The Pilbara Minerals Ltd (ASX: PLS) share price is up 0.5% after the company reported its FY24 results. This compares to a 0.66% rise for the S&P/ASX 200 Index (ASX: XJO), meaning the ASX lithium share is slightly underperforming the market.
Investors already had a clear sign that the business was going to report a difficult financial year because the company's quarterly updates showed the lithium price was sinking and revenue was falling.
However, share prices can still rise after bad results if they aren't as bad as expected or if the outlook commentary is positive.
FY24 earnings recap
The beaten-up ASX lithium share revealed that its revenue fell 69% to $1.25 billion, which had a painful flow-on effect on the profit measures.
FY24 earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 84% to $538 million, statutory net profit after tax (NPAT) declined 89% to $257 million, underlying NPAT dropped 86% to $318 million, and the cash margin from operations plunged 86% to $513 million.
While Pilbara Minerals' sales volume increased by 16% to 707.1kt, the realised price for its sales sank 74% to US$1,176 per tonne.
The broker UBS was expecting the business to deliver $1.27 billion in revenue, $343 million in earnings before interest and tax (EBIT), and $328 million in net profit.
The market consensus for underlying NPAT was $309 million, so Pilbara Minerals seemingly slightly beat expectations.
It was also noted that the ASX lithium share is working on a new A$1 billion debt facility to refinance its existing project debt and further strengthen its balance sheet.
UBS pointed out that the company reiterated that it has flexibility in achieving growth through its P2000 project and the planned acquisition of Latin Resources Ltd (ASX: LRS) when conditions are supportive.
Weak outlook for lithium
In a separate note, UBS said that its global auto and electric vehicle team has lowered its forecast for car, EVs, and battery demand, which has "significant implications for lithium demand".
The broker said global automotive battery demand is now up to 10% lower through 2030, which could have a similar effect on lithium demand. While some supply is being deferred, "it is not enough". So, it reduced its forecasts for the lithium price for 2025 and 2026 by up to 23%.
This could lead to lower earnings and free cash flow and put pressure on capital expenditure and dividends.
UBS concluded:
All in all, resilient supply and slowing demand result in surpluses building and remaining high until at least 2027. In our view, the next steps to understanding the extent and duration of this downturn will be a better understanding of 1) African primary lithium supply and 2) Chinese primary and conversion supply, both integrated and non-integrated.
Pilbara Minerals share price snapshot
Since the start of 2024, the Pilbara Minerals share price is down by 25%.
