FMG share price: where next following record FY21 result?

We examine the highlights from the mining giant’s full-year report.

The Fortescue Metals Group (ASX: FMG) share price opened firmly higher on Monday, after the pure play iron ore miner posted a record set of full-year FY21 results.

By 12:22 PM the stock was up 6.05% to $21.21 per share.

Across the board FMG’s operational results headed north, total iron ore shipments edged higher to come in at 182.2 million tonnes, while earnings EBITDA and profits (NPAT) all running off the back of the recent iron ore boom.

Cash in hand, the miner looks to be spending big to keep its shareholders happy, declaring a record final dividend as part of the results.

FY21 Results

Boosted by a rampant commodity market, the miner saw its total revenue hit US$22.2 billion in fiscal 2021.

That was driven partly by the sale of slightly more iron ore during the year, but primarily by the recent surge in commodity prices, which saw FMG’s average revenue increase 72% to US$135 per tonne in 2021.

Profits didn’t waver either: the miner booked earnings (EBITD) of US$16.4 billion and recorded an earnings margin of 73%. Meanwhile, post-tax profits doubled: underlying NPAT was US$10.3 billion, equating to earnings per share (EPS) of US 335 cents or AUD 445 cents per share.

Of the back of all this the miner retained a seemingly unassailable dividend policy, declaring a final dividend of AUD$2.11 per share. That takes FMG’s total dividends in FY21 to AUD$11 billion or AUD$3.58 per share - implying a favourable 80% payout ratio. Funnily enough, this was actually behind the market consensus, which pegged FMG at paying out a dividend of AUD$2.17 per share.

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Commenting on those results, FMG CEO – Elizabeth Gaines – said:

‘Guided by our unique culture and Values, the Fortescue family has delivered a second consecutive year of record performance, with shipments, earnings and operating cashflow surpassing any year in Fortescue's history.'

'Through the Iron Bridge Magnetite project and Fortescue Future Industries, we are investing in the growth of our iron ore operations, as well as pursuing ambitious global opportunities in renewable energy and green industries.'

FY22 outlook

Looking forward, the miner said it expected to ship between 180 million tonnes to 185 million tonnes of iron ore in fiscal 2022.

From a costs perspective, across 2022 C1 costs are expected to come in at between US$15.00 to US$15.50 per wet metric tonne, while total CAPEX, on an ex FFI basis, is expected to come in at between US$2.8 billion to US$3.2 billion.

Those estimates are based on an average Australian dollar exchange rate of 75 cents.

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