Could Pilbara’s inaugural profit signal good times ahead for ASX lithium shares?

One of the biggest pieces of news during this week of earnings season so far has been the results that ASX lithium share Pilbara Minerals Ltd (ASX: PLS) delivered yesterday. 

As we covered at the time, Pilbara delighted investors by reporting a whopping 577% surge in revenues to $1.2 billion for the full FY2022. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose to $814.5 million. That was up from $21.4 million in FY2021. 

But perhaps the biggest eye-catcher was the statutory net profit after tax (NPAT) of $561.8 million for FY2022 that Pilbara reported. That was up dramatically from a $51.4 million loss in FY2021. 

ASX lithium shares used to be infamous for a lack of profits on the bottom line.

But after such a strong showing from what is arguably the flagship ASX lithium share on the market, what could this mean for other ASX lithium shares?

What do Pilbara’s profits mean for ASX lithium shares?

Well, it’s certainly good news. Pilbara reported that it was both demand for lithium and spodumene concentrate that drove its impressive results. That was in addition to the strong pricing Pilbara was able to ask for its products.

As we reported yesterday, the average price per dry metric tonne the company was able to command came in at US$2,605.

That led to Pilbara enjoying a gross margin of $853.5 million. That was a massive increase on FY2021’s gross margin of $46.2 million.

These tailwinds Pilbara enjoyed over FY2022 are sector-wide, and thus, not just confined to Pilbara itself. So it does bode extremely well for other ASX lithium shares like Core Lithium Ltd (ASX: CXO) and Lake Resources N.L. (ASX: LKE).

But there is one caveat. Pilbara is certainly far more advanced with its lithium production than many other ASX lithium shares. For example, Core Lithium released a quarterly update back in late June. This revealed that the company’s flagship Finniss Project in the Northern Territory is “on track for first export of lithium by the end of the calendar year 2022″.

This means that Core Lithium is not really benefitting from the same tailwinds as Pilbara right now. Since its flagship project isn’t exporting lithium yet and all.

Similarly, lithium production at Lake Resources’ flagship Kachi Project was described in a July quarterly update as “targeted to commence in 2024“.

Pilbara’s record profit does bode well for all ASX lithium shares. But it’s not a guarantee that other lithium stocks are imminently profitable, especially when lithium product production hasn’t begun at scale just yet. 

The post Could Pilbara’s inaugural profit signal good times ahead for ASX lithium shares? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why Altium, Ansell, Monadelphous, and Pilbara Minerals shares are charging higher
• Why is the Allkem share price acing it on Tuesday?
• Why is Lake Resources underperforming other ASX 200 lithium shares right now?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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 Scott Phillips.

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