(SQM, 23.May.2019) — Sociedad Química y Minera de Chile S.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.”