Own Fortescue (ASX:FMG) shares? Here’s what to look for during reporting season

With Fortescue due to report its FY21 results next month, what should investors look out for?

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What a year it’s been for the Fortescue Metals Group Limited (ASX: FMG) share price.

Shares in the iron ore major have rallied by around 54% in the last 12 months, but remain relatively flat in terms of year-to-date performance, up less than 2%.

With reporting season right around the corner, what should investors be looking out for?

Fortescue share price slides despite record shipping

Fortescue’s March quarterly production report highlighted a strong operating performance with record year-to-date shipments.

Fortescue CEO Elizabeth Gains said:

Fortescue’s excellent operating performance continues to drive strong results, with shipments of 42.3mt in the third quarter contributing to a record shipping performance for the first nine months of the financial year

Overall, the company said that “guidance for FY21 shipments and C1 costs remain unchanged”.

Interestingly, on the morning of its March quarterly production report, the Fortescue share price tumbled 3.49% before a stronger finish, down 0.44%.

Iron Bridge expenditure

There have been a lot of question marks around Fortescue’s Iron Bridge Magnetite Project, with concerns of potentially higher than expected CAPEX expenditure.

Back in May, Fortescue advised it will need to fork out its share of US$2.5 million to US$2.7 billion of the total US$3.3 billion to US$3.5 billion of capital expenditure.

On top of the base capital expenditure, Fortescue will need to front up an additional US$1.3 billion in capital expenditure as at 30 April 2021.

The Motley Fool has previously reported increasing concerns for the Fortescue share price from brokers Shaw and Partners, Goldman Sachs and Morgan Stanley about blowout costs from the Iron Bridge project.

Dividends on watch

Fortescue dividends have surged in the last two years, from $1.14 in FY19 to $1.76 in FY20.

In February, Fortescue announced a significant interim dividend of $1.47 in its half-year results.

At the current Fortescue share price, the interim dividend alone would represent a yield of about 5.8%.

According to the half-year results, the company has a dividend policy to pay out 50% to 80% of its full-year net profit after tax, targeting the top end of the range.

Key dates for Fortescue share holders

According to Fortescue’s website, its FY21 full-year financial results will be announced on 30 August.

At the time of writing on Friday, the Fortescue share price is trading 0.08% higher at $25.21.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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