Albemarle, the world's largest producer of lithium for electric vehicle batteries, warned on Wednesday that its third quarter sales and profit will dip as automakers produce fewer EVs due to the coronavirus pandemic.
The warning came after the company posted a 45% drop in second-quarter profit due in part to low prices for the white metal caused by global oversupply.
Lithium producers boosted output last year in anticipation of a demand rush from EV manufacturers going into 2020, but the coronavirus pandemic upended those plans and dented global automobile sales, effectively pausing the EV revolution.
Albemarle said it now expects low "automotive production to be felt more acutely" in the third quarter, with prices sliding as stockpiles rise.
Despite the sagging outlook, Albemarle said it does not plan to cut its dividend, but it won't buy back shares for the time being and will continue with previously announced cost cuts.
"While our strategy has not materially changed, the environment in which we operate has changed dramatically," Kent Masters, who became Albemarle's chief executive earlier this year, said in a press release.
The company posted second-quarter net income of $85.6-million, or 80c per share, compared to $154.2-million, or $1.45 per share, in the year-ago quarter.
Excluding one-time items, Albermarle earned 86c per share. By that measure, analysts expected earnings of 73 cents per share, according to IBES data from Refinitiv.
Albemarle's shares rose 1.6% to $90 in after-hours trading on Wednesday.
Sales in the company's bromine division, which makes fire retardants, and its catalysts division, which makes materials for oil refining, also fell during the quarter.
Charlotte, North Carolina-based Albemarle plans to host a conference call with investors on Thursday morning to discuss the results.