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Mineral Resources’ weak financial results revealed after hours

Perth-based mining giant Mineral Resources (ASX:MIN) unveiled its disappointing financial performance for the December half-year in a late Wednesday evening release, catching markets off-guard after hours. The company reported a substantial 28% decline in underlying EBITDA to $674.9 million, coupled with an alarming 83% reduction in the final dividend, slashed to 20 cents per share from $1.20 per share in the same period in 2022.

Despite a reported 33% increase in net income, reaching $518 million, and a modest 7% rise in revenue to $2.51 billion, the underlying figures were buoyed by a significant final payment from former partner Albemarle. This payment injected $587.8 million into Mineral Resources’ coffers, masking the true extent of the company’s operational challenges.

The weak performance, excluding robust iron ore operations which benefited from favorable pricing late in the half-year, underscores the company’s struggle amidst market headwinds. The substantial dividend cut, reducing payouts to shareholders to $39 million from $227 million the previous year, reflects Mineral Resources’ imperative to conserve cash amid difficulties in its lithium division. Lithium revenue plummeted by 29% to $704.5 million, falling short of market expectations.

Conversely, iron ore operations witnessed a notable 37% revenue surge, exceeding market estimates with revenues surpassing $1.3 billion. However, concerns arise as the company’s capital expenditures for the half-year reached $1.48 billion, with forecasts projecting a full-year increase to $3.23 billion from the previous $2.75 billion.

Mineral Resources’ underlying profit for the half-year, plummeting by 49% to $196 million, serves as a stark indicator of the company’s current challenges. While certain sectors of its operations display resilience, the overall financial performance signals a turbulent period ahead for the Perth-based mining giant. Investors and industry analysts closely watch as Mineral Resources navigates through uncertain terrain, grappling with market pressures and internal restructuring efforts.