Shares of Fortescue Metals Group opened firmer as the Iron Ore miner more than doubled its net profit to AUD 2.7 billion and pledged to pay shareholders a bigger dividend going forward.
FMG will pay a final, fully franked dividend of 25 cents per share, which pencils out to 52% of the company’s net profit after tax. The full year dividend was announced at 45 cents per share.
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Looking into next year, FMG announced it would increase its dividend guidance to a range of 50 to 80% of net profit after tax.
We feel that the share price will run into resistance around the $6.10 level and aren’t buyers at these levels.
While Iron Ore has had a respectable price rebound off the $54.00 low posted in June, we don’t expect a protracted move higher back into the $80/82.00 range, which will temper the profit outlook for FMG.
Fortescue Metals Group
