BENGALURU Australia's Lynas Rare Earths posted a smaller-than-expected fall in annual profit on Wednesday, helped by lower operating costs amid weak prices and subdued China demand, sending its shares 2% higher in early trade.

The world's largest producer of rare earths outside China posted a net profit attributable of A$84.5 million (US$57.38 million, or RM249.61 million) for the year ended June 30, ahead of a Visible Alpha consensus of A$66.1 million.

However, the profit was sharply below the A$310.7 million logged in the prior year, hurt by weak China demand for rare earth metals and "stubbornly low" prices, Lynas said.

"FY2024 results were better than our and Visible Alpha consensus expectations, resulting from lower operating costs versus forecasts," analysts at Jefferies wrote in a note.

Shares of the rare earths producer rose 2% to A$6.930 by 0027 GMT, while the benchmark S&P/ASX 200 index was down about 0.4%.

Pointing to some green shoots in market prices since May, Lynas said it continues to expect investment and government initiatives for green transition to support a "growing global rare earths supply chain".

"We continue to see limited price (rare earths) recovery in the near term, and would need to see stronger lead indicators for demand growth, before becoming more constructive," Jefferies analysts said.

"We remain positive on the medium- to longer-term outlook," they said, adding that Lynas was well positioned to capture any market strength.

Lynas flagged a delay to the construction of its US heavy rare earths plant planned for this year, citing permit issues related to wastewater management.

The firm said it was "unlikely" that the issue would be resolved before the end of 2024.

The company expects to spend between A$400 million and A$500 million on capital in fiscal 2025, much ahead of the A$320.7 million consensus by Visible Alpha.

  - Reuters