Mineral Resources tanks after scrapping dividend
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More news: Mineral Resources was the worst performing stock across the ASX 200 in morning trade after the mining explorer reported an 80% fall in annual profit and scrapped its final dividend for the first time in more than a decade.
Shares were down 11.7% to $39.03 by 11am AEST, having shed nearly 45% since the turn of the year.
MinRes underlying profit drops 80% on weaker lithium prices
The news: Mineral Resources reported an almost 80% drop in annual profit, hit by weaker lithium prices despite record shipments, though the profit decline wasn't as severe as expected.
MinRes will not pay a final dividend. Management will hold a conference call with investors and analysts at 8:00am.
The numbers: The diversified miner tabled an underlying net profit after tax of $158 million for the year ended June 2024, down from $769 million in 2023.
Analysts polled by Visible Alpha had forecast underlying NPAT of $130m.
Production at the Mt Marion and Wodgina mines increased by 46% and 41%, respectively. However, oversupply from China and slower electric vehicle adoption have put downward pressure on prices.
Statutory profit was $114 million, half of last year’s $244 million profit.
The context: After completing the construction phase of the Onslow Iron project, it was targeting to ramp up production to 35 million tones per annum by June 2025.
With Onslow ramping up, MinRes plans to use the cash flow to deleverage its massive $4.43 billion net debt pile, which skyrocketed from $1.90 billion in 2023.
Meanwhile, expansion projects at the lithium division will deferred as MinRes plans to focus on cost reductions in FY25.
What they said: “Given the stubborn lithium price and our remaining investment in Onslow Iron, we will continue to take a conservative approach during FY25, deferring expansion projects and focusing on cost reduction and cash preservation. This approach was reflected by the Board’s decision to not declare a final dividend for FY24,” managing Director Chris Ellison said.
“This was the biggest year of development in our history, culminating with the start-up of the transformational Onslow Iron project. We expect to de-leverage rapidly as Onslow Iron hits nameplate capacity and becomes cashflow positive over the next 12 months.”
The source: Company release
