Tag: Motley Fool

The Boral Limited (ASX: BLD) share price has come under pressure on Friday following the release of its full year results.

At the time of writing the building products company’s shares are down 1% to $3.80.

How did Boral perform in FY 2020?

It was a very difficult year for company, culminating in a previously announced net non-cash impairment totalling $1,316 million.

For the 12 months ended 30 June 2020, Boral recorded a 2% decline in sales revenue from continuing operations to $5,728 million.

Things were much worse for its earnings. Boral reported a 30% decline in earnings before interest, tax, depreciation & amortisation (EBITDA) to $710 million. EBITDA from continuing operations came in at $715 million, down 29% and reflecting lower EBITDA from all three divisions.

Boral Australia posted a 5% decline in revenue and a 25% reduction in EBITDA to $447 million. This reflects lower pricing outcomes, higher costs, and lower production.

Boral North America wasn’t any better, with revenue down 2% to US$1,566m and EBITDA down 32% to US$188 million. This was driven by lower sales volumes, higher costs, and ~80% of plants experiencing COVID-19 related volume impacts and disruptions.

It was a similar story for the USG Boral joint venture. Its underlying revenue was down 8% to $1,474 million and EBITDA was down 25% to $190 million. This reflects housing downturns in South Korea and Australia, price declines in South Korea, and a significant impact from COVID-19 related plant closures and production slowdowns.

This ultimately led to Boral reporting net profit after tax before significant items of $181 million, down 57% on the prior year. Including significant items, the company posted a statutory net loss after tax of $1,139 million.

In light of this, no final dividend will be paid by the company.

“Challenging year.”

Boral’s new CEO & Managing Director, Zlatko Todorcevski, commented: “Boral’s FY2020 results reflect a particularly challenging year. Following the lower than expected first half result from Boral North America, Boral had a difficult start to the second half of FY2020.”

“Boral Australia was impacted by bushfire and flood-related events in Australia, resulting in significantly lower volumes and higher costs. This was quickly followed by COVID-19 disruptions, resulting in higher costs and production curtailments, which substantially reduced earnings for all divisions. Overall, second half margins were substantially down, as flagged in the Company’s market update in May, due to lower sales and even lower production volumes together with an unfavourable shift in the sales mix and cost,” he added.

Will things be better in FY 2021?

While no guidance has been provided for FY 2021 due to the uncertain economic environment, management did reveal that its performance is improving.

Mr Todorcevski said: “We have started FY2021 with lower revenues but only slightly lower earnings relative to the same time last year. Overall, EBITDA margins in July recovered relative to 2HFY2020 and were broadly in line with 1HFY2020.”

“We are experiencing less disruptions in most businesses, providing an opportunity for improved outcomes, however, there is potential for further disruptions and uncertainty remains. For example, it is unclear how long stage 4 lockdowns in Melbourne will continue. At this stage of the lockdown, concrete volumes in our Melbourne metro business are down ~20% relative to last year. “

“In the USA, we are seeing a pleasing start to the year, with evidence of demand strengthening and July sales volumes improving relative to recent months. However, sales are still down year on year and there is considerable uncertainty around the economic recovery and the ongoing disruptions associated with COVID-19, including a high level of absenteeism in a number of businesses and the industry more broadly, which is impacting operations and lead times.”

Management also advised that it is currently completing a review of Boral’s portfolio of businesses to assess the market outlook, competitive position, and earnings potential of each business. A further update on this will be given in October.

More reading

• Boral cops $1.3bn body blow to profits could signal impending cap raise
• Top broker warns Afterpay and these ASX stocks could disappoint on profit results
• The rocketing Aussie is shaping up as a new threat to the profit season

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Orocobre Limited (ASX: ORE) share price won’t be going anywhere on Friday after the lithium miner requested a trading halt following its full year results release.

How did Orocobre perform in FY 2020?

It certainly was a tough year for Orocobre following a further collapse in lithium prices amid an oversupply of the battery making ingredient and subdued demand.

For the 12 months ended 30 June 2020, the company posted a 50% decline in revenue to US$77.1 million and a US$67.1 million loss after tax. The latter compares to a net profit after tax of US$65.4 million a year earlier.

