Fortescue (ASX:FMG) share price on watch following 117% NPAT increase

Another outstanding performance by the company could set the tone for Fortescue shares today…

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Three happy miners standing with arms crossed at quarry

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The Fortescue Metals Group Ltd (ASX: FMG) share price will be in the spotlight on Monday morning. This comes as the iron ore miner released its full-year results for the FY21 financial year.

After the end of last week’s market close, Fortescue shares finished Friday at $20.00 apiece.

Fortescue share price on watch on record result

The Fortescue share price could be on the move after the company delivered another robust result for the 12 months ending 30 June 2021. Here are some of the key highlights:

  • Total revenue of US$22.3 billion, up 74% (FY20 US$12.8 billion);
  • Underlying earnings Before Interest and Tax (EBIT) of US$16.4 billion, up 96% (FY20 US$8.4 billion);
  • Net profit after tax (NPAT) of US$10.3 billion, up 117% (FY20 US$4.7 billion);
  • Earnings Per Share (EPS) of US$3.35, up 117% (FY20 US$1.54 per share); and
  • Final fully-franked dividend lifted to $2.11 per share, bringing the total dividend for FY21 to $3.58 per share, up 103% (FY20 $1.76 per share).

What happened in FY21 for Fortescue?

Fortescue recorded its highest-ever annual shipments of 182.2 million tonnes of iron ore, exceeding the prior guidance and underpinning the overall result. Earnings and operating cash flow also surpassed previous targets, reflecting an outstanding performance across the supply chain and strong customer demand.

In addition, disciplined cost management led to the company achieving industry-leading C1 costs of US$13.93 per wet metric tonne. Coupled with the average revenue of US$135 per dry metric tonne, up 72% on FY20, Fortescue collected bumper profits.

The delivery of its newest mining operation at Eliwana saw first ore through the processing facility in December 2020. Since then, operations have significantly ramped up to produce an annualised rate of 30 million tonnes of ore.

The company signalled its intention to become a worldwide leader in the battle against global warming, establishing Fortescue Future Industries (FFI). It aims to advance a global green hydrogen and renewable energy portfolio to achieve carbon neutrality by 2030.

What did management say?

Fortescue CEO Elizabeth Gaines commented on the milestone accomplishment, saying:

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.

What’s the outlook for Fortescue?

Looking ahead, Fortescue provided guidance for FY22, stating the following:

  • Iron ore shipments in the range of 180 million tonnes to 185 million tonnes;
  • C1 costs between US$15.00 to US$15.50 per wet metric tonne (based on assumed average exchange rate of AUD: USD 0.75); and
  • Capital expenditure (excluding FFI) of US$2.8 billion to US$3.2 billion.

Ms Gaines briefly touched on Fortescue outlook, adding:

We have seen a strong start to FY22 and through operational excellence, sustained focus on productivity and disciplined approach to capital allocation, we will continue to deliver benefits to all our stakeholders.

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Motley Fool contributor Aaron Teboneras 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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