SQM REPORTS EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

Rhea-AI Summary

SQM reported financial results for the nine months ended September 30, 2024, showing a significant decline in performance. Total revenues decreased 43.9% to US$3,455.0 million, compared to US$6,155.9 million in the same period last year. The company recorded a net loss of US$524.5 million (US$1.84 per share), versus a net income of US$1,809.5 million (US$6.33 per share) in 2023. Despite challenging market conditions, SQM achieved solid sales volumes across its lithium, iodine, and fertilizer businesses. Lithium sales volumes grew 18% year-on-year, though prices declined 24% from Q2 2024. The Specialty Plant Nutrition segment showed strong performance with over 20% volume growth.

Positive

• Lithium sales volumes increased 18% year-on-year to over 51,000 metric tons
• Specialty Plant Nutrition volumes grew more than 20% with 12% revenue increase
• Iodine sales volumes and revenues increased with slight price improvements
• First lithium sales achieved from SQM International division

Negative

• Net loss of US$524.5 million compared to US$1,809.5 million profit last year
• Revenue declined 43.9% to US$3,455.0 million
• Gross profit margin decreased to 29.9% from 43.4%
• Lithium prices dropped 24% compared to Q2 2024
• Persistent lithium market oversupply affecting prices negatively

Insights

Financial Analyst

The Q3 2024 results reveal significant challenges for SQM, with a concerning shift from profitability to loss. The company reported a $524.5 million net loss for the nine months, compared to $1.8 billion profit in the same period last year. Revenue declined by 43.9% to $3.45 billion, while gross margins contracted from 43.4% to 29.9%.

The most critical factor is the dramatic decline in lithium prices, with Q3 prices dropping 24% from Q2 levels due to market oversupply. Despite volume growth of 18% in lithium sales, the price deterioration has severely impacted profitability. The bright spots include 20% growth in Specialty Plant Nutrition volumes and improved iodine sales, but these cannot offset the lithium market weakness.

Market Research Analyst

The lithium market dynamics present a complex picture. While EV demand growth remains strong in China, the industry faces significant oversupply issues despite recent production curtailment announcements. The fertilizer segment shows encouraging recovery signs with solid market dynamics and volume growth. Iodine's steady price increases and strong demand indicate robust industrial activity, though supply remains constrained.

The company's strategic positioning remains sound with diversified revenue streams across essential industries. However, the near-term outlook appears challenging due to persistent lithium price pressures, which historically account for a substantial portion of SQM's profitability.

Highlights

SQM reported total revenues for the nine months ended September 30, 2024 of US$3,455.0 million compared to total revenues of  US$6,155.9 million for the same period last year.

Net loss(1),(2) for the nine months ended September 30, 2024 of (US$524.5) million or (US$1.84) per share, compared to net income(2) of  US$1,809.5 million or US$6.33 per share for the same period last year.

Solid sales volumes in lithium, iodine, and fertilizer businesses.

SPN and Potassium businesses posted healthy growth showing market recovery.

Slight increase in iodine prices, due to strong market demand and limited supply.

First lithium sales from the SQM International lithium division.

SQM will hold a conference call to discuss these results on Wednesday, November 20, 2024 at 10:00am ET (12:00pm Chile time).

Participant Dial-In (Toll Free): 1-844-282-4852

Participant International Dial-In: 1-412-317-5626

Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=xdNdTppQ

SANTIAGO, Chile, Nov. 20, 2024 /PRNewswire/ -- Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported today net loss^([1]),(2) for the nine months ended September 30, 2024, of (US$524.5) million or (US$1.84) per share, compared to US$1,809.5 million or US$6.33 per share reported for the same period last year. 

Gross profit⁽³⁾ reached US$1,033.3 million (29.9% of revenues) for the nine months ended September 30, 2024, lower than US$2,674.3 million (43.4% of revenues) recorded for the nine months ended September 30, 2023. Revenues totaled US$3,455.0 million for the nine months ended September 30, 2024, representing a decrease of 43.9% compared to US$6,155.9 million reported for the nine months ended September 30, 2023.

