CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

FMG share price surges on FY20 results, $1.00 final dividend declared

We look at the highlights from Fortescue's 2020 results, released to the market on Monday, 24 August.

FMG share price rises on FY20 results

The Fortescue Metals Group (FMG) share price surged at the open on Monday after the $56 billion iron ore giant reported its full-year (FY20) results to the market.

Here, Fortescue saw its revenue climb off the back of elevated iron ore prices, its earnings rise across the board, while also reporting a hefty final dividend of AUD$1.00 per share.

Commenting on these results, FMG’s Chief Executive, Elizabeth Gaines said:

'Once again, Fortescue's unique, differentiated culture underpinned the delivery of a year of outstanding performance for Fortescue, with record results achieved by the team across all of our key operating and financial measures while sustaining our clear focus on investment for future growth and development.'

The response was predictable – at least when framed against FMG’s meteoric rise over the last two years – as investors bid the stock higher at the open. A little after noon, FMG traded at $18.54 per share, up 3.09%.

A record production year in focus

Though much was already known about FMG’s results heading into the full-year release – today’s FY20 report was nonetheless favourably received by the market.

On the top-line, Fortescue reported total FY20 revenues of US$12,820 million, up 29%; driven by increased shipments (FY20: 178 million tonnes) and higher realised prices.

As with revenue, the miner’s earnings came in stronger – bolstered by still elevated iron ore prices and operational efficiencies – with earnings (underlying EBITDA) hitting US$8.4 billion (+38%), profits (underlying NPAT) reaching US$4.7 billion (+49%), and earnings per share (EPS) of 1.54 US cents or 229 AUD cents.

'Leveraging the capacity in our value chain resulted in record shipments, sustained low cost performance and excellent operating margins which positioned us to deliver record NPAT of US$4.7 billion,’ said CEO Elizabeth Gaines.

At the close of FY20 FMG had net debt of US$258 million.

FY20 dividends jump on strong operational performance

In step with these strong results, FMG's Board today declared a final dividend of AUD$1.00 per share – taking the full-year dividend to AUD$1.76 per share, representing a 54% increase on a year-over-year basis and a 77% payout ratio.

Fortescue has maintained its dividend policy aimed at paying out 50-80% of full-year profits (NPAT). The company will trade ex-dividend on 31 August.

Elsewhere, the company reiterated its FY21 iron ore shipment guidance of between 175-180 million tonnes as well as its FY21 CAPEX guidance of between US$3.0-3.4 billion.

How to trade FMG, long or short

In the wake of Fortescue’s FY20 results, where do you stand: are you bullish or bearish on the iron ore giant? Whatever your view, you can use CFDs to trade both rising and falling markets, through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) FMG using CFDs, follow these easy steps:

  1. Create an IG Trading Account or log in to your existing account
  2. Enter ‘FMG’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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