Albemarle, one of the world's largest lithium producers, forecast on Wednesday its annual earnings below market estimate even as lithium prices were at record highs, leaving investors unimpressed and sending shares down 11%.
Global efforts to tackle climate change have led to a surge in demand for lithium used in electric vehicle batteries that has far outpaced supply, driving up prices of the metal.
The Charlotte, North Carolina-based lithium producer, however, forecast its full-year earnings between $5.65 and $6.65 per share, the midpoint of which was slightly below estimates of $6.19, according to IBES data from Refinitiv.
Given how lithium spot markets have been very strong over the past two months, investors were hoping for potentially a large beat, which did not happen, said Aleksey Yefremov, analyst at Keybanc Capital Markets.
"There may have been some optimism that the contract prices that Albemarle was selling at to their customers would move up as fast as the spot market has," said Seth Goldstein, equity strategist at Morningstar, adding that multi-year contract prices tend to take time to catch up.
Its full-year revenue forecast of $4.2-billion to $4.5-billion was above analysts' expectations of $4.01-billion.
The company posted a loss of $3.8 million, or 3 cents per share, in the quarter ended December 31, versus a profit of $84.64-million, or 79c a share, a year earlier, citing labor- and pandemic-related issues at its Kemerton project in Australia.
Excluding items, Albemarle earned $1.01 a share, beating analysts' average estimate of 99 c a share.
Sales of lithium, the company's largest division, rose 13% to $404.7-million in the reported quarter.
Shares of Albemarle dived as much as 11% to $219 in extended trading.