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Albemarle Expects Lithium Volume Shift to Hurt Q1 Results

Zacks Equity Research

Albemarle Corporation ALB recently stated that its Lithium unit is expected to witness a shift in volumes of roughly 3,000-3,500 metric tons on LCE basis from the first quarter of 2019 to subsequent quarters in 2019.

The volume shift is likely to dent first-quarter performance by roughly $40-$45 million in revenues and $15-$18 million in EBITDA. Albemarle expects adjusted first-quarter earnings per share (EPS) in the range of $1.20-$1.25.

Per the company, the shortfall in volume was mainly due to the timing of customer qualifications of lithium hydroxide from Xinyu II and lithium carbonate from toll manufacturers. Production issues at the La Negra site, Chile, due to the disruption of fresh water supply also affected volumes in the first quarter.

However, Albemarle envisions that the shortfall to be recovered during the remainder of 2019. As such, the company has reaffirmed full-year guidance provided during fourth-quarter 2018 earnings call. Full year adjusted EPS outlook of $6.10-$6.50 represents a pro-forma growth rate of 12-20% from 2018 levels. The company also expects earnings to ramp up through 2019 supported by new lithium capacity.

Albemarle’s shares have lost 5.3% in the past year compared with 10.4% decline of the industry.

Zacks Rank & Key Picks

Albemarle currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd. KL, Ingevity Corporation NGVT and Materion Corporation MTRN, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Kirkland has an expected earnings growth rate of 8.8% for 2019. The company’s shares have surged 89.8% in the past year.

Ingevity has an expected earnings growth rate of 17.9% for the current year. The company’s shares have rallied 53.4% in a year’s time.

Materion has an expected earnings growth rate of 12.6% for 2019. Its shares have gained 13.7% in a year’s time.

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