Albemarle forecasts strong future growth as it records jump in sales and income

Leading international lithium producer Albemarle (NYSE: ALB) is forecasting strong future growth on the back of a predicted climb in the critical metal’s price and strong performances across its business.

Unveiling impressive second quarter results, the company informed the market it had elected to update its full-year 2023 outlook to reflect the recent strength of the global lithium market.

Albemarle forecast that its net sales will improve by 40% to 55% over the prior year, driven largely by the growing interest in electric vehicles.

The company announced that its adjusted EBITDA is expected to grow year-over-year by 10% to 25%, primarily as a result of increased pricing in energy storage.

Capital expenditures are tipped to be between $2.9 billion and $3.2 billion for 2023, which is above previous outlook due to the amended agreements with Mineral Resources (ASX: MIN), which retain full ownership of lithium processing assets.

Strong second quarter results

The positive forecast comes on the back of the company achieving matching 60% increases in sales and income for second quarter.

The company’s net sales for period hit $3.6 billion, while net income jumped to $995 million.

Albemarle’s adjusted EBITDA of $1.5 billion was a 69% increase year-on-year.

The quarter saw the company record a 120% increase in energy storage net sales for 2023 were $2.7 billion, an increase of $1.5 billion due to higher prices reflecting tight market conditions, primarily in battery- and tech-grade carbonate and hydroxide.

Volume numbers increased by 36% thanks to the La Negra III/IV expansion in Chile, production from our processing plant in Qinzhou, China, and higher tolling volumes to meet growing customer demand.

Additional growth projects added

Chief executive officer Kent Masters said the company had recorded a very strong quarter operationally, while adding a number of growth projects including signing a strategic agreement with Ford Motor Company to supply over 100,000 metric tonnes of lithium hydroxide from 2026 to 2030

“We achieved $2.4 billion in net sales, up 60% from prior year, primarily driven by higher prices and volumes in our energy storage business,” Mr Masters said.

“We remain confident in the long-term outlook for our businesses and are increasing our full-year 2023 net sales and adjusted EBITDA outlook based on the recent increase in lithium market prices.

“Our investments in future capacity are on track, with the Salar Yield Improvement Project mechanically complete and the Meishan project on schedule for early 2024 mechanical completion.”

Other highlights of a very busy quarter included the company being named in the Fortune 500 rankings and on the TIME 100 Most Influential Companies list.

Albemarle also agreed to amend the terms of the transaction signed earlier this year with Mineral Resources to significantly simplify operations and retain full control of downstream conversion assets.

Patriot Metals deal

Subsequent to the quarter, Albemarle hit the headlines when it signed an agreement under which will provide Patriot Battery Metals (ASX: PMT) with approximately $124 million via a private placement.

Under that agreement Albemarle will own approximately 4.9% of Patriot’s issued and outstanding common shares on a fully- diluted in-the-money basis, or 6.4% on a non-diluted, issued and outstanding basis.

Patriot has already identified plans to utilise the capital injection to accelerate development activities at the company’s exciting Corvette lithium project in James Bay.

The Albemarle agreement came one day after Patriot declared it had confirmed it held the largest lithium pegmatite resource in the Northern Americas.