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Reporting Season 29th August 2022

FMG shares slide on FY22 results decline | Fortescue Metals (ASX:FMG)

Australian-based mining giant Fortescue Metals Group (ASX:FMG) released its FY22 results today, including the company’s second-largest ever profit announced.

For the year, FMG reported record annual shipments, up 4%, revenue of US$17.4 billion, underlying EBITDA of US$10.6 billion, NPAT of US$6.2 billion and EPS of US$2.01 per share.

Net operating cash flow came in at US$6.6 billion, while net debt ended the year at US$0.9 billion.

A fully franked final dividend was announced for $1.21 per share, down 43% on FY21, taking the total dividends paid in FY22 to $2.07 per share with the full value of dividends paid for the year topping $6.4 billion.

The results topped analysts’ expectations for the year but were down from last year amid declining iron ore prices on the back of China’s lockdowns weakening demand.

Looking ahead, FMG is focusing on the decarbonisation progress with particular focus on emissions reduction across the value chain. On the forecast front for FY23, FMG announced full FY23 guidance including the expectation of iron ore shipments between 187-192 metric tons, CAPEX excluding Fortescue Future Industries between US$2.7 billion – US$3.1 billion, and C1 cost for hematite between US$18 – US$18.75 per WMT.

FMG didn’t however include financial outlook for FY23 in terms of EBITDA, NPAT or revenue expectations.

Looking at broker ratings, Citi has maintained its neutral rating on FMG with a price target of $18.40 per share, citing the company is performing well operationally but its valuation is not supportive assuming LT benchmark iron ore of US$80 per ton.

Investors have responded negatively to the results this morning, with of FMG shares trading just under 3% lower today so far.