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

Fortescue’s FY21 results are right around the corner. What should investors expect?

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The Fortescue Metals Group Limited (ASX: FMG) share price looks like it has fallen off a cliff, sliding 7.7% in the last two trading sessions.

Despite the recent weakness in iron ore prices driving down the Fortescue share price, investors might want to turn their attention to the company’s upcoming FY21 results on 30 August.

What should investors look out for?

Record shipments and earnings

Fortescue released its June quarter and full year FY21 activities update last Friday, which should give investors a solid preview of the company’s upcoming results.

According to the announcement, Fortescue delivered a record 49.3 million tonnes (mt) in the June quarter and 182.2 mt for FY21, topping its guidance of 182 mt.

In addition, the company’s average revenue for iron ore was US$135/dry metric tonne in FY21.

The upbeat announcement helped drive the Fortescue share price to an all-time record high of $26.58 last Friday.

By comparison, the company shipped 178.2 million wet metric tones (wmt) in FY20 at a realised price of US$78.62/dmt.

All eyes on dividends

The Fortescue share price paid a significant 147 cents interim dividend in March this year, almost higher than its entire FY20 dividend of 176 cents.

With record shipments and impressive revenue per tonne of iron ore, investors should have their eyes peeled on what the total dividend will be for FY21.

In the past two years, Fortescue has maintained a dividend payout ratio of net profits of 77% and 78% respectively.

Why the Fortescue share price is selling off before its results

Despite a highly anticipated full year results announcement right around the corner, the recent decline in iron ore spot prices might take the spotlight.

Iron ore spot prices have been trading above the US$200/tonne level since early May.

However, in a quick turn of events, have tumbled from highs of US$220 to US$178.97 in the past week, according to Markets Insider.

Mining.com reports that the sudden collapse was driven by China’s move to reduce domestic steel output in order to meet its decarbonisation goals.

Should you invest $1,000 in Fortescue right now?

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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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