Yes, in theory this is a negative, but this move has far more to do with ALB than it does with LTR. Note that the announcement also notes an LiOH plant in the States that will cease moving forward (at least temporarily), and that they are cutting U$300M of CAPEX in 2024.
It's not just that Lithium prices have fallen. ALB has seen their EPS drop from U$9+ and U$10+ in Q4 22 and Q1 23 to U$5+ in Q2 23 and U$2+ in Q3 23. They're getting ready to release their annual, and the average of 18 analysts' prediction for Q4 23 is only U$1.10. Cash flow is slowing to a trickle.
On top of that, they have been increasing debt levels, even with their considerable recent earnings, going from U$3.24B to U$3.63B from Q1 23 to Q3 23, and net debt has increased from U$1.65 to $2.06B (and while net debt is an interesting look into a firms' actual position, you pay interest on all of the debt).
This is a pure cash flow issue related to decreasing profits, a considerable debt load that is no longer easily covered by cash flow, and rather poor management by ALB (IMHO).
As a final axe hanging over ALB's head, everyone should also remember that for all their production in WA, ALB's crown jewel is their Chile brine production, and the SQM announcement last week about protesters shutting down their Salar de Atacama brine mines could extend to their Chilean production. Not saying it WILL happen, but if the current SQM protests continue, and show signs of success (or continue, but have little effect), the protests could be extended to ALB's facilities. The salars are very remote, usually with only one, or maybe two ways in and out, so it's easy to blockade the sites.
Have a nice Thursday, all.
LTR Price at posting:
$1.18 Sentiment: Buy Disclosure: Held
(20min delay)