The Allkem Ltd (ASX: AKE) share price is falling on Wednesday following the release of the company's quarterly update.
In early trade, the lithium miner's shares are down 1% to $9.72.
Allkem share price falls despite record quarter
The Allkem share price is falling today despite the company revealing that it had a strong finish to the financial year.
During the three months ended 30 June, Allkem delivered record quarterly group revenue of approximately US$337 million and a group gross operating cash margin of approximately US$292 million.
This means that group revenue for FY 2022 (including Mt Cattlin from the merger date of 25 August 2021) was US$762 million and its group gross operating cash margin was approximately US$594 million (excluding corporate and other non-operating costs).
Allkem finished the year with a hefty cash balance of US$663.2 million, which is an increase of US$213.1 million since the end of March.
What were the drivers of its record result?
The key Mt Cattlin and Olaroz operations finished the year strongly.
In respect to the former, the Mt Cattlin operation achieved production of 24,845 dry metric tonnes (dmt) and shipments of 37,837 dmt despite COVID-19 cases impacting the mine site over the quarter.
This led to the company delivering record quarterly Mt Cattlin revenue of US$188.9 million with a gross cash margin of 84% based on average pricing of US$4,992 per dmt.
In light of this strong quarter, Mt Cattlin reported record full-year production of 193,563 dmt.
It was a similar story over in Argentina at the company's Olaroz Lithium Facility. During the quarter, Allkem reported production and sales of lithium carbonate of 3,445 tonnes and 3,440 tonnes, respectively.
This led to the Olaroz Lithium Facility generating record quarterly revenue of ~US$141 million with a gross cash margin of 90% based on average pricing of US$41,033 per tonne.
Once again, this meant record full year production at Olaroz Lithium Facility of 12,863 tonnes of lithium carbonate. Approximately 47% of this was battery grade material, which was in line with targets.
Outlook
It could be the company's outlook that is underwhelming investors and weighing on the Allkem share price today.
Allkem revealed that it is targeting Mt Cattlin spodumene production of approximately 160ktpa to 170ktpa. This will be down from 193.5ktpa in FY 2022.
Management also warned that costs will be higher in FY 2023. This is due to ongoing developments, lower production volumes, and labour shortages in Western Australia.
However, with customer demand in the spodumene market remaining robust, the company is expecting spodumene concentrate pricing in the September quarter to be higher than the June quarter.
No real guidance was given for Olaroz other than management expecting the lithium carbonate sales price for the September quarter to remain similar to the June quarter.