This loss includes impairments, foreign exchange movements, and other one-off items.

Potential deal with PPES.

The company also revealed that it has entered into a non-binding memorandum of understanding (MOU) with PPES. This is a joint venture between Toyota and Panasonic which specialises in the production of automotive battery cells.

This MOU is for the long-term supply of product culminating in 30kt of lithium carbonate equivalent in 2025. Management anticipates that the majority of the volume will be in the form of battery grade lithium hydroxide from its existing Naraha plant.

Though, it is worth remembering that MOUs are not legally binding and therefore there is no guarantee that it will go ahead.

Equity raising.

Finally, the reason for the trading halt is Orocobre launching an equity raising this morning.

The lithium miner is aiming to raise $126 million via a fully underwritten placement of 50 million new shares at a price of $2.52 per share. This represents a 13.1% discount to its last close price.

Proceeds from the equity raising will be used to allow the company to fully fund Olaroz Stage 2 and deliver the Olaroz Stage 1 ramp up through a range of operating, COVID-19, and pricing environments, as well as capital for future growth initiatives.

The company will then attempt to raise a further $30 million from retail shareholders via a share purchase plan.

More reading

• These are the 10 most shorted shares on the ASX
• These are the 10 most shorted shares on the ASX
• Are ASX lithium shares the next big thing?
• These are the 10 most shorted shares on the ASX
• Orocobre share price shrugs off low lithium prices to soar 33% higher in July

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Resolute Mining Limited (ASX: RSG) share price is on watch this morning after the release of its half-year results.

Why is the Resolute Mining share price on watch?

The Aussie miner reported half-year production of 217,946 ounces, up 4.5% from the second half of last year (2H19). 55.6% of production was from its Syama Gold Mine with 39.3% from Mako and 5.1% from Ravenswood.

That production came in at an all-in sustaining cost (AISC) of US$1,020 per ounce including Ravenswood, with Group AISC down from $1276 last period to $955 in 1H20.

The Resolute Mining share price is one to watch after the half-year result underpinned by strong performance from Syama and Mako. The Aussie miner sold off its Ravenswood operations during the year.

Revenue from continuing operations climbed 26.8% higher to US$290.0 million thanks to strong gold prices and operational success.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) surged 96.3% higher to US$107.5 million. The group’s EBITDA margin jumped from 12% to 33% during the period.

Resolute Mining reported operating cash flow of $91.1 million with $87.5 million of cash and bullion at the period end. 

The group raised $195 million of equity in January 2020 which has helped shore up the balance sheet. That came before the coronavirus pandemic really kicked in with net debt a focus for management in the second half of the year.

FY20 outlook

The Resolute Mining share price is one to watch after reaffirming guidance for FY20.

The Aussie gold miner is targeting 430,000 ounces of production for the full-year at an AISC of US$980 per ounce.

That includes target production of 260,000 ounces from its Syama Gold Mine in Mali at an AISC of US$960 per ounce. Underpinning those forecasts is increased sulphide recoveries and continuing high margin oxide operations.

Resolute is also targeting 160,000 ounces at an AISC of US$800 per ounce from its Mako Gold Mine in Senegal. Consistent, positive cash flows are the key with target recoveries in processing of 92-93%.

Foolish takeaway

The Resolute Mining share price could be on the move in early trade following its half-year results release.

Strong production and pricing has underpinned the group’s half-year earnings with the company on-track to deliver on its FY20 guidance.

More reading

• Top ASX 200 gold shares have plummeted over the month with Resolute Mining leading the way down
• 5 things to watch on the ASX 200 on Wednesday
• Last week’s worst performing ASX shares
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Pointsbet Holdings Ltd (ASX: PBH) share price is on watch after reporting a 193% increase in FY20 revenue this morning.

Why is the Pointsbet share price on watch?

Total revenue for the year ended 30 June 2020 (FY20) surged to $75.2 million, up from $25.6 million last year.

Net revenue grew 159% while the Australian trading arm is now earnings before interest, tax, depreciation and amortisation (EBITDA) positive with $6.9 million in FY20.

