Fortescue Share Price Up after Record Half-Year Dividend (ASX: FMG)

Fortescue Metals Group Ltd [ASX:FMG] has had quite a bumper of a half year. The FMG share price is up today 1.77% at time of writing after releasing its half-year results.

Fortescue logs in record half-year shipping, earnings and operating cash flow

For the six months to December 2020 Fortescue recorded revenues of US$9.34 billion, up 44% from the same period last year. Net profit after tax was US$4.08 billion, a 66% increase from the US$2,464 it recorded in the same period last year.

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The company shipped 90.2 million metric tonnes, up 2% from the same period last year.

With such great results, the company said they’ll be distributing a record dividend of $1.47 cents a share, a 93% improvement from the interim dividend it declared last year.

The company also told investors their Iron Bridge magnetite project will be costing US$400 million more than originally planned. The estimated cost is now at US$3 billion, with production expected to start on the second half of 2022.

Underpinning Fortescue’s success are high iron ore prices and strong demand from China

Iron ore prices have gone to reach US$166 a tonne after Brazilian iron ore Vale hit some hiccups in production and off the back of strong demand from China.

Fortescue got average realised prices of US$114.02 per dry metric tonne, a 42% increase from the US$80.36 per dry metric tonne it got in the same timeframe last year. A price that, according to the company, outperformed the increase in the Platts 62% CFR Index which registered a 32% rise for the same period.

For FY21, the company expects iron ore shipments to be in the range of 178–182 metric tonnes. At time of writing, Fortescue’s shares are trading at $24.84 — that’s an over 122% increase in the last 12 months.

High iron ore prices have also boosted the Australian dollar higher. So far the Australian dollar is up 36% against the US dollar since it collapsed in March.

How will the Aussie dollar move next?

Check out our latest report ‘Will the Aussie Dollar Rise or Fall in 2021?’, where Rum Rebellion Editor Greg Canavan explores this question in depth.

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Selva Freigedo

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

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