Pilbara Minerals shares lower on disappointing half-year earnings miss

This lithium miner's earnings took a big hit during the first half.

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Pilbara Minerals Ltd (ASX: PLS) shares are edging lower on Thursday.

At the time of writing, the lithium miner's shares are down 0.25% to $3.65.

This follows the company's half-year results release this morning, which revealed a huge profit decline.

What happened?

As we covered here earlier, Pilbara Minerals reported a 65% decline in revenue to $757 million, a 77% decline in EBITDA to $415 million, and a 78% drop in underlying profit after tax to $273 million.

Management revealed that this was driven by falling lithium prices. Its average realised price was down 67% year on year from US$4,993 per tonne to US$1,645 per tonne.

In light of this profit decline, the Pilbara Minerals board unsurprisingly elected not to declare an interim dividend for FY 2024.

Some good news is that the company is still generating bucketloads of cash. It reported a positive cash margin from operations of $536 million for the half. This left it with a cash balance of $2.1 billion at the end of December despite some major investments. Management explains:

Operating cash margin decreased 71% to $536M, with the lower average realised price partly offset by increased sales volume and operational efficiencies. This enabled an increase in capital investment in Plant Property and Equipment of $398M for expansion programs and operating efficiency including8 $211M on the P680 and P1000 expansion projects, $78M on capitalised mine waste development, $47M on new projects and enhancements, and $40M on sustaining capital expenditure.

How does this compare to expectations?

Goldman Sachs was forecasting revenue of $774 million and underlying EBITDA of $469 million, whereas the consensus estimate was for $926 million and $597 million, respectively.

The company has missed on both sets of estimates, which may explain why some investors are selling Pilbara Minerals shares today.

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 positions in and has recommended Goldman Sachs Group. 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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