Unlike many of its peers in the lithium space, who have struggled to remain in business and faced significant write-downs, impairments, losses, and suspended expansion plans, Pilbara Minerals (ASX:PLS) has managed to survive—though not without considerable financial pain.
However, this pain was anticipated; the 90% hit to earnings was well-forecasted after the company’s 2023-24 production and sales report a month ago.
The decline in revenue and earnings due to the drop in lithium prices was expected, especially after February's interim report, as rivals cut costs aggressively to stay afloat and the pace of growth in EV sales slowed with waning demand.
Pilbara did its share of cost-cutting, including reducing jobs, expenses, and dividends, and taking other measures to preserve cash. The company ended the year with $1.5 billion in hand and announced a major new debt deal totalling $1 billion on Monday.
Pilbara also secured sales agreements with major customers, which helped maintain cash flow and ensure steady spodumene shipments.
Statutory profit after tax dropped 89% from $2.39 billion in 2023-24 to $257 million, falling short of analysts' average estimates of $308.5 million.
EBITDA fell 84% to $528 million, following a 69% decrease in revenue to $1.25 billion. The company attributed the decline in earnings and revenue to a 74% drop in the average realised price, partly offset by a 16% increase in sales volume and reduced total costs.
Full-year production rose 17% to 725,000 tonnes, exceeding Pilbara's guidance range of 660,000 to 690,000 tonnes, as reported in July.
Pilbara Minerals, which has agreed to acquire Latin Resources and its Brazilian lithium prospect, stated that its focus for this financial year will be to extend its low-cost position as a scale operator and maintain disciplined capital deployment to scale operations "in lock-step with lithium market growth."
“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,” CEO Dale Henderson said in the results.
“Subsequent to the end of the financial year, Pilbara Minerals has received credit-approved commitments from a banking group for a new $1 billion debt facility, which will enable the company to mature its capital structure, providing further financial flexibility and liquidity,” Henderson added.
