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Albemarle Corp. announced Wednesday cost-cutting actions, including job cuts, in an effort to boost cash flow as a result of changing market conditions, particularly in the lithium value chain.
The company said it is looking to reduce costs by about $95 million a year, by cutting expenses, reducing its workforce and lowering spending on contracted services. More than $50 million in savings are expected to be realized in 2024, as it pursues additional cash-management actions.
Albemarle said the actions should unlock more than $750 million of cash flow over the near term.
The stock
ALB
rose 1.6% in premarket trading, putting it on track to snap a five-day losing streak.
The company’s actions come as prices for lithium, which is used in electric-vehicle battery production, have plunged over the past year as supply has outpaced demand. J.P. Morgan analyst Lyndon Fagan wrote in a note to clients last week that December EV sales data didn’t provide a reliable indication of first-quarter trends, keeping him concerned about demand growth.
Lithium prices have plunged over the past year, amid concerns over lack of EV penetration growth.
FactSet
The company said it expects capital expenditures to fall to $1.6 billion to $1.8 billion in 2024 from $2.1 billion in 2023, as part of a “rephasing” of larger projects to focus on those that are significantly progressed, near completion and in startup.
The number of employees expected to be laid off was not disclosed.
The company said as a result of the actions it was taking, it would record a charge in the first quarter, but it did not specify the amount.
“The actions we are taking allow us to advance near-term growth and preserve future opportunities as we navigate the dynamics of our key end-markets,” said Chief Executive Kent Masters.
Albemarle’s stock has tumbled 48.2% over the past 12 months through Tuesday, while lithium hydroxide futures have plummeted 80% and the S&P 500
SPX
has rallied 19.4%.
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