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Highlights:
- PLS reports a major earnings drop, with EBITDA falling from $415M to $71M-$75M.
- Lithium price weakness impacts profitability, despite record production and cost reductions.
- POSCO JV ramp-up continues, but overall market pressures weigh on stock performance.
Shares of Pilbara Minerals Ltd (ASX:PLS) are under pressure, falling nearly 2% to $2.19 in early Monday trading. The lithium miner’s stock decline comes as investors react to a business and earnings update, which revealed a sharp drop in profits due to weaker lithium prices.
Earnings Decline Amid Lithium Price Weakness
Pilbara Minerals provided guidance on its first-half FY 2025 financial performance, showing a significant downturn in earnings:
- Underlying EBITDA is expected to be $71 million to $75 million, a major drop from $415 million in FY 2024 and $1.81 billion in FY 2023.
- The company forecasts a net loss of $5 million to $7 million, compared to a $273 million profit a year ago.
- On a statutory basis, which includes losses from the POSCO joint venture, EBITDA is expected to be $45 million to $49 million, while the statutory net loss is projected at $68 million to $71 million.
The decline in profitability is attributed to significantly weaker lithium prices, though the company reported record production and sales volumes from its core Pilgangoora Operation, along with cost reductions under the P850 Operating Model.
Business Update and Joint Venture Progress
Despite financial setbacks, Pilbara Minerals continues to progress key strategic projects, particularly its POSCO joint venture.
- Hydroxide facility ramp-up: Train 1 achieved first product certification in November 2024, enabling the sale of battery-grade Lithium Hydroxide Monohydrate (LHM). Train 2 ramp-up is underway, with certification targeted for the second half of FY 2025.
- Midstream Demonstration Plant: The project has been paused, but the company remains optimistic about its long-term potential in the battery chemicals market.
CEO's Outlook and Future Strategy
Pilbara Minerals CEO Dale Henderson remains optimistic, emphasizing strong operational performance and a robust balance sheet, with $1.2 billion in cash reserves.
“PLS delivered a strong set of operating outcomes for the first half, including record production and sales at Pilgangoora and the successful delivery of the P680 project on time and on budget,” said Henderson.
He acknowledged market-driven financial pressures but reaffirmed the company's long-term commitment to strategic investments in lithium processing and battery materials.
Market Reaction and Stock Performance
Pilbara Minerals' stock price has fallen nearly 40% over the past 12 months.
