Albemarle loses more than $1 billion on falling lithium prices
Albemarle reports $1.11 billion net loss in Q3
Company slashes capital budget amid 71% drop in lithium prices
CEO Masters expects lithium prices to stay low for the foreseeable future
Adds details throughout from earnings release, CEO interview, stock movement
By Ernest Scheyder
Nov 6 (Reuters) -Albemarle ALB.N, the world's largest lithium producer, said on Thursday it lost more than $1 billion in the third quarter and that it would slash its capital budget amid a 71% drop in prices for the electric vehicle battery metal.
The results underscore the supply glut engulfing the entire lithium industry amidoversupply from China and a softening of aggressive EV adoption rates that has dragged down prices for the ultralight metal.
Charlotte, North Carolina-based Albemarle is making business decisions on the assumption that lithium prices stay in their current range of roughly $12 to $15 per kilogram for the foreseeable future, CEO Kent Masters told Reuters.
"We do think the price is going to be lower for longer," Masters said. "We're positioning the company to compete at that level."
The company last month announced its second reorganization in as many years, describing the move to shrink its business units as necessary to "adapt to dynamic market conditions."
The moves - including cutting at least 6% of its staff - are expected to save at least $300 million to $400 million each year moving forward.
The company also cut its 2025 capital budget in half from this year's levels to a range of $800 million to $900 million.
Masters said the trimmed budget would be used to maintain facilities that operate "at the lower end of the cost curve," although he declined to name specific sites.
Albemarle, which has also cut other costs twice this year , reported a net loss of $1.11 billion, or $9.45 per share, compared with a net profit of $302.5 million, or $2.57 per share, in the year-ago quarter.
Revenue fell more than $1 billion to roughly $1.35 billion, although volumes of lithium sold rose from the year-ago quarter. The sales drop was partially offset by long-term supply contracts with customers that include Tesla TSLA.O.
Shares fell less than 1% in after-hours trading to $96.50.
The company has been financially supported in part by Washington, including a recent grant of $67 million from the Energy Department .
Funds that Albemarle has received under President Joe Biden are expected to all or partially dry up once President-elect Donald Trump takes office in January, a concern that dragged down shares of Albemarle and peers on Wednesday.
"We work on both sides of the aisle," Masters said when asked about the U.S. election results. "The energy transition is happening. It's a global dynamic. We'll have to see what Trump does."
FUTURE DEMAND EXPECTATION
Lithium miners got a partial reprieve from the oversaturated market in September when China's CATL said it would cut production. Albemarle and its peers have repeatedly said they expect demand for lithium to jump later this decade .
North American EV sales hit a record in the third quarter, executives noted, adding that they expect EV prices to match those of internal combustion engine vehicles by next year.
Interest has been red-hot in the space from outsiders, including Exxon Mobil XOM.N. One of Albemarle's top rivals, Arcadium ALTM.N, agreed last month to be bought by mining giant Rio Tinto RIO.L in a $6.7 billion deal that will create the world's third-largest lithium producer.
Masters said Albemarle is not looking to acquire a rival.
"At this stage, I don't see us being acquisitive," he said. "If we're on someone else's list, that I can't control."
Albemarle plans to discuss the quarterly results on a Thursday morning call with investors.
Chile's SQM SQMA.SN, the world's second-largest lithium producer, is set to post quarterly results later this month.
Reporting by Ernest Scheyder
Editing by Chris Reese and Marguerita Choy
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