Champion Iron share price falls on FY22 results

Champion Iron shares are under pressure on Thursday…

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Key points

  • The Champion Iron share price is tumbling on Thursday following the release of the iron ore miner's results
  • The Canadian mining company delivered solid revenue and earnings growth in FY 2022
  • This was driven by higher iron ore prices which offset softer production and higher costs

The Champion Iron Ltd (ASX: CIA) share price has dropped into the red on Thursday.

In morning trade, the iron ore miner’s shares are down 3% to $7.51 following the release of its full-year results.

Champion Iron share price falls on FY 2022 results release

  • Revenue up 14% year on year to C$1,460.8 million
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) up 13% to C$925.8 million
  • Net income up 12.5% to C$522.6 million
  • Cash on hand and restricted cash of C$396.4 million

What happened in FY 2022?

For the 12 months ended 31 March, Champion Iron delivered a 14% increase in revenue to C$1,460.8 million and a 13% lift in EBITDA to C$925.8 million.

This was driven by a 14% increase in net average realised iron ore price to C$190.9 per dry metric tonne, which more than offset a small production decline and higher costs.

The company’s production of high-grade 66.2% iron ore fell 1.1% to 7,907,300 wmt during the 12 months, whereas its cash costs rose 8.7% to C$58.9 per dmt.

Champion’s CEO, David Cataford, was pleased with the company’s performance during the 12 months. He said:

Delivering robust operational and financial results for our 2022 fiscal year, while completing our Phase II expansion project is a significant achievement highlighting our team’s professionalism and perseverance.

This year we will work to double Bloom Lake’s nameplate capacity and further position our Company’s contributions towards green steelmaking solutions. In addition to ongoing feasibility studies for our DR pellet feed project and the Kami Project, we also partnered with a global leader in the steel industry, in order to evaluate the opportunity to re-commission our recently acquired Pellet Plant in Pointe-Noire and produce DR pellets.

How does this compare to expectations?

According to a note out of Goldman Sachs, it was expecting Champion to report revenue of C$1,466 million and EBITDA of C$924 million. This means the company has fallen short on revenue but beaten on earnings.

In light of this, the pullback in the Champion Iron share price is likely to have been driven more from sector weakness rather than these results. A number of iron ore miners are also trading notably lower today.

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 Scott Phillips.

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