Another reporting season is over and so investors have the chance to look over the results to see what businesses are good value and where they think company earnings could go from here. Owners of Fortescue Ltd (ASX: FMG) shares may be wondering what to expect from their company in the years ahead.
Commodity prices are difficult to predict, which is why it can be challenging to forecast with certainty what ASX mining shares could achieve in the longer-term. The dynamic between supply and demand is integral for the success of Fortescue in any given year.
The broker UBS has provided some thoughts on what could happen with the iron ore price in the next few years and how this may impact the company's profits.
UBS said that the miner's FY25 operating profit (EBITDA) of US$7.9 billion was in-line with expectations, while US$3.4 billion of net profit after tax (NPAT) was a "tad soft" compared to analyst projections of US$3.5 billion.
Let's take a look at what the broker is expecting for owners of Fortescue shares in the coming years.
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FY26
UBS is forecasting that the iron price could be approximately US$90 per tonne in 2026 as the huge iron ore project in Africa called Simandou commences.
The broker said that iron ore fundamentals are "balanced" today, with the Onslow project – owned by Mineral Resources Ltd (ASX: MIN) – roughly running at its expected capacity. UBS also noted what it thinks will be a short delay after Simandou Sifer was suspended after a fatal incident.
UBS believes the launch of shipments from Simandou will be a "key overhang" in the next year.
The broker also said that Fortescue's increasing focus on deliver of decarbonisation is "pleasing" and it sees further potential for delayed green hydrogen/ammonia projects until these markets develop.
With the above in mind, UBS forecasts that Fortescue's net profit could decline US$400 million to approximately US$3 billion in FY26.
FY27
In FY27, the broker is forecasting that the iron ore price could be US$88 per tonne in 2027 as Simandou ramps up.
The 2027 financial year could see both the company's revenue and net profit decrease.
UBS is projecting that the net profit could decline by more than US$300 million to US$2.7 billion.
FY28
The 2028 financial year could be the start of a recovery for Fortescue (shares), if the UBS projections end up being correct.
UBS said that that the new Iron Bridge project's ramp up will be in focus between now and FY28, with a target of reaching the nameplate capacity in FY28.
The broker is projecting that Fortescue's net profit could rise more than US$400 million to US$3.1 billion in the 2028 financial year.
FY29
The 2029 financial year could be the best one since FY24, if UBS is correct.
Fortescue's net profit after tax could climb by another US$500 million in FY29 to US$3.6 billion.
FY30
Pleasingly, UBS suggests that the 2030 financial year could be the best set of numbers over for rest of this decade. In FY30, Fortescue's net profit could climb by another US$200 million to US$3.8 billion.
