The Lynas Rare Earths Ltd (ASX: LYC) share price is on the slide on Tuesday.
In morning trade, the rare earths producer's shares are down almost 3% to $6.76 following the release of its FY 2023 results.
Lynas share price falls on FY 2023 profit decline
- Revenue down 19.6% to $739.3 million
- Cost of sales increased 14.8% to $399.9 million
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 37.1% to $377.7 million
- Net profit after tax down 42.5% to $310.7 million
- Cash balance of $1,011.2 million
What happened in FY 2023?
For the 12 months ended 30 June, Lynas reported a 19.6% decline in revenue to $739.3 million and a 42.5% drop in net profit after tax to $310.7 million. This reflects a combination of lower rare earths prices and higher costs, which offset record concentrate production and record NdPr production in the second half.
Despite the company investing $595 million in capital projects, Lynas finished the year with a cash balance of $1 billion. Management notes that this provides funding certainty for the completion of its key growth projects.
How does this compare to expectations?
According to a note out of Goldman Sachs, its analysts were expecting revenue of $765 million and underlying EBITDA of $362 million.
As you can see above, this means that Lynas has missed on the top line but beaten with its earnings thanks to stronger-than-expected margins.
However, this hasn't been enough to stop the Lynas share price from falling today.
Management commentary
Lynas' CEO and managing director, Amanda Lacaze, was pleased with the company's performance in FY 2023. She said:
FY23 was another very productive year for Lynas. Operational performance was particularly strong with record concentrate production and record NdPr production achieved in the 2nd half. Revenue of $739.3m remained strong. EBITDA, at $377.7m was 51% of revenue with NPAT at 42% of revenue. Whilst strong, these results were lower than those in FY22 when market prices were at record highs.
Lacaze remains positive on the future thanks to its growth projects and increasing demand for rare earths. She adds:
Lynas remains confident that the rare earths market will continue to grow in value and demand. Our extensive capital investment programme will support capacity growth to meet that demand. Our excellent operational performance, and continued focus on operational cost control and efficiency improvements, has ensured that we are well positioned to supply our strategic customers whilst holding inventory to benefit from improved rare earths prices in the future.
The Lynas share price is down almost 25% over the last 12 months.
