The Pilbara Minerals Ltd (ASX: PLS) share price fell by 4.6% in July 2024, compared to a rise of 4.2% for the S&P/ASX 200 Index (ASX: XJO). The ASX lithium share rose 5% on the last day of the month (31 July 2024), so the underperformance was even worse before that.
As we can see on the chart below, it has been a rough year for the stock.
While it may be simple enough to say that the lithium price has fallen, there's a lot more to the story.
The latest update is usually the most important one for investors. During July, the company released its quarterly update for the three months to 30 June 2024.
Quarter recap
Pilbara Minerals reported that in the latest quarter, compared to the three months to March 2024, it grew its production by 26% to 226.2kt of spodumene concentrate and its sales grew by 43% to 235.8kt. The realised price increased 4% to US$840 per tonne, while the unit operating cost (CIF) decreased 7% to US$483 per tonne.
The company finished June 2024 with $1.6 billion of cash.
With the end of the fourth quarter of the 2024 financial year, the ASX lithium share was able to tell investors about its full-year performance.
FY24 production increased 17% year over year to 725.3kt, and sales grew 16% to 707.1kt. However, the realised price dropped 74% to US$1,176 per tonne. This meant the overall FY24 revenue declined 69% to $1.25 billion. Pilbara Minerals' unit operating cost (CIF) declined 27% to US$537 per tonne.
It also said that it had started construction of the mid-stream demonstration plant at Pilgangoora operation.
The ASX lithium share also released its P2000 pre-feasibility study, which "determined that production capacity at the Pilgangoora operation could be expanded to 2 million tonnes per annum with the construction of an additional plant."
Outlook for the Pilbara Minerals share price
The business has provided guidance for FY25. It's expecting to produce between 800kt to 840kt of spodumene concentrate (compared to 725.3kt in FY24).
Its unit operating costs (FOB) guidance is A$650 per tonne to A$700 per tonne compared to A$654 per tonne in FY24.
The ASX lithium share expects to allocate between $615 million and $685 million for capital expenditures, with at least $120 million for mine development, $195 million for growth, $240 million for infrastructure, and $60 million for sustaining capex.
Broker UBS suggests the lithium market remains "well-supplied", with the lithium spot price at around US$900 per tonne and "no clear catalysts for a rebound, meaning risk remains to the downside in the short-term."
UBS suggested its own forecasts of US$1,000 to US$1,050 per tonne over FY25 and FY26 "are beginning to look slightly optimistic with the ramp up of African supply a key driver."
The broker suggested that the Pilbara Minerals share price "continues to trade expensive". UBS forecasts that in FY25 it could make $1.17 billion in revenue and $242 million in net profit after tax (NPAT).
At the current Pilbara Minerals share price, it's valued at 37x FY25's estimated earnings.
