① Tianqi Lithium expects a net loss of 3.6 billion yuan to 4.3 billion yuan in the first quarter, while the company's net profit for the full year of last year was 7.3 billion yuan; ② The company claims that the joint venture's SQM tax dispute ruling caused the company's investment income to drop sharply year-on-year.
Financial Services Association, April 23 (Reporters Liu Yue and Zeng Chuchu) Due to fluctuations in the lithium product market and the tax dispute ruling of the affiliated company SQM, Tianqi Lithium (002466.SZ) is expected to have a maximum advance loss of more than 4 billion yuan in Q1 this year. The Shenzhen Stock Exchange issued a letter of concern to the company this evening to inquire about the reason for the sharp increase in losses in the first quarter.
Tianqi Lithium announced this evening that it expects a net loss of 3.6 billion yuan to 4.3 billion yuan in Q1 and a net profit of 4.875 billion yuan for the same period last year. It is worth noting that in 2023, the company's net profit returned to mother was 7.3 billion yuan. Calculating the loss amount for a single quarter in Q1, this is almost half of the net profit for the full year of last year. Last year, Q4 had a net loss of 801 million. The company continued to lose money and increase in the first quarter of this year.
The Shenzhen Stock Exchange issued a letter of concern to Tianqi Lithium this evening, requesting a quantitative analysis of the reasons for the sharp increase in losses in the first quarter of 2024 compared to the fourth quarter of 2023, taking into account specific changes in factors such as main business development, product production and sales, product prices, raw material purchase prices, costs and expenses, and impairment calculation, and to explain whether there is a risk of continuing losses, etc.
By the end of last year, Tianqi Lithium's lithium mineral products accounted for nearly 70% of revenue. Regarding the reason for the change in performance, Tianqi Lithium stated in the announcement that due to fluctuations in the lithium product market, the sales price of the company's lithium products dropped sharply compared to the same period last year, and the gross profit of lithium products dropped sharply.
According to data from Zhuochuang News, in the first quarter of 2024, the average price of battery-grade lithium carbonate was 100,000 yuan/ton, down 24.5% from the fourth quarter of 2023.
In addition to common reasons for the decline in lithium carbonate prices in the industry, Tianqi Lithium also stated that according to Bloomberg forecast data, combined with the impact of the SQM (Chile Mining & Chemical) tax dispute ruling, SQM's first quarter 2024 results are expected to drop sharply year on year, so the investment income confirmed by the company during this reporting period in the associated company fell sharply compared to the same period last year.
Tianqi Lithium said in an announcement that SQM issued an announcement stating that the Santiago de Chile court ruled on its tax lawsuit for the 2017 and 2018 tax years in April 2024, revoking the tax and customs court's ruling on the case on November 7, 2022. SQM anticipates that it may reduce its net profit for the first quarter of 2024 by approximately $1.1 billion. Tianqi believes that this matter is expected to reduce the company's net profit to mother.
Tianqi Lithium's “Snake Eater” acquired 22.16% of SQM's shares to operate the Atacama project in the world's largest lithium salt lake. According to public information, SQM and the Chilean National Copper Company (Codelco) have reached a memorandum of understanding to form a new joint venture to jointly develop lithium resources. This has brought potential uncertainty to Tianqi Lithium's return on investment.
Regarding the above matters, Tianqi Lithium stated in the Investor Relations Activity Record Form disclosed on April 11 that as a shareholder of SQM, the company previously issued a request to SQM to hold an informational shareholders' meeting to hear details of matters relating to the Memorandum of Understanding (MoU) between SQM and Codelco. The shareholders' meeting was held on March 21, 2024. The company understands that the matter is still being studied and discussed, and the company currently has no information to share in this regard.
Tianqi Lithium previously disclosed in its 2023 annual report that during the reporting period last year, the company had received SQM dividends equivalent to about RMB 2,276 billion. The SQM resource volume is about 10.8 million tons of lithium metal equivalent. Atacama Salt Lake is the project with the highest production of lithium salt lakes in the world in 2023. SQM's annual revenue for 2023 was equivalent to RMB 52,449 billion, and net profit was equivalent to RMB 14.136 billion.