Mineral Resources share price slides as dividend drops 43%

What did Mineral Resources report today?

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Key points

  • The Mineral Resources share price is falling 2.29% today 
  • Underlying NPAT dropped 64% to $400 million 
  • The company declared a dividend of $1 per share - this will be paid on 23 September  

The Mineral Resources Limited (ASX: MIN) share price is falling today amid the company's FY22 results.

The mining company's share price is currently trading at $63.63, a 2.29% drop. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 1.77% today. The S&P/ASX 200 Materials Index (ASX: XMJ) is 2.26% in the red.

Mineral Resources is an iron ore and lithium producer. Let's take a look at what the company reported to the market today.

Mineral Resources share price falls on profit drop

Highlights of Mineral Resources FY22 results include:

  • Underlying net profit after tax (NPAT) fell 64% on FY21 to $400 million
  • Statutory NPAT fell 72% to $351 million
  • Underlying EBITDA dropped 46% to $1.024 billion
  • Revenue slid 8% on FY21 to $3.4 billion
  • Operating cash flow of $344 million
  • Fully franked final dividend of $1, down 42.8% from $1.75 in 2021
  • Diluted earnings per share (EPS) of 184.87 cents per share

What else did the company report?

Underpinning the drop in earnings was the sharpest iron ore price in history and a broadening of discounts.

On a positive note, Mineral Resources delivered "a strong second half performance" on the back of record lithium prices. Spodumene concentrate from Mt Marion was converted into lithium hydroxide.

A jump in working capital from the restart of Wodgina and higher receivables amid the higher lithium pricing contributed to a 79% drop in the operating cash flow.

Mineral Resources shipped a record 19.2 million tonnes of iron ore in FY22. The Mining Services division produced a record 274Mt.

Looking at lithium, joint venture partner Ganfeng approved the next stage of the Mt Marion expansion to 900,000 tonnes per annum.

This was the first earnings that Mineral Resources reported lithium hydroxide production.

Management comment

Commenting on the results, managing director Chris Ellison said he is incredibly proud of what the Mineral Resources team delivered. He added:

Against the headwinds of iron ore price and inflationary cost pressures and the pandemic still affecting our everyday operations, we achieved the second-best financial performance in our history while investing in major development projects that will set us up for the next 30 to 50 years.

MinRes began building a world-class, long-life lithium business in Western Australia more than a decade ago. Our foresight and investment are starting to bear fruit – today, we already are the largest ASX-listed spodumene concentrate producer and one of the first to derive earnings from lithium hydroxide.

What's else

Today, Mineral Resources announced Red Hill Iron Joint Venture parties have made a final investment decision on the Onslow Iron Project in Western Australia. Mineral Resources has a 40% stake in this project, while API Management Pty Ltd (APIM) has a 60% stake.

Stage one will target a yearly capacity of 35 Mtpa. Mineral Resources will continue as manager of the joint venture. In return for a $1.3 billion capital expenditure, Mineral Resources will earn an extra 17% participating interest in the joint venture. Iron ore shipment is targeted for early 2023.

Mineral Resources share price snapshot

The Mineral Resources share price has jumped 16% in the past year, while it has climbed 7% in the year to date.

In the past month, Mineral Resources shares have leapt 13%.

For perspective, the benchmark ASX 200 Materials Index has lost 0.04% in the past year and 1.58% in the year to date.

Motley Fool contributor Monica O'Shea 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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