
Upon examining P&G’s financial ability to meet short-term obligations, it is apparent that not only have their current liabilities exceeded current assets over the last three years, but close to half of their current assets have been tied up in inventories and other illiquid assets. For example, assessing both the quick and current ratio respectively shows that less than 70% of the firm’s current assets could be converted immediately to pay current commitments, but a little more than 90% of the firm’s liabilities would ultimately be covered. Though, based on industry average similar findings occur; therefore, it must not be uncommon for industries similar to P&G to
... million, would occur in the construction sector. Other sectors seeing a significant increase in sales because of mine construction include utilities ($11.3 million), retail trade ($4.3 million), and real estate ($3.1 million).