Albemarle Corporation ALB recently signed a formal agreement with Ford Motor Company F to supply battery-grade lithium hydroxide to assist the automaker in scaling up EV production.
More than 100,000 metric tons of battery-grade lithium hydroxide will be supplied by Albemarle for about 3 million future Ford EV batteries. The five-year supply agreement begins in 2026 and will run through 2030.
Albemarle and Ford are committed to supplying the U.S. EV supply chain with lithium hydroxide produced in the United States or originating in a country with a U.S. Free Trade Agreement. With the growing demand for EVs in the United States, Albemarle customers are looking to regionalize their supply chain for increased security, sustainability and cost savings, ALB noted. This agreement shows the necessary industry alliances and investments.
In addition to the supply of lithium hydroxide, Albemarle and Ford plan to explore collaborations to build a closed-loop solution for lithium-ion battery recycling. Also, both companies are entirely committed to responsible sourcing and production and have decided to collaborate to ensure supply chain sustainability, transparency and traceability.
Albemarle will only supply lithium hydroxide from mines that have been accredited in accordance with the Initiative for Responsible Mining Assurance, a comprehensive standard developed by NGOs, affected local communities and workers, among others.
Shares of Albemarle have lost 9% over the past year compared with the industry’s decline of 7.1%.
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Albemarle, earlier this month, said that it now expects net sales in the band of $9.8-$11.5 billion for 2023 compared with $11.3-$12.9 billion expected earlier. It sees a continued global shift to EVs to drive a 35-55% year-over-year rise in net sales in 2023. Adjusted EBITDA for the year is now forecast to be $3.3-$4 billion compared with $4.2-$5.1 billion expected earlier.
Albemarle projects adjusted earnings per share for 2023 in the band of $20.75-$25.75, down from its earlier view of $26.00-$33.00.
The company anticipates capital expenditures of $1.7-$1.9 billion for 2023. Net cash from operations is projected to be $1.7-$2.3 billion for the year.
Albemarle Corporation Price and Consensus
Albemarle Corporation price-consensus-chart | Albemarle Corporation Quote
Zacks Rank & Key Picks
Albemarle currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks to consider in the basic materials space include Koppers Holdings Inc. KOP, and Linde plc LIN. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Koppers currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for current-year earnings for KOP is currently pegged at $4.40, reflecting an expected year-over-year growth of 6.3%. It has a trailing four-quarter earnings surprise of roughly 13.64%, on average. KOP has gained around 26.2% in a year.
Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days. Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN’s shares have gained roughly 12.1% in the past year.
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