Ground Breakers: Lynas and Woodside boast profits as a monster reporting season hits the home straight
Analysts are less concerned with Lynas Rare Earths’ (ASX:LYC) financial performance right now than they are with its regulatory struggles, as it continues to combat an impending deadline to end cracking and leaching at its Kuantan processing plant in Malaysia.
One of many big stocks reporting today on the home straight for this year’s bumper February results season, Lynas delivered net profit after tax of $150.1m for the first half, just shy of last year’s $156.9m haul on higher revenue ($370m, up from $314.8m YoY) and near equal EBITDA ($189m, down from $189.8m).
That saw Lynas boost the cash in its coffers from $674.2m to $934.2m despite hitting the pointy end of construction on its $575m cracking and leaching replacement plant in Kalgoorlie and water issues at the LAMP facility in Malaysia.
But a potential production gap for the rare earths giant is emerging with the Kalgoorlie plant touch and go on its commissioning date — feed on is currently planned for Q4 this year — and a decision by Malaysian authorities that it will not extend a July 1 2023 deadline to end the import of lanthanide concentrate to the South East Asian nation.
The concentrate contains low levels of radioactivity that has been at the centre of years of political and community relations issue for Lynas since operations began a decade ago at the plant, the largest source of NdPr for permanent magnets outside China.
Lynas confirmed on Friday a second appeal had been made against the Atomic Energy Licencing Board’s refusal to accept changes to its licence conditions that would allow the import and processing of lanthanide concentrate beyond July 1.
Lynas shares fell more than 5% this morning.
That came amid a 2.51% drop across the materials sector, as investors responded to a big pullback in commodity prices across base metals, iron ore and coal on Friday.
The war in Ukraine prompted a staggering lift in oil and gas benchmarks, with Woodside’s first year after its merger with BHP Petroleum delivering a US$6.5 billion full year net profit after tax on production of 157.7 million barrels of oil equivalent and operating cash flow of US$8.8b.
A US$1.44 per share final payout brought full year returns to US$2.53/sh, or US$4.8b, over 90% of its underlying NPAT of US$5.23b.
Those NPAT numbers, statutory and underlying, were up a staggering 228% and 223% respectively, with revenues up 142% to US$16.8b as average realised prices of US$98.4/boe generated massive margins against unit costs of US$8.1/boe.
Woodside’s Meg O’Neill says growth projects are being progressed in 2023, with the controversial $16 billion Scarborough and Pluto Train 2 projects now 25% complete ahead of first production in 2026, an investment decision due on the Trion project in the Gulf of Mexico this year and the H2OK hydrogen project in Oklahoma being progressed to an FID.
Prices were up 63% year on year, a situation which saw politicians turn on energy players for generating megaprofits as east coast energy customers faced rising prices.
O’Neill said Woodside had taken steps to ensure maximum volumes were available from BHP’s old Bass Strait assets.
“Throughout the year we took steps to maximise our exposure to favourable prices, expanding our global marketing presence and increasing trading activities. Our exposure to gas hub pricing for produced LNG sales was 23%,” she said.
“As a result of our increased profit, Woodside’s Australian tax and royalty payments for the year more than tripled to A$2.7 billion. We are proud to be making this record contribution back to the local communities where we operate and our Australian tax payments are expected to again increase significantly in 2023.
“The Bass Strait assets acquired in the merger supply around 20% of the gas consumed in eastern Australia. With the emergence of crisis conditions in the east coast energy market last winter, we took steps to ensure maximum volumes were available for supply to customers on both a term and spot basis.”
Woodside had US$6.2b cash in hand at the end of December, with over US$10b in liquidity.