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Albemarle Swings to Profit, Lowers Spending Amid Prolonged Lithium Slump
Aug. 01, 2025 09:20AM PST
The lithium major returned to profitability in the second quarter and reaffirmed its full-year outlook, but warned that lithium prices remain too low to justify new project investments.
A Stockphoto / Adobe Stock
Albemarle (NYSE:ALB) is cutting costs and investment plans as it adjusts to lithium price weakness, even as demand from the electric vehicle (EV) and energy storage sectors holds up better than expected.
The major lithium miner reported a Q2 profit of US$22.9 million, a significant turnaround from the US$188.2 million loss it posted a year ago. While total revenue fell 7 percent to US$1.33 billion, the figure still came in ahead of Wall Street’s US$1.22 billion estimate, buoyed by cost management and stronger-than-expected results in its specialties division.
“Our job is just to keep working on the things that are in our control, because we don’t really have a clear line of sight to where pricing is going,” CFO Neal Sheorey told investors on Thursday (July 31).
Sheorey said Albemarle has reached its US $400 million annualized cost-savings and productivity target, citing measures such as supply chain restructuring and improved operations at lithium conversion and mining sites.
The company now expects to spend between US$650 million and US$700 million in capital expenditures for the full year, narrowing its previous guidance of US$700 million to US$800 million.
With lower spending and continued operational execution, Albemarle said it expects to achieve positive free cash flow for 2025 — so long as current lithium prices, which have hovered around US$9 per kilogram, persist.
Lithium prices down, but demand remains resilient
Lithium prices have come off historic highs seen from 2021 to 2022.
But that surge spurred rapid supply growth, and by late 2022, the market entered a surplus. Prices have since declined sharply and now sit near levels that are not considered economically viable for many new or greenfield projects.
Despite the pricing downturn, Sheorey emphasized that demand for lithium has not collapsed.
During the company’s earnings call, he maintained that demand has held up better than expected this year, pointing to robust growth in China and Europe that is offsetting a more subdued US market.
“The outlook in North America is less certain, particularly in the United States due to the potential impact of tariffs and the removal of the 30D tax credit in September,” Sheorey said.
He added that the US accounts for only about 10 percent of global EV sales.
In contrast, EV sales in China rose 41 percent year-to-date, including a 44 percent jump in battery EVs spurred by recent subsidies, while Europe also showed double-digit growth.
Still, Sheorey cautioned that pricing remains under pressure. “We continue to expect the full-year EBITDA margin [for energy storage] to average in the mid-20 percent range assuming our $9 per kilogram price scenario,”
According to Albemarle’s internal analysis, the market could return to balance as early as next year if current price levels persist. “New project development has begun to slow, while demand continues to be robust,” the company said. It estimates that demand growth could outstrip supply growth by up to 10 percent per year between 2024 and 2030.
Much of the company’s current optimism stems from performance at its integrated production and processing facilities, particularly due to strong volumes from Albemarle’s Wodgina mine and the Salar yield improvement project.
With lithium demand expected to more than double by 2030, Albemarle is betting that its investments in operational excellence and global reach will pay off once the market stabilizes.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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