SANTIAGO, Chile, May 23, 2019 /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, 2019 of US$80.5 million (US$0.31 per share), a decrease from US$113.8 million (US$0.43 per share) reported for the three months ended March 31, 2018. Gross profit reached US$145.5 million (29.9% of revenues) for the three months ended March 31, 2019, compared to US$192.7 million (37.1% of revenues) recorded for the three months ended March 31, 2018. Revenues totaled US$504.2 million for the three months ended March 31, 2019, representing a slight decrease of 2.8% compared to US$518.7 reported for the three months ended March 31, 2018.
SQM's Chief Executive Officer, Ricardo Ramos, stated: "We reported earnings for the three months ended March 31, 2019 of US$80.5 million. In line with our expectations, iodine and potassium chloride prices increased significantly compared to the same period last year, and sales volumes grew in the iodine, specialty plant nutrition and lithium business lines. In fact, we reported the highest quarterly iodine revenue since 2013. Other important factors that impacted our results in the first quarter 2019 were lower margins in the lithium business line. These margins were impacted by lower average prices and higher costs related to the new lease payment structure with Corfo, which became effective on April 10, 2018, and were therefore not a part of the first quarter 2018 costs. Additionally, we sold lower sales volumes in industrial chemicals during the first quarter 2019 when compared to 2018; we expect similar sales volumes of solar salts this year as we sold last year, approximately 45,000 -50,000 metric tons During the remainder of 2019, our expectations related to sales volumes across all of our business lines have not changed."
He continued by saying, "As expected, during the first quarter, the lithium market saw price pressure as new supply entered the market. Consequently, our average prices fell approximately 8% in comparison to the fourth quarter last year, and we reported average prices of approximately US$14,600/metric tons in this business line. Our sales volumes were higher than sales volumes reported in the first quarter 2019, and we continue to expect to sell between 45,000-50,000 metric tons of lithium carbonate equivalent this year."
Mr. Ramos continued, "Lithium carbonate and lithium hydroxide demand is expected to continue to grow at double-digit rates in the future; accordingly, significantly more supply of both products will be needed. We believe the lithium demand could grow approximately 17% in 2019 when compared to 2018, reaching at least 315,000 metric tons. The evolving EV battery technology in the lithium market will require us to be flexible, and we believe this operational flexibility is essential, and is the key component of our strategy. We are currently working on our lithium carbonate expansion to produce 120,000 metric tons per year. We believe this expansion will be completed during the second half of 2021, with a capex of approximately US$280 million. We are also expanding our lithium hydroxide capacity in Chile to 29,500 metric tons in 2021; the expected capex for this project is US$100 million. Finally, Wesfarmers formally informed that it is expecting to acquire Kidman Resources, our partner in the Mt. Holland lithium project; we believe their experience and capabilities related to chemical processing, and their significant local infrastructure in Australia will be an important asset in the development of the project."
He closed by saying, "I would like to highlight that during the first part of 2019, board elections were held. We look forward to working with the new Board members, and believe that they will bring good insights and expertise to the Company at the Board level."
For more information: Please visit www.sqm.com
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.
For further information, contact:
For media inquiries, contact:
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.