The Fortescue Metals Group Limited (ASX: FMG) share price is in focus this week as the iron ore giant is scheduled to report its FY22 half-year result.
Fortescue has now reported its half-year result. You can check out the HY22 result.
Fortescue’s incoming HY22 result
Iron ore mining giant Fortescue is expected to release its result tomorrow.
This is actually one of the biggest iron ore miners in the world. In the first six months of FY22, it shipped 93.1 million tonnes of iron ore. That’s a lot of iron ore. In the December quarter, its iron ore shipments were 47.5mt.
What to expect from the report
Fortescue is a commodity business. That means it’s dependent on the price of the commodity that it produces, as well as how much it produces.
The iron ore miner is producing a lot of iron ore and is working on new projects. The Iron Bridge project is getting closer to being finished. This will produce higher grade/quality iron which is worthy of getting a higher price.
At the moment, most of Fortescue’s iron is seen as lower quality and the price discount to regular iron is growing.
Fortescue is also thinking about expanding its iron production with a project in Gabon (Africa) as well as potentially working with Sinosteel.
How about the dividend?
An interesting question is what the Fortescue half-year dividend is going to be. At the current Fortescue share price, the FY22 dividend yield could be above 10% when including the franking credits.
The FY21 half-year dividend was $1.47 per share. Fortescue’s share price and the iron ore price has been very volatile since June 2021. Will profit be higher or lower in HY22? BHP Group Ltd (ASX: BHP) just reported its own result, which showed higher profit and a much bigger dividend thanks to higher commodity prices.
I don’t think that the Fortescue FY22 annual dividend will be as big as FY21. We’ve seen that plunge of the iron ore price per tonne to around US$80 late last year. I also don’t think that we’re going to see a high for the iron ore price like we saw above US$200 per tonne.
Final Fortescue share price thoughts
The Fortescue share price has climbed a lot in the last few months. Despite the Fortescue decline today (of 4.5% at the time of writing), it’s still up 9.5% since the start of the year.
It’ll be interesting to see what the company says about Fortescue Future Industries (FFI). It has announced a lot of things recently, including the acquisition of Williams Advanced Engineering (WAE) for £164 million. I wonder if FFI has kept any news for the HY22 result?
I’m not sure if Fortescue is a buy at this stage. It has risen a lot in the last three months. If/when the iron ore price falls below US$100 per tonne then it could be a buy again, particularly for its green initiatives. I’m not buying today, but below $18 will be when I start thinking about topping up again.
