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Highlights

  • On Wednesday (7 June 2023), CIA shares closed 2.28% lower at AUD 6.010 apiece after the company updated about the impact of forest fires in Quebec on its operations.
  • For FY23, the company reported a net profit of AUD 200.71 million on revenues of AUD 1,395 million.
  • Despite the drop in net profit in FY23, the company is optimistic about its performance in the future as it foresees significant demand for high-grade iron ore

Champion Iron Ltd (ASX: CIA), which produces high-grade iron ore concentrate, failed to impress market participants with its FY23 results as higher operating costs impacted its profit. As a result, CIA shares fell nearly 7% in two days through 1 June 2023 after the company reported its FY23 earnings.

For FY23, the company reported a net profit of AUD 200.71 million on revenues of AUD 1,395 million, compared to a net profit of AUD 522.6 million on revenues of AUD 1,460.8 million in FY22. Even with a 4% annual decline in revenue, CIA's net profit tanked by 62% in FY23. This was primarily because of a 79% jump in its cost of sales to AUD 823 million.

The company said higher operating costs in the previous fiscal to support the infrastructure required to achieve the higher anticipated production prior to achieving nameplate capacity and few non-recurring costs.

CIA Outlook

Despite the drop in net profit in FY23, the company is optimistic about its performance in the future as it foresees significant demand for high-grade iron ore as the steel industry is rapidly transitioning from Blast Furnaces and Basic Oxygen Furnaces (BF-BOF) steelmaking, which uses coal to Direct Reduced Iron and Electric Arc Furnaces (DRI-EAF) steelmaking.

As per the company, the growth in the new DRI project launch is "accelerating at an unprecedented pace," which will likely boost the demand for Direct Reduction (DR) quality iron ore. Citing a McKinsey & Company report, CIA said global DR quality iron ore demand is expected to be at a deficit of more than 100Mtpa by 2031.

Champion Iron said it is well positioned to service the steel industry's transition to Electric Arc Furnaces (EAF) with its growth projects focused on DR quality iron ore products.

CIA Share Price Performance

On Wednesday (7 June 2023), CIA shares closed 2.28% lower at AUD 6.010 apiece after the company updated about the impact of forest fires in Quebec on its operations. Including today's decline, the stock has fallen nearly 15.35% in the last six months and nearly 21% in one year. Its 52-week high of AUD 8.080 was seen on 27 January 2023, while its 52-week low of AUD 4.410 was registered on 3 August 2022.

CIA Daily Price Chart; Source: EODHD/Others

Note 1: Past performance is neither an Indicator nor a guarantee of future performance. 

Note 2: The reference date for all price data, currency, is 7 June 2023. The reference data in this report has been partly sourced from EODHD/Others.