SANTIAGO, Chile, Aug. 21, 2019 /PRNewswire/ --
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Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported earnings today for the six months ended June 30, 2019 of US$150.7 million (US$0.57 per share), a decrease from US$247.7 million (US$0.94 per share), representing a 39.1% decrease compared to the earnings reported for the six months ended June 30, 2018. Gross profit reached US$288.0 million (28.8% of revenues) for the six months ended June 30, 2019, lower than US$417.1 million (36.0% of revenues) recorded for the six months ended June 30, 2018. Revenues totaled US$998.4 million for the six months ended June 30, 2019, representing a decrease of 13.7% compared to US$1,157.4 million reported for the six months ended June 30, 2018.
The Company also announced earnings for the second quarter of 2019, reporting net income of US$70.2 million (US$0.27 per share) compared to US$133.9 million (US$0.51 per share) for the second quarter 2018. Gross profit for the second quarter 2019 reached US$142.5 million; lower than the US$224.4 million recorded for the second quarter 2018. Revenues totaled US$494.1 million, a decrease of approximately 22.6% compared to the second quarter 2018, when revenues amounted to US$638.7 million.
SQM's Chief Executive Officer, Ricardo Ramos, stated: "We reported earnings for the six months ended June 30, 2019 of US$150.7 million. The second quarter results were mainly impacted by lower lithium sale prices, partly compensated by higher lithium sales volumes, lower potassium chloride volumes, and the lack of solar salt sales during the second quarter. These factors were partially offset by higher iodine prices. We have seen lithium supply growing more than demand over the past few quarters, putting pressure on prices. We sold higher sales volumes in the second quarter and expect to sell higher volumes in the second half of the year as we prepare for a 30% to 40% increase in sales volumes next year, which will help us recover some of the market share lost in previous years."
"We are expecting higher sales volumes in the potassium chloride business line this year than previously anticipated, reaching close to 600,000 metric tons, this implies significantly higher sales volumes during the second half of the year. Additionally, our sales volumes could grow in the future as we get back to the brine extraction levels that we had at the beginning of last year. We still expect the solar salt sales volumes this year of between 45,000 and 50,000 metric tons, while for the upcoming years these volumes should grow significantly as we will be supplying a major project in the Middle East that will require approximately 400,000 metric tons of product between 2020 and 2022."
Finally, he closed by saying, "The margins in the iodine business line are becoming more attractive as prices are up almost 20% when compared to last year. We expect prices to continue on this upward trend as the market remains tight."
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 support 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, except as required by law.