Allkem share price in the green as ASX 200 lithium stock posts record revenue

Allkem posted a 209% year on year increase in six month earnings, buoyed by higher lithium prices and increased production.

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Key points

  • The Allkem share price is in the green on Friday morning
  • The ASX 200 lithium share reported a 1,592% increase in net profits
  • Allkem expects lithium and spodumene prices to increase during the current quarter

The Allkem Ltd (ASX: AKE) share price is climbing higher in morning trade after opening in the red.

The S&P/ASX 200 Index (ASX: XJO) lithium stock closed yesterday trading for $11.46 per share and opened this morning at $11.30 apiece. Its hares are currently swapping hands for $11.65 each, up 1.66%.

This comes after the release of Allkem's half-year results for the six months ending 31 December (H1 FY23).

Allkem share price higher on surging revenue and profits

Here are the highlights:

  • Revenue of US$558 million, up 209% from H1 FY23
  • Earnings (EBITDAIX*) increased 311% year on year to US$402 million
  • Net profit after tax of US$219 million, up 1,592%
  • Net cash balance at 31 December of US$552 million, up 32% from June

(*Earnings before interest, taxes, depreciation, amortisation, impairment, gains from financial instruments, foreign currency (losses)/gains, share of associate losses, business combination costs, and other adjustments due to purchase price allocation.)

What else happened during the half year?

Helping drive the strong results lifting the Allkem share price today was record half-year production at the company's Olaroz Lithium Facility in Argentina. Olaroz produced 7,542 tonnes of lithium carbonate, beating its 2019 record by 13%.

This also saw Olaroz deliver record revenue, up roughly 350% to US$296 million.

The ASX 200 lithium share reported that average pricing over the six months increased almost four-fold from H1 FY22 to reach US$43,236 tonne free on board (FOB). The gross profit margin was approximately 90%.

Allkem also saw a 65% year-on-year increase in its spodumene revenue. That reached US$190 million from sales of 36,951 dry metrics tonnes (dmt) of spodumene concentrate.

The company received an average price of US$5,136 per tonne cost, insurance, freight (CIF), with a gross cash margin of 76%.

What did management say?

Commenting on the results helping boost the Allkem share price today, CEO Martin Perez de Solay said:

Amidst strong demand for lithium products, we have delivered first production at the Naraha Lithium Hydroxide Plant and advanced Olaroz Stage 2 to commissioning. Sal de Vida construction is well underway, and James Bay is advancing with approvals received by the federal government for the ESIA.

With two revenue generating operations being supplemented in the near future by Olaroz Stage 2 and a strong balance sheet, we are fully funded to complete construction at Sal de Vida and the development of James Bay.

What's next?

Looking to what might impact the Allkem share price in the months ahead, the company forecasts third-quarter FY23 lithium carbonate prices will be approximately US$53,000 per tonne FOB. It noted that figure excludes Naraha feedstock, an intermediate input for the production of battery-grade lithium hydroxide.

With strong customer demand, Allkem forecasts spodumene prices in the March quarter will come in 5% higher than for the December quarter.

"Allkem remains focused on continuing successes of our business, optimising operations and delivering its tier 1 development assets while also advancing the next wave of growth," Perez de Solay said.

Allkem share price snapshot

As you can see on the chart below, the Allkem share price has gained an impressive 33% over the past 12 months.

Motley Fool contributor Bernd Struben 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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