China EVs: lithium producers Ganfeng, Tianqi issue profit warnings, blame price plunge for battery material as stocks sink
- The two producers of the metal that powers EV batteries expect 2023 net profit to decline by as much as 80 per cent
- Ganfeng shares dropped 5 per cent and Tianqi declined 5.9 per cent on Wednesday in Hong Kong
Shares of Ganfeng Lithium and Tianqi Lithium, two of the world’s largest producers of the metal that powers batteries for all kinds of products including electric vehicles (EVs), fell after warning their profits plunged last year due to sharply lower prices.
Xinyu, Jiangxi province-based Ganfeng, which said its production capacity was the world’s third largest and China’s biggest last year, said in a filing late on Tuesday that it expects its 2023 net profit to decline between 70 and 80 per cent year on year to between 4.2 billion yuan (US$587 million) and 6.2 billion yuan.
After accounting for non-recurring losses and gains, net profit will amount to between 2.3 billion yuan and 3.4 billion yuan, down between 83 and 88.5 per cent from the 2022 level, it added.
Sichuan province-based rival Tianqi also posted a profit warning on Tuesday, saying it expects net profit to decline between 62.9 and 72.6 per cent to between 6.62 billion yuan and 8.95 billion yuan.
Ganfeng shares dropped 5 per cent to HK$20.90 on Wednesday in Hong Kong, after falling as much as 6.6 per cent in morning trading. Tianqi declined 5.9 per cent to HK$34.45.
“Due to the cyclical [nature] of the lithium industry and the growth rate of [end-user] demand slowing down, [there was] a significant decrease in the price of lithium-salt products,” Ganfeng said in its filing to Hong Kong’s bourse.