SQM Reports 3Q:21 Earnings

(SQM, 17.Nov.2021) — Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported earnings for the nine months ended 30 September 2021 of $263.9mn ($0.92 per ADR), an increase from $97.5mn ($0.37 per ADR) for the nine months ended September 30, 2020.

Highlights

— SQM reported net income for the nine months ended 30 September of $263.9mn compared to $97.5mn for the same period the year before. Earnings per share totaled $0.92 for the first nine months of 2021, higher than the $0.37 reported for the first nine months of 2020.

— Revenues for the nine months ended 30 September were $1,778mn.

— Higher sales volumes and average prices in almost all of our business lines during the first nine months of 2021 when compared to the same period last year.

— SQM recently qualified for both the DJSI Chile Index and DJSI MILA Pacific Alliance Index.

Gross profit reached $547.3mn (30.8% of revenues) for the nine months ended 30 September, higher than $350.4mn (26.9% of revenues) recorded for the nine months ended 30 September, 2020. Revenues totaled $1,778mn for the nine months ended 30 September, representing an increase of 36.4% compared to $1,303.4mn reported for the nine months ended 30 September 2020.

The Company also announced earnings for the third quarter of 2021, reporting net income of $106.1mn ($0.37 per ADR) compared to $1.7mn ($0.01 per ADR) for the third quarter of 2020. Gross profit for the third quarter of 2021 reached $224.8mn, higher than the $114.8mn recorded for the third quarter of 2020. Revenues totaled $661.6mn, an increase of approximately 46.1% compared to the third quarter of 2020, when revenues amounted to $452.9mn.  

SQM’s Chief Executive Officer, Ricardo Ramos, stated: “We reported a significantly higher net income for the nine months ended 30 September when compared to the similar period of 2020. These results were primary driven by much higher sales volumes in lithium, iodine, specialty plant nutrition and potassium business lines as well as higher realized prices in all our business lines”.

He continued by saying, “The expansion of our lithium operations is yielding positive results, letting us increase our sales volumes more than 80% when compared to last year. We are already producing at rate higher than 120,000 metric tons per year, while we continue working to reach 180,000 metric tons capacity next year. We are confident that our sales volumes could reach close to 100,000 metric tons this year, on a market that we estimate will grow close to 50%. This market growth is putting pressure on prices, as a result, we forecast average prices to be close to 50% higher in the fourth quarter this year when compared to prices reported in the third quarter 2021”.

“In the iodine market, the rapid post-Covid recovery is being reflected in a 25% increase in our sales volumes in the first three quarters of 2021 compared to the same period last year. This strong demand growth should have a positive impact on prices going forward since supply is not keeping up.”

The CEO continued by saying, “Given the existing shortage of potash and potassium-based fertilizers, we have seen a significant increase of global potassium prices, letting us report an over 65% increase of our average price in potassium business line during the third quarter of 2021 when compared to the same period last year. This positive trend should continue during the fourth quarter, with prices of potassium-based fertilizers growing at a rate higher than earlier anticipated”.

The CEO closed by saying, “The positive trends we are seeing in each of the markets in which we participate, along with the expiration of the legacy lithium contracts, are leading us to reach record-level results in the fourth quarter of this year”.

Sustainable Development

We continue with the implementation of our Sustainable development plan, focusing on reducing our emissions, water and brine usage, strengthen our relationships with communities and contributing to the regional development. For the second year, we were qualified for DJSI Chile Index and DJSI MILA Pacific Alliance Index.

During the third quarter we submitted our first disclosure report under Climate Disclosure Project (CDP) Climate change guidance and completed self-evaluation process under The Initiative for Responsible Mining Assurance (IRMA). We are also extremely pleased with the successful placement of our first green bond of US$700 million which proceeds will be used to finance lithium capacity expansion projects that contribute to the low-carbon transition through clean transportation and energy storage solutions.

Recently we joined the Race to Zero initiative which focuses on the immediate actions to reduce global emissions by 2030. Race to Zero is an initiative from the United Nations Framework Convention on Climate Change (UNFCCC). It is an external validation of SQM’s sustainable development plan to become carbon neutral in lithium, iodine, and potassium chloride products. Race to Zero is based on 4 meta-criteria: Pledge, Plan, Proceed and Publish. This implies the use of science-based targets and ties in with our ongoing work with the CDP to limit global warming to 1.5°C. 

As part of Race to Zero initiative and our aim to reduce our logistics carbon footprint, we have introduced Chile´s first high tonnage electric truck which will be operating on the route between Coya Sur and Tocopilla. If this project is successful, we expect to continue replacing diesel power trucks by electric ones in our operations.

____________________