Pilbara Mineral (ASX:PLS) share price sinks 7% amid half-year results and CEO exit

This lithium miner had a strong half

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Key points

  • Pilbara Minerals delivered strong sales and profit growth during the first half
  • This was underpinned by sky high lithium prices, which have continued to rise
  • Pilbara Minerals' also revealed the surprise exit of its CEO later this year

The Pilbara Minerals Ltd (ASX: PLS) share price has taken a tumble on Wednesday morning. This follows the release of the lithium miner's half year results.

At the time of writing, the Pilbara Minerals share price is down 7.5% to $2.58.

Pilbara Minerals share price lower on results and shock announcement

  • Shipments up 49% to 170,228 dry metric tonnes (dmt) of spodumene concentrate
  • Half year sales revenue up 394% to a record of $291.7 million
  • EBITDA of $151.1 million, up from $3.2 million a year earlier
  • Cash balance of $191.2 million
  • Underlying profit after tax of $84.2 million
  • CEO Ken Brinsden to step down by the end of 2022

What happened during the first half?

For the six months ended 31 December, the lithium giant reported a 394% increase in revenue to a record of $291.7 million. Management advised that this result reflects continued improvement in lithium market conditions over the period, which has continued its strong momentum into the current half.

During the half, Pilbara Minerals achieved an average selling price of ~US$1,250/dmt (~A$1,700/dmt). However, since the end of the half, the company notes that reporting agencies are currently indicating spot spodumene concentrate prices in the range of ~US$3,750-US$4,500/dmt.

This bodes well for its performance in the second half, particularly given its unit operating costs. While these costs have increased due to higher royalties and sea freight costs, lower spodumene rates, and the tight labour market, at US$486/dmt (A$666dmt) Pilbara Minerals is operating with huge profit margins.

CEO exit

Taking some of the shine off the strong result is news that Pilbara Minerals' CEO, Ken Brinsden, plans to step down by the end of 2022.

Mr Brinsden revealed that he believed it was the right time for him to step back after what will be approximately seven years in the role. The decision is motivated by his desire to be able to spend more time with his family and to pursue personal interests after a lengthy career at senior executive levels.

Pilbara Minerals has commenced an executive search process for its next CEO.

Management commentary

The outgoing CEO was pleased with the company's performance during the half.

Mr Brinsden said: "We are very pleased to announce an outstanding inaugural profit for the half-year to 31 December, which marks a significant milestone for Pilbara Minerals in our journey to become one of the world's leading suppliers of lithium raw materials."

"Our financial performance for the period is a direct reflection of the incredible turnaround which has been experienced in the lithium raw materials supply chain over the past year or so. The combination of strong underlying demand growth and Pilbara Mineral's ability to create a transparent spot price outcome via the Battery Material Exchange has driven very strong increases in prices for our product," he added.

Outlook

Mr Brinsden is confident on the company's outlook despite the widespread labour shortage issues and cost inflation being experienced in the Western Australian resource sector.

He commented: "Despite these challenges, the outlook for Pilbara Minerals in the second half of FY2022 and beyond remains extremely bright. The current momentum in lithium markets continues to demonstrate higher price outcomes and we are very well placed to participate in this as production and sales volumes from the combined Pilgangoora Operation continue to increase. I am confident that a combination of hard work, innovation and focus on production growth will continue to drive our success."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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