Fortescue Ltd (ASX: FMG) shares will come under scrutiny later this month when the ASX mining share releases its FY24 results.
The last several weeks have been rough for the Fortescue share price and the iron ore price. In just the last month, the company's share price has dropped by close to 20%, as shown on the chart below.
The iron ore price recently plunged below US$100 per tonne, reaching the lowest level in 20 months, according to Trading Economics. Low demand for steel in China has led to Chinese steel mills cutting their iron ore buying. Steel production reportedly dropped 9% month on month in July, suggesting a weak outlook for iron ore demand by blast furnaces.
Trading Economics points to housing oversupply in China and the lack of government stimulus for debt-laden property developers as factors hurting the outlook for the construction sector. The recent Chinese NBS Construction PMI reading fell to a one-year low in July, and house prices dropped the most since 2015.
All of this is occurring while iron ore inventory grows at Chinese ports.
When is Fortescue reporting its FY24 result?
The ASX mining share is expecting to report its annual result for the 12 months to 30 June 2024 on 28 August, which is next week on Wednesday.
Forecast financials
We've already seen some operational numbers from the latest quarterly update.
In FY24, UBS forecasts that Fortescue generated US$18.5 billion of revenue following a volatile financial year for the iron ore price, which saw it go above US$140 per tonne and drop to around US$100 per tonne.
Fortescue is projected by UBS to generate earnings before interest and tax (EBIT) of US$8.6 billion. This could lead to the ASX mining share reporting net profit after tax (NPAT) of US$5.88 billion and earnings per share (EPS) of US$1.91.
The ASX mining share could decide on an annual dividend per share of A$1.41 per share. At the current Fortescue share price, that translates into a fully franked dividend yield of 8.2% and a grossed-up dividend yield of 11.7% for FY24, though there's only the final dividend to come. Fortescue paid a half-year dividend per share of A$1.08 a few months ago, so UBS is expecting a much smaller final dividend.
Fortescue share price snapshot
Since the start of 2024, the Fortescue share price has dropped by more than 40%. From the start of this year, the S&P/ASX 200 Index (ASX: XJO) has risen by more than 4%, so Fortescue shares have significantly underperformed.
