• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

  • Menu
    • Commodities
      • Resources and Mining
      • Copper
      • Gold
      • Iron Ore
      • Lithium
      • Silver
      • Graphite
      • Rare Earths
    • Technology
      • AI
      • Bitcoin
      • Cryptocurrency
      • Energy
      • Financial Technology
      • Bio Technology
    • Market Analysis
      • Latest ASX News
      • Dividend Shares
      • ETFs
      • Stocks and Bonds
    • Macro
      • Australian Economy
      • Central Banks
      • World Markets
    • Small Caps
    • More
      • Investment Guides
      • Premium Research
      • Editors
      • About
      • Contact Us
  • Latest
  • Fat Tail Series
  • About Us
Macro Australian Economy

Fortescue Metals [ASX:FMG] Delivers Lower Dividends as Growth Takes Priority

Like 0

By Mahlia Stewart, Wednesday, 15 February 2023

FMG was flat in the share market having presented lower profits for the half year.

Iron ore giant Fortescue Metals Group [ASX:FMG] posted that iron ore shipments of 96.9 million tonnes were 4% higher than the prior period, and it received NPAT of US$2.4 billion, 15% lower than the previous year.

As a result, Fortescue delivered a fully franked interim dividend of 75 cents per share, a 65% payout of H1 FY23 profit, less than the 86 cents interim dividend the year before and at a lower payout ratio to earnings.

Fortescue’s share price dropped slightly below its last trading price, trading at $22.15 a share by early afternoon.

 

ASX:FMG fortescue stock chart

Source: TradingView

Fortescue Metals provides half-year report, profits and dividends dip

For the half year ending 31 December 2022, Fortescue Metals reported a ‘record half year’ of production, with iron ore shipments totalling 96.9 million tonnes, 4% higher than the same time last year.

However, the group reported that its net profit after tax (NPAT) had come to US$2.4 billion, down 15% on last year.

Fortescue churned an underlying EBITDA of US$4.4 billion in the first half of fiscal 2023 and an underlying EBITDA margin of 56%.

Since the group had earned less than it did the previous year, the board dished out a fully franked interim dividend of 75 cents a share, repressing a 65% payout to it first half’s NPAT.

Last year, the interim dividends were at value of 86 cents each, again lower in its correlation to earnings by 5 cents.

FMG’s consistency in delivering at the higher end of its promised dividend-as-a-percentage-of-earnings range (between 50% and 80%) has faltered, following a two-year track record wherein FMG delivered dividends at around 75–80% of earnings.

Capital expenditure in the half year totalled US$1.4 billion, including US$596 million of sustaining and development capital, US$110 million in exploration and studies, US$624 million in major projects, and US$51 million incurred by growth in Fortescue Future Industries.

What does this mean for FMG’s immediate future?

While dividend growth has been cut as a casualty of lower profit, the iron ore giant did say that it’s not changing its FY23 shipments or capital expenditure guidance.

This is an interesting choice, as the iron ore producer seeks to upscale its growth in the energy market across its existing major projects, Iron Bridge Magnetite Project and its Fortescue Future Industries (FFI) subsidiary.

FMG shared a balance sheet of US$4 billion in December 2022, structured around low-cost invest-grade terms, which it declares is balanced with some built-in flexibility for supporting ongoing operations and future growth.

For the rest of FY23, the group expects to ship 187–192 million tonnes of iron ore, at a C1 hematite cost of US$18.00–18.75 per wet metric tonne.

FFI’s FY23 anticipated expenditure is looking at around US$500–$600 million of operating expenditure and US$230 million of capital expenditure.

Market analyst UBS predicts FMG’s earnings and dividends will sink lower over the next five years, while Macquarie expects to see growth expenditure rise from around US$3.3 billion to US$3.9 billion to 2028.

Whether or not would-be shareholder returns are further redirected into growth funding is something we may yet see.

Australia’s next commodity boom

Speaking of FMG, our resources expert thinks the Australian resources sector is set to enter a new commodities boom — one that may just mirror the potential FMG offered to investors when it struck gold — well, iron — the las time around.

This is a boom that is likely to be brought on by the ‘Age of Scarcity’.

James Cooper, trained geologist turned commodities expert, is convinced ‘the gears are in motion for another multiyear boom in commodities’…and the best part is that Australia and its stocks are in prime position to reap great benefits.

You can access a recent report by James on exactly that topic AND access an exclusive video on his personalised ‘attack plan’ right here.

If that isn’t enough to sate your curiosity, check out this interview with James and Greg with Ausbiz.

 

Regards,

Mahlia Stewart

For The Daily Reckoning Australia

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Mahlia Stewart

Mahlia’s Premium Subscriptions

Publication logo
Fat Tail Investment Research

Latest Articles

  • One forecast for gold: 10k per ounce!
    By Callum Newman

    Gold was long considered a “chaos” hedge, and protection against market sell offs and financial crisis. It can be that, for sure. But for now, the markets are bidding on both, because it’s inherently protection against currency depreciation. This is why bitcoin is surging toward new highs as well.

  • Three men, $20.8 million, and a $230 million rally… all in a day
    By Brian Chu

    Brian shares his insights on how to identify emerging investment trends before they gain widespread attention.

  • Jamie Dimon’s warning means one thing only
    By Callum Newman

    Dimon recently stated: “You are going to see a crack in the bond market”. And… “You are going to panic”. He doesn’t say it, but implied in Dimon’s warning is you and I better have a plan in place for when this scenario goes down.

Primary Sidebar

Latest Articles

  • One forecast for gold: 10k per ounce!
  • Three men, $20.8 million, and a $230 million rally… all in a day
  • Jamie Dimon’s warning means one thing only
  • As Empires Crumble… Precious Metals Reign
  • Whatever happened to the Tump-Musk visit to Fort Knox?

Footer

Fat Tail Daily Logo
YouTube
Facebook
x (formally twitter)
LinkedIn

About

Investment ideas from the edge of the bell curve.

Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.

Quick Links

Subscribe

About

FAQ

Terms and Conditions

Financial Services Guide

Privacy Policy

Get in Touch

Contact Us

Email: support@fattail.com.au

Phone: 1300 667 481

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988