Lynas (ASX:LYC) share price jumps amid record interim net profit

The Lynas Rare Earths Ltd (ASX: LYC) share price is rallying this morning after the ASX miner posted a sharp rise in revenue and profit for the six months ending December 2021.

Shares in Australia’s largest rare earths miner are 3.58% higher at $9.27 in early trade following the release of the results.

Lynas share price bolstered by record first half profit

Highlights from Lynas’ first-half FY22 results include:

• Net profit after tax (NPAT): A$156.9m (1H 21: A$40.6m)
• Revenue: A$314.8m (1H 21: A$202.5m)
• EBIT: A$161.9m (1H 21: A$46.1m)
• EBITDA: A$189.8m (1H 21: A$80.6m)
• Cost of sales: A$140.3m (1H 21: A$150.8m)
• Closing cash and short term deposits: A$674.2m (1H 21: A$512.6m).

Part of the green metals boom

Lynas is benefitting from the global electric vehicle revolution that is powering our lithium miners like Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd (ASX: PLS).

One of the commodities Lynas produces is Neodymium-Praseodymium (NdPr), or magnets used in motors.

As with the skyrocketing price of lithium, NdPr prices are also booming and have jumped to over US$100/kg. This is its highest in 11 years.

Another factor that may be bolstering the Lynas share price today is its cost control. Most miners, including Rio Tinto Limited (ASX: RIO), are complaining about inflationary pressure. But attentive investors will be pleased that Lynas’ cost of sales fell during the period versus 1H 21.

Growth projects

Lynas continues to invest in building the business under its Lynas 2025 Strategy. Its Mt Weld resource is part of its growth plan and it is expecting to accelerate investment in this project.

The miner said that Mining Campaign 4-1 commenced and the resource extension drilling program was completed towards the end of 2021.

Lynas is also making progress on the Kalgoorlie Rare Earths Processing Facility. All necessary approvals have been secured for the processing facility and Lynas is stepping up construction activities.

Another pleasing development is the environmental approval for its Malaysian plant in December 2021. This has been a key risk factor that was hanging over the Lynas share price for a while.

Commentary from management

Speaking on the results driving the Lynas share price today, Managing Director, Amanda Lacaze, commented:

Our team remains highly focused on delivering results, whilst managing the ongoing challenges of the pandemic.

Pleasingly, a number of Lynas 2025 growth project milestones were achieved during the half year and subsequently which will provide a strong foundation to meet accelerating demand growth.

Our customers expect demand will grow strongly as we move further into FY22, and we are positioning the business to meet accelerating demand through our Lynas 2025 growth projects.

Lynas share price snapshot

The Lynas share price has surged by 64% over the past 12 months. However, it’s lost around 16% since the start of the calendar year.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has only managed to gain a modest 2.6% over the past year.

The post Lynas (ASX:LYC) share price jumps amid record interim net profit appeared first on The Motley Fool Australia.

More reading

• The ASX share that the whole world is relying on
• Here’s how rich Lynas Rare Earths (ASX:LYC) shares have made ASX 200 investors over the past 2 years
• What even are rare earths and why are ASX shares with exposure always in the spotlight?
• Do Lynas Rare Earths (ASX:LYC) shares pay dividends?
• Lynas (ASX:LYC) share price jumps on government green light

Motley Fool contributor Brendon Lau owns Lynas Corporation Limited, Allkem Ltd, and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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