The Company also announced net income for the third quarter of 2024 of US$131.4 million or US$0.46 per share, a decrease of 72.6% compared to US$479.4 million or US$1.68 per share for the third quarter of 2023. Gross profit for the third quarter of 2024 reached US$280.8 million, 62.7% lower than the US$753.6 million reported for the third quarter of 2023. Revenues totaled US$1,076.9 million for the third quarter of 2024, a decrease of 41.5% compared to US$1,840.3 million for the third quarter of 2023.

SQM's Chief Executive Officer, Ricardo Ramos, stated, "We are publishing our third quarter 2024 financial results with positive volume growth in almost all of our business lines compared to last year. Fertilizer markets have shown solid market dynamics with a market size recovery. Our Specialty Plant Nutrition volumes grew more than 20% year-on-year while our revenues in this business line increased close to 12%."

He continued, "Iodine demand continued to be strong, leading to an increase in our sales volumes and revenues compared to last year. Prices continued to move up slightly quarter over quarter since the beginning of this year and we have used part of our inventories to answer market needs."

Mr. Ramos further stated, "In lithium, we reported sales volumes of more than 51 thousand metric tons of lithium products, an 18% growth year-on-year, demonstrating strong demand in the market. As anticipated, prices during the third quarter continued their downward trend, with average realized prices 24% lower than the second quarter this year. Although demand continues to grow at a strong pace, mainly driven by strong EV sales growth in China, we continue to see the prices pressured by an oversupply that persists despite the curtailment announcement we have seen over the past few weeks."

Mr. Ramos closed by saying, "Our more than 30-year track record in the lithium market has proved that we have a long-term view in this business. Despite current market prices, we strongly believe in the lithium market and its fundamentals which are highly related to the clean energy transition. SQM is in a strong competitive position and well prepared to continue developing our projects in Chile and abroad to harvest the benefits of this transition."

About SQM

SQM is a global company that is listed on the New York Stock Exchange and the Santiago Stock Exchange (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A). SQM develops and produces diverse products for several industries essential for human progress, such as health, nutrition, renewable energy and technology through innovation and technological development. We aim to maintain our leading world position in the lithium, potassium nitrate, iodine and thermo-solar salts markets.

For further information, contact:

Gerardo Illanes / gerardo.illanes@sqm.com
Isabel Bendeck / isabel.bendeck@sqm.com 

For media inquiries, contact:

Maria Ignacia Lopez / ignacia.lopez@sqm.com
Pablo Pisani / pablo.pisani@sqm.com 

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 completion and implementation of the proposed partnership with Codelco, the development of Salar Futuro Project, Company's capital expenditures, financing sources, Sustainable Development Plan, business and demand outlook, future economic performance, anticipated sales volumes and sales prices, 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, including our ability to successfully implement the Sustainable Development Plan. 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, including the most recent annual report on Form 20-F, which identifies other 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.

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¹ Includes the net effect of accounting adjustments for the payments of the specific tax on mining activities for the exploitation of lithium for the nine months ended September 30, 2024, in a total amount of US$1.303,3 million. For more detail, please refer to Note (1) to this Earnings release.

 

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SOURCE Sociedad Quimica y Minera de Chile, S.A. (SQM)

FAQ

What was SQM's revenue for the first nine months of 2024?

SQM reported total revenues of US$3,455.0 million for the nine months ended September 30, 2024.

How much did SQM's lithium sales volumes grow in Q3 2024?

SQM's lithium sales volumes grew 18% year-on-year, reaching over 51,000 metric tons of lithium products.

What was SQM's net income/loss for Q3 2024?

SQM reported a net income of US$131.4 million (US$0.46 per share) for the third quarter of 2024.

How much did SQM's lithium prices decline in Q3 2024?

SQM's average realized lithium prices decreased 24% compared to the second quarter of 2024.