Pilbara Minerals Ltd (ASX: PLS) shares will be on watch on Monday.
That's because the lithium giant has just released its full year results and report a sharp decline in profits.
Pilbara Minerals shares on watch amid profit crunch
- Revenue down 69% to $1,254 million
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 84% to $538 million
- Underlying profit after tax down 86% to $318 million
- Cash balance down 51% to $1,626 million
- No dividend for FY 2024
What happened in FY 2024?
For the 12 months ended 30 June, Pilbara Minerals reported a 69% decline in revenue to $1,254 million. This reflects a 16% increase in sales volumes which was offset by a 74% decline in its realised price.
Things were even worse for the company's earnings, with EBITDA down 84% to $538 million and underlying profit after tax down 86% to $318 million.
Unsurprisingly, in line with its capital management framework, and to further preserve its balance sheet strength while investment in the P680 and P1000 projects continue, the company's board has not declared a final dividend for FY 2024.
Speaking of its balance sheet, Pilbara Minerals ended the period with a cash balance of $1,626 million. This is down 51% year on year due to an income tax catch-up payment of $763 million, growth capital expenditure of $493 million, and a FY 2023 final dividend payment of $421 million.
However, Pilbara Minerals revealed that it has received credit approved commitments from a group of domestic and international banks for a new $1 billion debt facility. This is conditional on the execution of transaction documentation by mid-October, repayment of existing debt facilities, and other customary conditions precedent.
How does this result compare to expectations?
According to a note out of Bell Potter, its analysts were expecting the lithium miner to report revenue of $1,254 million and EBITDA of $578 million.
So, with Pilbara Minerals reporting revenue to $1,254 million and EBITDA of $538 million, it has delivered on the top line but missed by some margin on the bottom line.
This could potentially weigh on Pilbara Minerals' shares today. Though, with lithium stocks rallying hard on Wall Street on Friday, it may be spared by investors today.
Management commentary
Pilbara Minerals' CEO, Dale Henderson, was pleased with the results in a difficult operating environment. He said:
Pilbara Minerals delivered a strong set of results in the 2024 financial year, reinforcing our position as a global leader in lithium production through the disciplined execution of our strategic plan. The successful completion of the P680 primary rejection facility was a significant milestone, enabling record production and sales.
Despite the challenges posed by a softer lithium pricing environment, Pilbara Minerals maintained a robust EBITDA margin of 43%, a testament to the strong operational performance and disciplined cost management of the team.
Outlook
Henderson spoke positively about FY 2025, highlighting its low costs and proposed acquisition of Latin Resources Ltd (ASX: LRS). He commented:
Earlier this month, we announced a binding scheme implementation agreement for the acquisition of Latin Resources.
This strategic, counter-cyclical acquisition will further diversify our business, adding a second 100% owned, hard rock lithium asset that is expected to be highly accretive for our shareholders over time. We are excited about the value this transaction will create and look forward to updating the market as we progress.
The 2025 financial year promises to be another exciting year for Pilbara Minerals. The focus will remain on building on our strengths; extending our low cost position as a scale operator; disciplined capital deployment to scale the operation in lock-step with lithium market growth and preserving our strong balance sheet.
The company is guiding to production of 800,000 to 840,000 dry metric tonnes of spodumene concentrate with unit operating costs of $650 to $700 per tonne.
This compares to production of 725,329 tonnes and costs of $654 per tonne in FY 2024.
