By Ernest Scheyder
(Reuters) -Albemarle Corp, the world's largest producer of lithium for electric vehicle batteries, raised its annual forecast on Wednesday and reported a better-than-expected quarterly profit after it renegotiated supply contracts for the metal at higher prices.
The results reflect the rising demand for lithium as the auto industry begins to pivot its manufacturing base toward EVs, a shift that has given significant pricing power to mining companies.
Compared to last year, Albemarle now expects the price at which it sells its lithium to jump at least 225% in 2022 and adjusted profit in its lithium division to rise at least 500%.
"We have shifted our lithium contracting strategy to realize greater benefits from these strong market dynamics," Albemarle Chief Executive Kent Masters said in a statement.
Shares of the Charlotte, North Carolina-based company jumped 4.4% to $250 in after-hours trading.
The company reported second-quarter net income of $406.8 million, or $3.46 per share, compared with $424.6 million, or $3.62 per share, in the year-ago quarter.
Excluding one-time items, Albemarle earned $3.45 per share. By that measure, analysts expected earnings of $3.26 per share, according to IBES data from Refinitiv.
Adjusted profit in the company's lithium division more than quadrupled, though adjusted profit in the catalyst division, which sells to the oil refining sector, fell more than 50%. The company's bromine division, which sells chemicals used in fire extinguishers, saw a profit jump due to a jump in bromine prices.
Albemarle said its lithium production this year should rise at least 20% and that expansion projects in Chile, Australia, China and the United States https://www.reuters.com/business/energy/albemarle-plans-major-us-lithium-processing-plant-2022-06-27 are on track or ahead of schedule.
The company's executives plan to hold a conference call to discuss the quarterly results on Thursday.
Albemarle rival Livent Corp on Tuesday said that General Motors Co would prepay https://www.reuters.com/markets/commodities/livent-profit-jumps-rising-lithium-prices-2022-forecast-raised-2022-08-02 $198 million for a supply of lithium that will not begin until 2025.
(Reporting by Ernest Scheyder; editing by Jonathan Oatis and Marguerita Choy)