The Lynas Rare Earths Ltd (ASX: LYC) share price has opened lower on Wednesday after the company posted its H1 FY25 results.
Shares in the rare earths miner are currently fetching $6.74 apiece shortly after the open, down more than 3% as investors process the update.
Let's jump in and digest the numbers.
Image source: Getty Images
Lynas share price on watch after mixed first half
Lynas had several takeouts from the half. Here are the key highlights from the announcement:
- Revenue of $254.3 million, up 8.3% from H1 FY24, driven by a 23% increase in sales volume
- Pre-tax income of $38.1 million, down from $62.6 million this time last year
- Net profit of $5.9 million, a sharp decrease from $39.5 million in the prior period
- Cost of sales increased by 29% to $205.3 million
- Cash burn of $378 million, with cash balance of $308.3 million at the end of the half
What else happened in H1 FY25?
The Lynas share price had a turbulent period in the first half of FY25, and so did the business.
Revenues were up 8% thanks to a spike in neodymium and praesodymium (NdPr) sales volumes. NdPr are two rare earth elements.
But even though Lynas saw this jump alongside a 22% increase in NdPr production, the average price of NdPr fell 12.5%.
The company also faced higher production costs as it continued to expand its operations in Kalgoorlie and Malaysia.
All of this put pressure on margins and overall profitability, with net profit down over 85% year over year. This "reflected low market prices", according to the company.
It wasn't all headwinds through. Lynas also commissioned Stage 1 of the Mt Weld project.
Further, it reported a "strong uplift" in its Mt Weld mineral resource and ore reserves.
This site now "supports its 20+ year life of mine target at 12,000tpa NdPr finished product capacity". This may or may not impact the Lynas share price.
What did management say?
Lynas CEO Amanda Lacaze mentioned the production increase, in spite of tough conditions.
The company recognised a positive Net Profit After Tax of $5.9m. Compared to the prior
corresponding period, there was a 22% increase in NdPr production volume to 2,969t. Sales revenue increased to $254.3m due to the increased NdPr sales volume. This was achieved despite the average China domestic price of NdPr (VAT excluded) decreasing from US$56/kg in December 2023 to US$49/kg in December 2024. NdPr family sales volumes increased by 23% during the period……The Rare Earths market continues to be subject to complex influences. Conditions which may support improved market conditions include demand growth which continues in key sectors, proposed changes to the regulatory environment in China, and sustained support for supply chain development from key governments.
What's next?
Management didn't provide formal guidance in any of its investor material today.
That said Lacaze did mention the Lynas team has a "strong track record of operating in challenging rare earth market conditions".
The company will focus on its "high value clients" moving forward, and sees current market headwinds as near-term.
We see the current challenges as short-term issues and our team has the skills and competence to manage these and deliver stronger results in the future. We remain focused on growing to meet customer demand, maximising efficiencies and delivering excellent value.
Lynas share price snapshot
The Lynas share price has opened in the red this morning after the company posted its half-year accounts.
Zooming out, the stock is up nearly 23% in the past year.
