The performance recovery of the joint venture company SQM contributes to profit growth, and TIANQI LITHIUM's net profit is expected to turn from loss to profit year-on-year in 2025 | Financial Report Insights
TIANQI LITHIUM forecasts a net profit of 3.69 billion to 5.53 billion yuan in 2025, successfully turning around from a significant loss of 7.9 billion yuan last year. The performance reversal is mainly attributed to three pillars: first, optimizing the pricing mechanism for concentrate, allowing costs to quickly align with the market, leading to a recovery in core business profitability; second, the significant investment income contribution from the joint venture company SQM as its performance improves; third, benefiting from the appreciation of the Australian dollar, resulting in considerable foreign exchange gains
On January 29, lithium giant TIANQI LITHIUM released a performance forecast indicating a turnaround from loss to profit.
The announcement showed that the company expects to achieve a net profit attributable to shareholders of the listed company of between 3.69 billion yuan and 5.53 billion yuan for the fiscal year 2025, marking a "V" shaped reversal compared to the massive loss of 7.9 billion yuan in 2024. During the same period, the net profit after deducting non-recurring gains and losses is also expected to be between 2 billion yuan and 3.6 billion yuan.
This performance reversal is mainly attributed to the company's systematic optimization in areas such as industrial chain integration, refined cost management, and response to exchange rate fluctuations. Although the market price of lithium products still faces adjustment pressure, the company has successfully consolidated its profit resilience during the industry's bottoming phase by adjusting the pricing mechanism for the concentrates of its holding subsidiaries, accelerating the turnover of high-priced inventory, reducing procurement costs, and capturing exchange gains from the strengthening Australian dollar in 2025.
In addition, the performance recovery of the joint venture SQM has also brought significant incremental investment income to the company. Based on Bloomberg's forecast data, SQM's annual performance is expected to grow year-on-year, significantly enhancing TIANQI LITHIUM's investment income recognized under the equity method. Meanwhile, the scale of asset impairment provisions has significantly shrunk compared to the previous year, providing support for profit recovery.
Pricing Mechanism Optimization Significantly Improves Cost Structure
The key to TIANQI LITHIUM's turnaround from loss to profit lies in successfully addressing the long-term mismatch in industrial chain pricing. The company has shortened the pricing cycle for its Talison lithium concentrates, aligning it more closely with the sales pricing rhythm of downstream lithium salt products, significantly reducing the profit erosion caused by the lag in procurement cost locking compared to sales price changes.
With the new low-cost lithium concentrates coming into use and the gradual digestion of historically high-priced inventory, the actual raw material costs at the company's production bases have been able to align more closely with current market prices. This adjustment allows the company to maintain relatively stable processing profits even during the downturn in lithium prices, effectively enhancing the main business's risk resistance and profit certainty amid cyclical fluctuations.
SQM Investment Income Becomes an Important Source of Profit
Sociedad Quimica Y Minera (SQM), as an important joint venture of TIANQI LITHIUM, is expected to contribute significantly increased investment income in 2025. Based on Bloomberg's forecast data, benefiting from SQM's year-on-year performance growth, the investment income recognized under the equity method during this reporting period has significantly increased compared to the same period last year, becoming an important driving force behind this turnaround from loss to profit.
However, there is a certain degree of uncertainty regarding the recognition of this investment income. Since SQM follows the disclosure timetable of listed companies in both Chile and the United States, its formal quarterly report is released later than TIANQI LITHIUM's performance forecast. Currently, SQM and its joint venture are determining the proposed dividend distribution and reviewing the related accounting impacts based on the agreement, which may affect its final net profit. Therefore, the investment income currently disclosed by TIANQI LITHIUM is based on preliminary estimates from forecast data and may differ from actual data, with the final results subject to SQM's official announcement and the company's audited annual report
Exchange Rate Fluctuations Bring Additional Gains
The strengthening of the Australian dollar in 2025 contributed significant exchange gains to TIANQI LITHIUM's performance. As the company holds the globally important lithium spodumene mine Talison in Australia and has dollar-denominated debt, the continuous appreciation of the Australian dollar against the US dollar directly enhanced the value of its assets denominated in local currency and the exchange conversion gains on its dollar liabilities, with this non-operating income significantly increasing compared to the 2024 fiscal year.
This financial performance highlights the strategic value of the company's global asset layout. During the phase of cyclical adjustments in lithium product prices, the cross-regional asset and liability structure not only brought direct exchange gains but also objectively formed a natural hedge against exchange rate risks, enhancing the company's financial resilience and overall profit stability during industry downturns
