The stock of Charlotte-based Albemarle Corp. recouped some of its losses over the past year after forecasting its cash flow may break even in 2025.
Achieving break-even cash flow hinges upon plans by the world’s largest lithium mining company to slash capital spending, trim expenses and improve the productivity of operations, partly by placing its Chengdu lithium conversion facility in China into “care and maintenance” by midyear. Albemarle also plans to collect a prepayment of $350 million from a customer’s five-year contract.
These steps “have positioned us to successfully navigate dynamic market conditions and maintain our long-term competitive edge,” CEO Kent Masters told analysts on the company’s fourth-quarter earnings call earlier today.
The stock climbed 3.5% to $79.29, narrowing its decline to 29.3% over the past year.
Albemarle has suffered from slowing demand for electric vehicles and declining prices for lithium used in them. In the fourth quarter, an adjusted loss of $1.09 a share missed Zacks consensus estimate of a loss of 49 cents. Revenues tumbled roughly 48% to $1.23 billion from a year earlier, missing analysts’ expectations.
Albemarle is responding with plans to spend $700 million to $800 million on capital projects in 2025, down $100 million from earlier guidance.
Capex totaled $1.7 billion in 2024. By cutting it this year, Albemarle intends to “unlock cash flow over the near term and generate long-term financial flexibility,” according to the company’s annual securities filing. It also expects to gain $300 million to $400 million a year in cost and productivity improvements.
“Taken together, we now have greater confidence in our ability to achieve breakeven free cash flow as early as this year at current price levels,” Masters said. “We just need to execute to accomplish that.”