However, the group reported a statutory net loss up 1% to $41.5 million despite a bumper year on the operations side.

Pointsbet reported more than 110,000 active clients that have placed bets in the last 12 months, up 39% from 80,008 in FY19.

The Aussie wagering group posted turnover of $1.15 billion, up 103% on FY19, with more than 17 million bets placed during the year.

Pointsbet reported a gross win of $117.3 million, up 123% from FY19, thanks to strong performance across Australia and the United States.

The group’s $82.1 million net win result represented 191% year on year growth compared to FY19 figures. 

Management noted the challenges presented by the coronavirus pandemic with many sports being disrupted in FY20. However, a focus on capital management and cash flow has translated to a strong full-year result in spite of this.

5-year media deal with NBCUniversal

The growing US arm is now operational in three states and continues to sign strong new deals. The latest of those was unveiled this morning with Pointsbet signing a new 5-year agreement with NBCUniversal.

That new deal makes the Pointsbet share price worth watching as the latest in a long line of US partnerships.

Pointsbet will become the Official Sports Betting Partner of NBC Sports in the United States with access to more than 184 million viewers.

The wagering group will have an exclusive right to certain pre-game, post-game and in-game promotional enhancements on certain NBC Sports’ digital and television programs.

Foolish takeaway

The Pointsbet share price has rocketed 530.3% higher since the bottom of the March bear market.

Shares in the Aussie wagering group could be on the move after the company’s full-year results and 5-year media deal announcements.

More reading

• Why Pointsbet is a top ASX growth share to buy right now
• How investing in ASX shares could help you grow $10,000 into $100,000
• Pointsbet share price on watch after ANOTHER new partnership
• Pointsbet share price edges higher on new market opportunity
• Why Mesoblast, Northern Star, PointsBet, & Splitit shares are racing higher

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Costa Group Holdings Ltd (ASX: CGC) share price will be in focus this morning following the release of the horticulture company’s half year results.

How did Costa perform in the first half?

Costa was finally back on form during the first half of FY 2020 and delivered solid revenue and profit growth.

For the six months ended 28 June 2020, Costa posted revenue of $612.4 million. This was an increase of 6.8% on the prior corresponding period.

Thanks largely to a strong performance from its international business, which offset weakness in its Produce segment, Costa’s earnings before interest, tax, depreciation, and amortisation before self-generating and regenerating assets, leasing, and material items (EBITDA–SL) grew at a quicker rate.

Costa reported first half EBITDA–SL of $93.7 million, up 13.7% from $82.4 million during the prior corresponding period. This comprises EBITDA-SL of $62.1 million from its International segment (up 98%), EBITDA-SL of $28.6 million from the Produce segment (down 40.5%), and EBITDA-SL of $3.1 million from the Farms and Logistics segment (up 1.4%).

As a comparison, according to a note out of Goldman Sachs, it was expecting EBITDA-SL to come in at $108 million for the half.

On the bottom line, Costa reported a net profit after tax–SL of $45.8 million. This is an increase of 12% on the prior corresponding period.

In light of this return to form and a better than expected net debt leverage of 1.66x, the Costa board has declared a fully franked 4 cents per share interim dividend.

Management commentary.

Costa Group’s CEO, Harry Debney, was pleased with the company’s performance in FY 2020.

He said: “Our international segment performed strongly over the half, with significant improvement in EBITDASL, reflected in growth of 98% compared to the first half CY19. The major northern Morocco harvest cycle returned to normal timing and yield from all of our China farms was exceptional.”

“The continued impact of CY19 adverse weather and drought conditions affected our first half CY20 results for our Australian operations. However, these historical conditions should have no material impact in 2HCY20 or beyond and there is broad based forward momentum in demand and pricing over our Australian portfolio leading into the second half of CY20,” he added.

The chief executive notes that its citrus orchards are performing well in respect to size and yield, despite facing a number of challenges.

He commented: “We have been impressed with the relative performance of our citrus orchards in terms of fruit size and yield, especially given the circumstances where industry harvest volumes have been impacted due to previous heat events. Also, strong export and domestic demand, together with improved pricing levels are expected to continue to season end.”

Outlook.

No guidance was given for the full year, but management appears positive on its prospects.

