CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

Fortescue Metals Group FY21 earnings preview

We highlight some of the key things investors and traders should be aware of before Fortescue Metals Group reports its full-year results on August 30.

Fortescue Metals Group FY21 earnings preview Source: Bloomberg

With two out of three of Australia’s large-cap iron ore miners – BHP Group and Rio Tinto – having already reported their latest round of earnings, market expectations are likely elevated around Fortescue Metals Group (FMG) upcoming full-year earnings report.

FMG is set to report its full-year, FY21 results next week, expected to be released during the morning on Monday, 30 August.

Below we look at some key macro considerations as well as examine the recent operational results from big three peers BHP and Rio Tinto, and the insights they might give to FMG’s upcoming results.

Iron ore comes under pressure

With the market driven by the short-term whims of investors, stocks like FMG have been battered over the last month, as iron ore itself faces heavy selling pressure.

Prices of the all-important commodity have collapsed since May, falling from a high of around US$230 per tonne to US$160 per tonne in recent days – implying a decline of approximately 30%. Off the back of that, FMG has seen its share price decline steeply, with the stock down ~20% in the last month alone, last trading at $20.13 per share.

Market commentary, dated August 18, from the Metals Market index provides useful insight into the current situation, with it being noted:

'Steel mills are more likely to buy cautiously due to the continuously decreasing iron ore price, and the, overall deal atmosphere was depressed today.’

'Recently important iron ore inventory continued to gradually increase, spot iron ore price still has more pressure to rise. Furthermore, steel price also decreasing due to unforeseeable steel demand, the support effect on iron ore price has gradually decreasing.'

Click here to learn more about commodities and how to trade them with IG.

Rio Tinto, BHP results: dividend harbingers

Despite iron ore’s short-term weakness, the commodity has run hot over the last year, boosting the profit and cash flow profiles of Australia’s big three miners in the process.

This was most recently evidenced by Rio Tinto and BHP’s recent interim and full-year results, respectively, which saw both companies hand out mammoth windfalls to investors. BHP for example, returned more than US$15 billion worth of dividends in FY21 alone.

Investors will likely be keen to see Fortescue make comparably significant payouts. The miner most recently paid an interim dividend of 147 cents per share and currently has a dividend yield of 11.51%. This comes as those slumps in the iron ore price have pushed FMG’s share price down, bumping up the dividend yield in the process.

Macquarie, who is particularly bullish on the iron ore and FMG more specifically, has an Outperform rating and $27.00 price target on the miner. The investment bank expects FMG to payout 367 cents per share in total dividends in FY21, up from 176 cents per share in FY20, implying that a significant final dividend looms.

Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.

The information 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 Bank S.A. 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 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. See full non-independent research disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.