SANTIAGO, Chile, May 24, 2018 /PRNewswire/ -- Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported earnings today for the three months ended March 31, 2018 of US$113.8 million (US$0.43 per ADR), an increase from US$103.2 million (US$0.39 per ADR) reported for the three months ended March 31, 2017. Gross profit(3) reached US$192.7 million (37.1% of revenues) for the three months ended March 31, 2018, higher than US$177.9 million (34.3% of revenues) recorded for the three months ended March 31, 2017. Revenues totaled US$518.7 million for the three months ended March 31, 2018, representing a slight increase of 0.03% compared to US$518.6 million reported for the three months ended March 31, 2017.
SQM's Chief Executive Officer, Patricio de Solminihac, stated, "Our results for the first three months of the 2018, were positive, the performance seen in our main business lines was strong. The lithium market and lithium prices continue to exceed expectations. In the potassium chloride and potassium sulfate business line, sales volumes were significantly lower, and as indicated before, should be lower than one million metric tons this year. As demand for potassium chloride and potassium nitrate grows, average prices in both of our fertilizer business lines increased compared to average prices reported during the fourth quarter of 2017. A trend we expect to continue during the remainder of 2018. In the SPN market, sales volumes were higher than what we reported during the first quarter of last year as a result of continued demand growth and limited supply from competitors. We are on track to reach 1.5 million tons of nitrates capacity this year. We expect to process about 10-15% more caliche ore this year in Nueva Victoria as part of this major project. As the largest player in this market, with about 50% market share, we will work to have the permits and engineering ready to further expand our capacity if the market demands it."
"We were pleased to see a positive pricing trend in the iodine market, and average prices were significantly higher during the first quarter of 2018 than prices seen during the same period last year. Sales volumes reached 3,200 MT, and we believe we will be able to sell approximately 13,000 MT this year. Our iodine expansion is also on target to reach 14,000 MT of capacity by the end of this year."
"In the lithium market, demand continues to grow at record rates, and total market demand should be over 20% more in 2018 than seen last year. Average prices during the first three months of this year surpassed US$16,000/MT given a tight supply and demand balance. We believe that this price pressure will continue throughout the first half of the year."
Mr. De Solminihac continued by saying, "Given this lithium demand growth, we plan to increase our capacity in Chile in three different stages and continue with the developments of our projects in Argentina and in Australia. As previously disclosed, during 2018 in Chile, we have been working to expand our production from 48,000 to 70,000 MT, with a total capex of US$75 million. We expect this additional 22,000 MT of capacity to be operating by the end of this year. The second stage of the expansion in the Salar de Atacama, in which we will increase production from 70,000 to 120,000 MT (previously 100,000 MT), will be completed in the next 18 months with a total investment of US$200 million. Finally, we will add an additional 60,000 metric tons of capacity to our operations, investing around US$250 million to increase our capacity from 120,000 MT to 180,000 MT. We expect this third stage to be online by early 2021. We believe that with demand growing close to 20% this year and next year, the market will be able to absorb this additional supply. However, we reiterate that we are constantly reviewing market conditions; our strategy is to have the installed capacity to react to the market demand."
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SQM´s business strategy is to be a global company, with people committed to excellence, dedicated to the extraction of minerals and selectively integrated in the production and sale of products for the industries essential for human development (e.g. food, health, technology). This strategy was built on the following five principles:
- ensure availability of key resources required to support current goals and medium and long-term growth of the business;
- consolidate a culture of lean operations (M1 excellence) through the entire organization, including operations, sales and support areas;
- significantly increase nitrate sales in all its applications and ensure consistency with iodine commercial strategy;
- maximize the margins of each business line through appropriate pricing strategy;
- successfully develop and implement all lithium expansion projects of the Company, acquire more lithium and potassium assets to generate a competitive portfolio.
These principles are based on the following key concepts:
- strengthen the organizational structure to supports the development of the Company's strategic plan, focusing on the development of critical capabilities and the application of the corporate values of Excellence, Integrity and Safety;
- develop a robust risk control and mitigation process to actively manage business risk;
- improve our stakeholder management to establish links with the community and communicate to Chile and worldwide our contribution to industries essential for human development.
Cautionary Note Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "plan," "believe," "estimate," "expect," "strategy," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make concerning the Company's business outlook, future economic performance, anticipated profitability, revenues, expenses, or other financial items, anticipated cost synergies and product or service line growth.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are estimates that reflect the best judgment of SQM management based on currently available information. Because forward-looking statements relate to the future, they involve a number of risks, uncertainties and other factors that are outside of our control and could cause actual results to differ materially from those stated in such statements. Therefore, you should not rely on any of these forward-looking statements. Readers are referred to the documents filed by SQM with the United States Securities and Exchange Commission, specifically the most recent annual report on Form 20-F, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to SQM on the date hereof and SQM assumes no obligation to update such statements, whether as a result of new information, future developments or otherwise.