SANTIAGO, Chile, Nov. 20, 2019 /PRNewswire/ --
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Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM) reported today earnings for the nine months ended September 30, 2019 of US$211.2 million (US$0.80 per ADR), a decrease from US$331.2 million (US$1.26 per ADR) for the nine months ended September 30, 2018. Gross profit(3) reached US$422.2 million (28.7% of revenues) for the nine months ended September 30, 2019, lower than US$579.1 million (34.1% of revenues) recorded for the nine months ended September 30, 2018. Revenues totaled US$1,471.4 million for the nine months ended September 30, 2019, representing a decrease of 13.5% compared to US$1,700.6 million reported for the nine months ended September 30, 2018.
The Company also announced earnings for the third quarter of 2019, reporting net income of US$60.5 million (US$0.23 per ADR) compared to US$83.5 million (US$0.32 per ADR) for the third quarter of 2018. Gross profit for the third quarter of 2019 reached US$134.2 million, lower than the US$162.1 million recorded for the third quarter of 2018. Revenues totaled US$473.1 million, a decrease of approximately 12.9% compared to the third quarter of 2018, when revenues amounted to US$543.2 million.
SQM's Chief Executive Officer, Ricardo Ramos, stated: "The results of the third quarter of 2019 were impacted by lower sales volumes and, as anticipated, significantly lower average lithium prices. The increase in iodine prices partially offset the results of this quarter".
"The decrease in lithium prices was a result of lower than expected demand growth this year, related to changes in Chinese subsidies and customers' decision to reduce their inventory. We estimate that the total demand growth in 2019 could be lower than our long-term estimates range of 16-20%, reaching approximately 14%. Consequently, the negative pricing trend seen in the third quarter should continue into the fourth quarter of 2019. We remain positive on our 2019 sales volumes reaching approximately 47,000 MT. Despite the short-term softening in the lithium demand this year, we remain very positive about the long-term demand fundamentals and continue with our commitments to the previously announced capacity expansions in Chile and the development of the Mt. Holland project in Australia."
He continued by saying, "This year, we have seen positive price dynamics in iodine and derivatives business line where our average price has increased when compared to 2018. In the recent years, we have been increasing our iodine sales volumes ahead of capacity expansion, thus significantly reducing inventory levels. That has allowed us to recover our market share but put certain constraints on continuing our growth at the same pace. Because of these constraints, our iodine sales volumes could be slightly lower this year, reaching approximately 13,000 MT and that trend may continue in 2020. We are currently working on the preliminary stages of iodine capacity expansion to serve the market needs in the future".
Mr. Ramos went on to say: "The company is closely monitoring the recent events in Chile, especially their effect on the transit of our employees and contractors, logistics and port services. As always, our priority has been the safety and well-being of our employees, contractors and neighboring communities".
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.
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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.