It notes that Australian market conditions across its portfolio are showing sizeable improvement and expects it to drive increased earnings into the second half.

It also advised that strong export and domestic demand and pricing in citrus, together with increased second half harvest timing, should be supportive of an improved outcome.

Management concluded: “Over the next three years given all major capex will be in place, this along with continued innovation will be the platform to drive quality, yield growth and shareholder returns. This is supported by strong balance sheet and cashflow generation, placing the company in a position to continue growth as a low cost producer, while capitalising on opportunities as they arise.”

More reading

• 5 things to watch on the ASX 200 on Friday
• This is where I’d invest $1,000 right now into ASX shares
• Fund managers have been selling these ASX shares
• Earnings preview: What to expect from the Costa Group half year result
• Why the Coca-Cola share price and these ASX stocks just got upgraded by brokers to “buy”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Vicinity Centres (ASX: VCX) share price crashed 5.0% lower yesterday in another tough day for shareholders.

Shares in the Aussie real estate investment trust (REIT) are now down 46.8% in 2020 compared to an 8.4% drop in the S&P/ASX 200 Index (ASX: XJO).

However, I still like the Vicinity Centres share price at $1.32 per share. Here’s a couple of reasons why I’ve got my eye on the Aussie REIT in 2020.

Why is the Vicinity Centres share price falling?

Interestingly, there have been no new announcements from the Aussie REIT since 19 August. That was the day Vicinity released its FY20 results headlined by a $1.8 billion statutory loss.

Property valuation declines and significant goodwill impairment hurt the bottom line as Vicinity cancelled its June distribution.

Net property income fell 23.0% while occupancy rates deteriorated by 90 basis points to 98.6%. Funds from operations (FFO) fell 24.5% to $520.3 million with 90% of stores trading compared to FY19.

The coronavirus pandemic continues to weigh on the Vicinity Centres share price given the restrictions on movement and store capacity.

Investors have been bearish on the Aussie REIT this year given its heavy exposure to the retail sector. However, I think a 46.8% year to date decline could present a buying opportunity for speculative investors.

Why the Aussie REIT could be a cheap buy right now

I think this really comes down to how the economic recovery plays out. On the one hand, a ‘V-shaped’ bounce back would be good news for the REITs.

Customers could return to shopping centres, boosting sales and improving occupancy rates and leases.

However, a prolonged downturn would not be good news. Vicinity has heavy retail exposure including mega centres like Chadstone in Victoria.

If sales are depressed and tenants shift to an online-only model, there are some challenges ahead.

However, Vicinity has reduced its gearing from 33.7% to 25.5% during the year to boost liquidity. This focus on capital management, including no June distribution, is good for short-term security.

The other thing to remember is that Vicinity has a portfolio of prime real estate around the country. Having a good portfolio of assets is always a good things when times get tough compared to speculating on future growth.

Foolish takeaway

There are some big challenges ahead for Vicinity Centres and its share price. However, I think a strong capital management program coupled with heavy share price losses could make it worth a look.

If we see a quicker than expected economic turnaround in 2021 then I’d expect Vicinity Centres to outperform early next year.

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.2%, Afterpay reports FY20 result
• Is it finally time for ASX investors to buy gold?
• ASX 200 jumps 0.7%: Afterpay reaches 9.9 million customers, Woolworths strong sales growth
• Why the IGO share price is outperforming the ASX 200 today

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Australian tech sector is still small and  immature compared to the much larger US tech market. However, a broad range of ASX tech shares is now emerging.  Many have strong growth prospects in my view.

Let’s look at 2 ASX tech shares that I believe have high growth potential over the next five years: WiseTech Global Ltd (ASX: WTC) and Appen Ltd (ASX: APX).

WiseTech Global

WiseTech Global has not been among the top performing ASX shares in the past 12 months. After trending downward from $36.50 to $29.44 in mid February, the WiseTech Global share price then dropped to $10.48 in mid March. It then made a weak recovery, before rising sharply after its FY 2020 earnings release. Despite this strong rise, the ASX tech share’s share price is still trading well below where it was 12 months ago.

