The Allkem Ltd (ASX: AKE) share price is rising on Tuesday morning.
Shares are up 2.31% to $14.19 apiece as investors pick apart the full-year FY23 results from the specialty lithium and chemicals company.
Here are the highlights:
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Allkem share price on a record-breaking year
- Group revenue up 62% to a record US$1,207.8 million
- Gross profit up 80% to US$1,100 billion
- Group net profit after tax (NPAT) from continuing operations up 57% to US$525 million
- Net cash balance up 55% to US$648 million
- Record full-year production at Olaroz of 16,702 tonnes, up 30% year on year
What else happened in FY23?
For the 12 months ended 30 June 2023, Allkem achieved record revenue of US$1,207.8 million. The strong result was boosted by the average realised price for lithium carbonate almost doubling to US$43,981 per tonne compared to the prior year.
In addition, Allkem's Olaroz lithium facility in Argentina dialled up its annual production to a record 16,703 tonnes — increasing approximately 30% versus FY22.
On a different note, the Mt Cattlin mine in Western Australia reported a reduction in spodumene concentrate production. The hard rock lithium operation generated 130,984 dry metric tonnes of concentrate, down nearly 10% from its prior comparable period.
However, a 120% increase in the average realised sales price of spodumene lifted Mt Cattlin's revenue to a record US$615.6 million.
Allkem revealed plans to merge with downstream lithium processor Livent Corp (NYSE: LTHM) in May. The proposed $15.7 billion mega-merger resonated with investors, sending shares skyward amid the news.
The Allkem share price rallied 15.7% in a single trading day amid the planned deal.
What did Allkem management say?
Outgoing Allkem managing director and CEO Martin Perez de Solay commented on the monumental result, stating:
We have achieved outstanding full-year results and demonstrated the quality and profitability of our operations. FY23 Revenue and EBITDAIX hit new records and were underpinned by record production at Olaroz and strong performance at Mt Cattlin, which achieved record run rates towards the end of the year.
Furthermore, Perez de Solay highlighted the progress on future growth initiatives.
Our team has reached significant milestones to capture global growth by increasing our production capacity and product offering. Amidst strong demand for lithium we delivered first production at the Naraha Lithium Hydroxide Plant and achieved first production at Olaroz Stage 2. Sal de Vida construction is well underway, and James Bay is advancing with approvals received by the Federal government for the ESIA.
What's next for Allkem?
Allkem provided FY24 guidance for both its Olaroz and Mt Cattlin operations in its results today.
Firstly, management is forecasting between 22,000 to 26,000 tonnes of lithium carbonate production from stages one and two of Olaroz in FY24. This would suggest an increase in production of roughly 44% at the midpoint.
Secondly, Mt Cattlin production is expected to be between 210,000 to 230,000 tonnes of spodumene concentrate. At the midpoint, this would represent a 68% increase in production from FY23.
Lastly, a shareholder meeting to vote on the Livent/Allkem merger is planned for later this year.
Allkem share price snapshot
The Allkem share price has a shaky start to 2023. By 23 March, shares in the lithium producer were down 5%, coinciding with a weakening lithium price.
However, prices for the electrifying material have since rebounded. As a result, Allkem shares are now 25% higher year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is up a measly 2.2% so far this year.
The lithium giant now trades on a price-to-earnings (P/E) ratio of 10.7 times FY23 earnings.
