Could Pilbara’s inaugural earnings signal good times ahead for ASX lithium stocks?
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One of the biggest news this week of earnings season so far has been the results shared by ASX lithium Pilbara Minerals Ltd (ASX: PLS) delivered yesterday.
As we covered at the time, Pilbara delighted investors by reporting a whopping 577% increase in revenue to $1.2 billion for the full 2022 fiscal year. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached $814.5 million. That was up from $21.4 million in fiscal 2021.
But perhaps the biggest eye-catcher was the statutory net profit after tax (NPAT) of $561.8 million for fiscal year 2022 reported by Pilbara. This increased significantly from a loss of $51.4 million in fiscal 2021.
ASX lithium shares were once infamous for their lack of bottom line profits.
But after such a performance from what is arguably the market’s flagship ASX lithium stock, what could this mean for other ASX lithium stocks?
What do Pilbara earnings mean for ASX lithium stocks?
Well, that’s definitely good news. Pilbara said it was both lithium concentrate and spodumene demand that drove his impressive results. This was in addition to the high prices that Pilbara could charge for its products.
As we reported yesterday, the average price per dry metric ton that the company was able to order was US$2,605.
This gave Pilbara a gross margin of $853.5 million. This was a massive increase in fiscal year 2021 gross margin of $46.2 million.
These tailwinds that Pilbara enjoyed in fiscal year 2022 are industry-wide and therefore not limited to Pilbara itself. So this bodes extremely well for other ASX lithium stocks like Core Lithium Ltd (ASX:CXO) and Lake NL Resources (ASX:LKE).
But there is a caveat. Pilbara is certainly much more advanced with its lithium production than many other ASX lithium stocks. For example, Core Lithium released a quarterly update at the end of June. This revealed that the company’s flagship Finniss project in the Northern Territory is “on track for the first export of lithium by the end of the calendar year 2022″.
That means Core Lithium doesn’t really enjoy the same tailwinds as Pilbara right now. Since his flagship project does not yet export lithium and all.
Similarly, lithium production at Lake Resources’ flagship Kachi project was described in a July quarterly update as “planned to start in 2024“.
Pilbara’s record earnings bode well for all ASX lithium stocks. But that’s no guarantee that other lithium stocks will be profitable anytime soon, especially when production of lithium products has yet to begin on a large scale.