Lithium Producer Livent Plummets on Guidance Cut

Shares of Livent (NYSE:LTHM) tumbled more than 20 percent on Wednesday (May 8) after the lithium miner reported weaker demand for its lithium hydroxide in Q1, reducing its revenue and earnings guidance for the year.

According to the Philadelphia-based company, the shift towards higher-nickel cathode batteries, which consume more lithium hydroxide, has been slower than previously expected.

“We are seeing weaker near-term demand for our high-performance lithium hydroxide, as several major customers have informed us about recent decisions to delay their own commercial launches of high-nickel cathode chemistries,” CEO Paul Graves said.

Livent, which spun out of FMC (NYSE:FMC) last year, does not expect to see any meaningful change in demand for its lithium hydroxide until late 2019 or early 2020.

As a result of this and other factors, the lithium miner has cut its full year revenue forecast to between $435 million and $475 million from a previous estimation of US$495 million to US$525 million. The company has also revised its adjusted earnings before interest, tax, depreciation and amortization to U$125 million to US$145 million.

Graves said that, despite weaker current market conditions, the outlook for electric vehicles and lithium demand remains positive.

“We have seen multiple OEMs announcing more detailed plans for new EV model launches. Importantly, for the first time, they are now specifying performance requirements that will require the use of high-nickel cathode chemistries, which increases our confidence in the growing importance of high performance lithium hydroxide.”

Livent operates its lithium business in the Salar del Hombre Muerto in Argentina. The company said that about 1,000 tonnes of lithium carbonate production were lost for the year due to heavy rains, but operations are now back at normal levels.

Looking ahead, the lithium producer said it continues to move forward with its expansion programs in Argentina and in the United States, with the first production from these expansions currently expected in the second half of 2020.

On Wednesday, shares of Livent were down 15.84 percent in New York, trading at US$9.03.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.