Company News

Ganfeng Lithium Q3 profits crash on lower prices, fair value loss

* Lithium producer posts Q3 profit of 33.4 mln yuan, -86.5% y/y

* Result is Ganfeng’s worst since net loss in Q4 2016

* Company sees full-year earnings declining by 55-65%

BEIJING, Oct 28 (Reuters) - China’s Ganfeng Lithium said on Monday its net profit slumped 86.5% year-on-year in the third quarter as a sharp drop in the value of its financial assets exacerbated a fall in prices for the metal used in electric vehicle batteries.

Ganfeng, one of the world’s top lithium producers which counts automakers Tesla and Volkswagen among its customers, posted net income of 33.38 million yuan ($4.73 million) for July-September, versus a restated figure of 246.84 million yuan in the third quarter of 2018.

The meagre profit marked Ganfeng’s worst quarterly result since a loss of 21.4 million yuan in the fourth quarter of 2016, according to Refinitiv Eikon data.

Third-quarter revenues rose 10% year-on-year to 1.39 billion yuan thanks to higher production, even though oversupply has pushed prices for battery chemical lithium carbonate down around 28% year-to-date to 49,500 yuan a tonne in China AM-99C-LTCB. Prices were around 150,000 yuan a tonne in early 2018.

But a 294.5 million yuan loss in fair value, mostly related to the falling prices of equities held by Ganfeng, made a severe dent in the company’s bottom line.

Ganfeng, which has interests in lithium mines in Australia, Argentina, Canada and Mexico, boasts around 70,000 tonnes of lithium carbonate equivalent of annual lithium processing capacity in China.

Its rival Tianqi Lithium Corp last week reported its first net loss in 5-1/2 years, blaming lower lithium prices, higher interest rates and foreign exchange fluctuations.

For the first nine months of 2019, Ganfeng posted net income of 329.17 million yuan, down 66.2% year-on-year.

It now sees its full-year net income declining by 55-65% from 2018 to 428-550 million yuan. ($1 = 7.0630 Chinese yuan renminbi) (Reporting by Tom Daly and Min Zhang, editing by Louise Heavens)