Arcadium Lithium (ASX:LTM), formed earlier this year by the merger of Livent of the US and Australia's Allkem, has seen another significant fall in earnings, joining its rivals in taking a big hit from the downturn in lithium prices and demand.
IGO, Albemarle, Pilbara Minerals, and smaller rivals have reported substantial drops in revenue and earnings for the March quarter as the collapse in prices, rise in supply, and slower growth in demand took their toll.
Arcadium, which was created by the 2023 merger between the two producer companies, managed a small profit for the three months to March of $US15.8 million – down nearly $US100 million from the $US114.8 million a year ago.
That was after 4th quarter 2023 profits slumped 54% to $US37.7 million.
March quarter revenue totaled $US261 million, up from $US253 million in the year-ago quarter (before the full merger).
With the merger completed, costs soared to $US241.4 million from $US106.7 million a year ago – which explains the narrow profit.
Restructuring and other charges surged to nearly $US84 million from just over $US2 million a year ago as the company completed the merger and cut staff and other costs.
The results were helped in part by cost cuts, including Arcadium laying off about 11% of its staff during the quarter.
"We see encouraging signs in the lithium market, and underlying demand fundamentals remain very strong," Arcadium CEO Paul Graves said in a statement.
The company achieved an average realized pricing of over $20,000 per product metric ton for its combined hydroxide and carbonate volumes in the first quarter.
"Combined volumes in the first quarter were down versus the prior quarter, driven primarily by a decline in spodumene sales due to lower production at Mt. Cattlin (in WA). Prices were slightly higher across most lithium products versus the prior quarter due to an initial improvement in lithium market conditions, although they were down compared to the beginning of 2023," the company said in its release.
The company said it remains on track to achieve a 40% increase in combined lithium hydroxide and lithium carbonate sales volumes for the full year, with volume growth weighted towards the second half of this year.
SQM, the world’s second-biggest lithium group after Albemarle, is due to release its March quarter figures Wednesday in Argentina.
