Albemarle Corporation (NYSE: ALB), a US-based lithium producer, has revised its annual revenue forecast to between $10.4 billion and $11.5 billion, an increase from its earlier estimate in May, which ranged from $9.8 billion to $11.5 billion. This anticipated revenue suggests a 40-55% growth compared to its 2022 revenue of $7.32 billion. This upward adjustment stems from predicted volume growth in its energy storage division, which specializes in lithium-ion battery materials, and the anticipation of higher average prices.
Albemarle CEO Kent Masters commented:
"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,"
"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."
In its 2023 Corporate Outlook, Albemarle has revised its projections in light of recent changes in the lithium market. It anticipates a 40% to 55% surge in net sales over the last year, mainly propelled by the global transition to electric vehicles. The Adjusted EBITDA is forecasted to rise between 10% and 25%, largely due to increased Energy Storage pricing.
However, its expected net cash from operations, ranging from $1.2 billion to $1.8 billion for 2023, is below prior estimates. This adjustment is mainly attributed to shifts in working capital related to Energy Storage shipments' timing and an agreement to address the "DOJ Matter" with the U.S. Department of Justice and the Securities Exchange Commission.
Capital expenditures for the year are projected to be between $1.9 billion and $2.1 billion, an increase from earlier expectations, owing to Albemarle retaining full ownership of lithium processing assets following modified agreements with MinRes.
Albemarle announced an investment in Patriot Battery Metals (TSX.V: PMET), granting it a 4.9% interest in a promising spodumene deposit situated in northern Québec. Albemarle aims to uphold its history of a disciplined M&A process to hasten high-return growth, ensuring financial agility and preserving its investment-grade credit rating. Its balance sheet flexibility serves as a competitive edge, enabling growth both organically and via acquisitions, while also supporting its dividend.
Accelerating Progress: Albemarle's Role in Ford's EV Expansion
22 May 2023
In a landmark agreement strengthening American electric vehicle (EV) supply chains, Albemarle, a global leader in essential elements for mobility, energy, connectivity, and health, is set to become the battery-grade lithium hydroxide provider for automotive giant Ford Motor Company (NYSE: F).
The five-year agreement, which kicks off in 2026 and spans through 2030, will see Albemarle delivering more than 100,000 metric tons of the critical component for approximately three million future Ford EV batteries. This strategic alliance is expected to bolster Ford's EV production plans significantly.
Both companies have committed to prioritizing the domestic U.S. EV supply chain, sourcing lithium hydroxide from within the United States or countries with a U.S. Free Trade Agreement. This commitment serves as a response to the growing demand for EVs and the need for regionalized supply chains, which offer increased security, sustainability, and cost-effectiveness.
Eric Norris, President of Albemarle Energy Storage, explained the significance of the partnership:
"As our customers look to regionalize their supply chains amidst the burgeoning EV demand in the U.S., collaborations and investments of this sort become vital. We are thrilled to be entering this strategic alliance with a renowned automotive manufacturer like Ford."
But the partnership extends beyond lithium supply. Both companies will explore potential collaborations to establish a closed-loop solution for lithium-ion battery recycling.
Meanwhile, earlier in May, ALB reported impressive financial results for Q1, 2023. The company experienced a substantial increase in net sales, with a growth rate of 129% Y/Y, reaching $2.6 billion. Net income also soared by 389% to $1.2 billion, resulting in diluted earnings per share of $10.51. Adjusted EBITDA showed significant growth of 269% to reach $1.6 billion.
Albemarle's strong performance was attributed to higher lithium prices and volumes Y/Y.
Net sales are now expected to increase by approximately 35% to 55% Y/Y, and adjusted EBITDA is projected to range from a decline of 5% to an increase of 15% Y/Y. Albemarle remains confident in the underlying strength of its world-class assets and long-term growth strategy. The company continues to focus on expanding its global portfolio, investing in organic and inorganic opportunities, and maintaining its financial flexibility and investment-grade credit rating.
FactSet analysts have a consensus Overweight rating on ALB stock with a target share price of $263.73. Several analysts are optimistic about Albemarle's prospects due to the favorable market conditions and their assessment that the stock price adequately accounts for potential risks. They believe that Albemarle is well-positioned for growth.
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