How Lynas Rare Earths (ASX: LYC) focusing on production ramp up as revenue declines

Highlights

• Lynas Rare Earths is a rare earth material production firm, based in Malaysia
• In FY23, LYC’s revenue fell by 19.6% YoY to AUD 739.3 million.
• Challenger Managed Investments Ltd has the maximum stake in the company, with a shareholding of nearly 6.05%

Lynas Rare Earths Limited (ASX:LYC) is an ASX-listed materials company which is engaged in the production of rare earth material. The company has processing plants in Australia and Malaysia, from where it exports rare earth materials to manufacturing markets such as the United States, Europe and Asia.

The 6.15-billion-market-cap firm witnessed a 19.6% YoY decline in its revenue to AUD 739.3 million in the financial year 2023 (FY23), due to lower commodity prices which fell from record-high levels in FY22.

During the reported period, EBIT fell by 41.6% YoY to AUD 315.5 million and EBITDA stood at AUD 377.7 million. The period saw investment of AUD 595 million in capital projects.

Top 10 shareholders of LYC

The top 10 shareholders of LYC have around 30.25% stake in the company. Challenger Managed Investments Ltd has the maximum stake in the company, with a shareholding of nearly 6.05%.

Recent business update

On 13 December 2023, the company notified that Greencape Capital Pty Ltd became a significant shareholder in the company with a shareholding of 5.045 on 11December 2023.

Through an ASX-update, dated 7 December 2023, the company informed that the first feed from Mt Weld was introduced into the Kalgoorlie Rare Earths Processing Facility after conclusion of all commissioning activities. This development marks the transition from the commissioning phase to the first production and ramp-up of the facility. 

Latest quarterly update

In the first quarter of FY24, the company reported a decline in sales revenue to AUD 128.1 million from AUD 163.8 million in 1QFY23. The sales revenue was affected by lower rare earths prices and continued accumulation of NdPr and SEG inventory.

Outlook

After the commissioning of Kalgoorlie Rare Earths Processing Facility, the company intends to ramp up production at the facility. The company targets 12,000 tonnes of capacity in FY25.

To address the customer requirements, the company undertook multiple production ramp-ups.

Share performance of LYC

LYC shares closed 4.27% down at AUD 6.27 apiece on 10 January 2023. Including this, LYC’s share price has dropped by 23.63% in the past one year and in the past six months, it has decreased by 10.93%.

The 52-week high of LYC is AUD 9.845, recorded on 1 February 2023, while the 52-week low is AUD 5.98, recorded on 13 December 2023.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 10 January 2024. The reference data in this report has been partly sourced from EODHD/Others.

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