The Orocobre Limited (ASX: ORE) share price has edged 2.78% higher this morning after the pure play lithium miner reported a 407% surge in full-year net profit.
What's behind Orocobre's rocketing profits?
For the full-year ended 30 June 2019 (FY19), Orocobre's revenues surged 367% higher to $81.15 million while profit rocketed even higher.
Orocobre reported a net profit after tax for the year of US$54,586,000, an incredible 2,743% higher than its FY18 numbers.
The Aussie lithium miner announced FY19 production of 12,605 tonnes and total sales of 12,080 tonnes, bringing the company's revenue to US$124.7 million.
This was despite the average price per tonne falling to US$10,322 compared to US$12,578 in FY18 as lithium prices fell lower throughout the year.
Net profit after tax came in at $65.4 million for the group, surging 407% on Orocobre's FY18 figures largely due to tax reasons.
Orecobre reported a net tax benefit of $19.5 million for FY18 compared to a net tax expense of $31.9 million, meaning a total difference of $51.4 million for the year.
What were Orocobre's other highlights?
Orocobre said that it remains exposed to economic volatility in Argentina in both inflation and currency devaluation, which weighed on its full-year result.
The company does now have control of the Olaroz Lithium Facility, having announced the finalisation of its Stage 2 Finance Facility alongside its full-year results this morning.
Olaroz reported sales of 12,080 tonnes of lithium carbonate at an average FOB price of US$10,322 per tonne with cash costs of US$4,302 per tonne.
What about FY20 guidance?
From its Olaroz Lithium Facility, Orocobre expects full-year production will be at least 5% higher than FY19 with further soft lithium carbonate pricing lowering its expected average sales price.
Orocobre also said its Borax Argentina operations are expected to yield 45,000–50,000 tonnes for the group in FY20.
Foolish takeaway
A combination of softening demand and increasing supply has created headwinds for Orocobre's share price in 2019 as it has slumped 26.2% lower so far this year.
While underlying earnings only edged marginally lower due to lower sales and global lithium prices, it may not be enough to keep shareholders happy in the latter part of 2019.
