Mineral Resources share price drops on earnings decline and dividend crunch

This miner has been forced to slash its dividend during the first half.

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The Mineral Resources Ltd (ASX: MIN) share price is tumbling on Thursday morning.

At the time of writing, the mining and mining services company's shares are down 2.5% to $57.65.

This follows the release of the company's half-year results.

Mineral Resources share price tumbles on half-year results

Here's how the company performed during the six months ended 31 December:

  • Revenue up 7% to $2,514.7 million
  • Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) down 28.1% to $674.9 million
  • Statutory net profit after tax up 32.8% to $518 million
  • Interim dividend down 83.3% to 20 cents per share
  • Net debt of $3,546.7 million

What happened during the half?

During the first half of FY 2024, Mineral Resources reported a 7% lift in revenue to $2,514.7 million but a 28.1% decline in underlying EBITDA to $674.9 million.

Iron Ore was the company's star performer during the half, as stronger prices and solid volumes drove up revenue 37% to $1,329.4 million.

In addition, Mineral Resources' managing director, Chris Ellison, advised that this result reflects the company's diversified business model. He said:

MinRes' diversified business model ensured a solid set of financial results despite weaker lithium prices, with revenue for the first half up 7 per cent to $2,514.7M. Underlying EBITDA of $674.9M was evenly split between lithium ($271.4M), iron ore ($266.2M) and mining services ($253.7M), with statutory net profit after tax of $518.0M.

Management notes that its Wodgina lithium operation reported underlying EBITDA of $134.1 million, down from $177.2 million a year earlier. It was impacted by lower lithium prices, partially offset by higher volumes sold and lower spodumene costs.

Mineral Resources' statutory profit includes a $279.8 million pre-tax net gain plus a net tax benefit of $79.5 million. Excluding these, its net profit would have been substantially down on the prior corresponding period.

This explains why the company slashed its interim dividend by a sizeable 83% to 20 cents per share. This represents a yield of only 0.35%. Not quite the big yields investors may have become accustomed to in recent times.

Outlook

Ellison notes that the company is on track to achieve its guidance in FY 2024. He said:

A focus on delivery has our lithium, iron ore and mining services divisions on track to guidance this year and the transformational Onslow Iron project on time and on budget.

Motley Fool contributor James Mickleboro 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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