Despite lacklustre recent share price performance, I believe the long term growth potential for WiseTech Global remains solid. This ASX tech share recently provided a strong FY 2020 result in challenging market conditions due to the coronavirus pandemic.  Total revenue grew to $429.4 million, up by 23% on the prior year, while EBITDA grew by 17%.  Also, the integration of its recent acquisitions is progressing well. I am confident that WiseTech Global remains well-placed to grow on the back of an expanding global logistics market over the next five to 10 years.

Appen

In contrast to WiseTech Global, the Appen share price has risen strongly over the past 12 months. The ASX tech share’s price increase has been particularly fast since mid-March. This is despite an 11% fall in its share price yesterday, following the release of its full year financial results. The financial result to me looked solid in very difficult market conditions. Total revenue was up 25% to $306.2 million for FY  2020 and underlying EBITDA came in at $49.1 million, up 6%. Growth was strong in China, and Appen had key customer wins in the first half of  FY 2020 in the US and Europe. I think the growth story for Appen is set to continue over the next few years,  driven by the growing global demand for Artificial Intelligence products and machine learning markets.

Foolish Takeaway

Both WiseTech Global and Appen are ASX tech shares that I think have strong growth potential over the next five years. Both have entrenched market positions and an expanding global presence. This positions both companies for above average share price growth in the years to come.

More reading

• ASX 200 rises 0.2%, Afterpay reports FY20 result
• Why Appen, Link, LiveTiles, & Zip shares are dropping lower
• ASX 200 jumps 0.7%: Afterpay reaches 9.9 million customers, Woolworths strong sales growth
• Appen share price on watch after delivering a strong half year result and reaffirming guidance
• These ASX 200 shares could help you grow your wealth

Phil Harpur owns shares of Appen Ltd and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Investors have been warned that possessing shares in exchange-traded funds (ETFs) is treated differently to owning “normal” shares in a company.

ETFs have become very popular in Australia and around the world as a way mum-and-dad investors can hold a diversified portfolio without making the stock picking decisions themselves.

CPA Australia tax policy adviser Elinor Kasapidis told The Motley Fool that holding ETF shares might feel the same as company shares, but the tax office won’t see it that way.

“This is because ETFs are treated like trusts — not companies — for tax purposes and there are specific rules that apply.”

The income received from an ETF is not a straight-forward dividend, according to Kasapidis.

“Because the underlying portfolio of the ETF is actively managed, the income received from ETF investments is made up of items such as distributions, capital gains, franking credits and foreign tax credits from Australian and overseas investments,” she said.

“This can increase the complexity of your tax return.”

UNSW associate professor Dale Boccabella said that the underlying investments are purchased on behalf of the eventual investor, which complicates the tax implications.

“The investor, under trust law, is the beneficiary. The short answer is that it’s a managed fund. Even if [the management of the ETF] is all automated, it doesn’t change anything.”

AMIT might help though

There is some relief in that back in 2016, a tax regime called Attribution Managed Investment Trust (AMIT) came into place.

This streamlined the taxation of distributions to trust investors.

ETFs that participate in AMIT will calculate the numbers on your behalf for you to plug into your tax return.

“Investors will receive a member annual statement which provides a breakdown of their income from the ETF for tax purposes,” said Kasapidis.

But it is optional for each trust and ETF to participate in the regime. So specific advice must be sought for the particular funds you’re invested in.

If your ETF doesn’t do AMIT, investors will have to go through the “present entitlement” model on their tax return.

“The very old trust [tax] regime is a pain in the neck,” said Boccabella.

“There’s no other way to put it.”

More reading

• Costa share price in focus following half year results
• Why I like the Vicinity Centres share price today
• 2 top ASX tech shares to buy and hold beyond 2025
• Buy Coles and this quality ASX dividend share for income
• Pilbara Minerals share price on watch as losses increase 243%

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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It looks as though interest rates will remain at their low levels for some time to come. In light of this, I continue to believe dividend shares are the best place to earn a passive income right now.

But which ASX dividend shares should you buy? I think these would be top options:

Aventus Group (ASX: AVN)

The first ASX dividend share I would buy is Aventus. It is a retail property company which specialises in large format retail parks. It currently has a total of 20 centres, which are home to a diverse tenant base of 593 quality tenancies. This includes major retailers such as ALDI, Bunnings, Officeworks, and The Good Guys.

