Albemarle Corp. warned that lower production rates from big automotive manufacturers with electric vehicles lines will pressure its lithium business in the third quarter, another sign of how the Covid-19 pandemic is rippling through global auto supply chains.
“At the same time, we are seeing impacts of lower market prices, higher inventory in the battery channel, and reduced demand in the glass and ceramics markets,” Albemarle said Wednesday of the lithium business.
The company’s lithium unit is closely watched by investors, as Albemarle has tried to position it as its growth engine with car makers developing more electric vehicles that are powered by lithium-ion batteries.
Overall, Albemarle reported second-quarter sales of $764 million. That was off 14% year over year but ahead of the $710 million that analysts polled by FactSet expected.
Net income fell to $85.6 million, or 80 cents a share, from $154.2 million, or $1.45 a share, the year earlier. Its adjusted profit of 86 cents a share was ahead of the 74 cents a share consensus estimate.
The company, which produces other materials like bromine, said its facilities have been operating without a major impact from the pandemic.
“We remain confident that we have the right strategy in place to deliver value to our stakeholders by investing in and growing our lithium business,” Chief Executive Kent Masters said.
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