This high weighting to major retailers and every day needs has been a real blessing during the pandemic. At a time when many retail property owners are struggling, Aventus released its full year results and revealed a 4.2% increase in funds from operations (FFO) to $100 million. It also reported solid rent collection of 87% through the COVID-19 period and a high occupancy rate of 98%. This allowed it to declare an 11.9 cents per security distribution for the year. Based on the current Aventus share price, this equates to a generous 5.1% yield.

Coles Group Ltd (ASX: COL)

Another great dividend share to own right now could be this supermarket giant. It was a strong performer in FY 2020 and delivered a 6.9% increase in sales to $37.4 billion and a 7.1% lift in net profit after tax to $951 million. Pleasingly, it also revealed that it has started FY 2021 in a positive fashion.

Given its defensive qualities, strong market position, and cost cutting plans, I expect more of the same over the next decade. This could make it a great ASX share for income investors to buy and hold for the long term. Based on the current Coles share price, I estimate that it offers investors a fully franked 3.2% dividend yield in FY 2021.

More reading

• Reinvest your Coles dividends in these top ASX shares
• ASX giants say cutting staff hours will save jobs
• Forget term deposits and buy these quality ASX income shares
• The latest ASX stocks that brokers just upgraded to “buy”
• Why I would buy Coles and this ASX dividend share today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended AVENTUS RE UNIT. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Pilbara Minerals Ltd (ASX: PLS) share price is on watch this morning after announcing a 243% increase in net losses after tax.

What does Pilbara Minerals do?

Pilbara is an Aussie lithium miner with significant operations in the Pilgangoora Lithium-Tantulum Project. Founded in 2005, Pilbara is a leading industry player and currently has a market capitalisation of $789.8 million.

Why is the Pilbara Minerals share price on watch?

Despite revenue climbing 96.7% to $84.1 million, the Pilbara Minerals share price is on watch after reporting a $99.3 million net loss after tax. 

Pilbara Minerals did not declare a dividend for FY20 in line with its FY19 policy. Net tangible assets fell 15% lower to $0.17 per share in a tough year for lithium miners.

Softer market conditions in China and weaker customer demand made it a tough year for earnings. Pricing was weak which saw Pilbara Minerals moderate its production and draw down on existing stockpiles to reduce supply. This allowed a more flexible response to the coronavirus pandemic despite disruptions to its Chinese supply chain.

The Pilbara Minerals share price is up 14.5% in 2020. That’s despite the company completing its $111.5 million equity raising to strengthen its balance sheet and increase working capital. 

Total ore mined for the year totalled 812,312 wet metric tonnes (wmt) with 642,215 wmt processed. The company secured a new long-term spodumene concentrate offtake partner in the second half of the year. The agreement sees Yibin Tianyi Lithium Industry Co Ltd take 75,000tpa of spodumene concentrate with an initial 60,000tpa to be supplied in calendar year 2020.

Spodumene concentrate produced in FY20 totalled 90,768 dry metric tonnes (dmt) with 116,256dmt shipped. Tantalie concentrate produced was 86,991 pounds with 143,336 pounds shipped as part of Pilbara Minerals’ drawdown strategy.

Subsequent to the year-end, Pilbara refinanced US$110 million of debt with BNP Paribas and the Clean Energy Finance Corporation (CEFC) to reduce its cost of funding from 12% to 5%.

The Pilbara Minerals share price will be one to watch in early trade as investors weigh up the latest result. The miner increased its cash balance by $22.7 million to $86.3 million thanks to the recent equity raising.

Foolish takeaway

It’s been a tough year for lithium miners amid soft pricing and weaker demand. The Pilbara Minerals share price is worth watching after announcing the significant losses for FY20.

More reading

• Want exposure to battery technology? Buy this ASX ETF
• Take a look at last week’s worst performing ASX shares
• Why the Pilbara Minerals share price surged 40% in July
• Are ASX lithium shares the next big thing?
• These were last week’s best performing ASX shares

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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