SQM REPORTS EARNINGS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2023

Rhea-AI Summary

SQM reports a decrease in net income and revenues for the twelve months ended December 31, 2023, compared to the previous year. The company achieved a record lithium sales volume in 2023 and commenced spodumene concentrate production. Despite challenges in the lithium market, SQM focuses on operational efficiency and capacity expansion. The CEO anticipates growth in the lithium market in 2024, with stable prices and increased sales volumes. SQM signed a Memorandum of Understanding with Codelco for sustainable operations. The company's total capital expenditure for 2024-2025 is expected to be approximately US$2.4 billion.

Positive

• Recorded net income of US$2,012.7 million for the twelve months ended December 31, 2023, a 48.5% decrease from the previous year.
• Revenues of US$7,467.5 million for the twelve months ended December 31, 2023, a 30.3% decrease from the previous year.
• Achieved record lithium sales volume of over 170,000 metric tons in 2023.
• Commenced production of spodumene concentrate at Mt. Holland during the fourth quarter of 2023.
• CEO anticipates growth in the lithium market in 2024 with stable prices and increased sales volumes.
• Signed a Memorandum of Understanding with Codelco for sustainable operations in the Salar de Atacama.
• Total capital expenditure for 2024-2025 expected to be approximately US$2.4 billion for capacity expansion projects.
• Total capex for 2024 estimated at US$1.3 billion, including maintenance costs.

Negative

• None.

Insights

Financial Analyst

An examination of SQM's financial performance reveals a significant reduction in net income and revenues, with net income dropping by 48.5% and revenues by 30.3% compared to the previous year. This contraction is a crucial indicator of the company's profitability and operational challenges. The decrease in gross profit margin from 53.6% to 41.2% suggests a decline in operational efficiency or a change in product mix. Additionally, the reported capital expenditure of US$1.1 billion for 2023, with an anticipated US$2.4 billion for the next two years, indicates an aggressive investment strategy, which could impact the company's cash flow and debt levels in the short term. However, this also reflects the company's commitment to expansion and could potentially lead to increased production capacity and market share.

Market Research Analyst

The lithium market dynamics mentioned by SQM's CEO, including a 20% expected growth in global demand driven by the electric vehicle sector, are pivotal for understanding the company's future revenue streams. While the CEO anticipates stable lithium prices, the acknowledgement of excess capacity in the market could signal a potential oversupply scenario, which might suppress prices and affect profit margins. The expansion in Chile and the commencement of spodumene concentrate production at Mt. Holland could position SQM favorably to meet the growing demand. However, the company's ability to navigate the price pressures and maintain cost efficiencies will be critical to its success.

Sustainability Analyst

From a sustainability perspective, the Memorandum of Understanding with Codelco to develop the Salar Futuro project indicates a strategic move towards sustainable operations, crucial for maintaining a social license to operate, especially in environmentally sensitive regions like the Salar de Atacama. The inclusion of SQM in the DJSI World and Emerging Markets indices reflects positively on its environmental, social and governance (ESG) efforts, which can enhance investor confidence and potentially lead to a more favorable risk assessment from an ESG perspective. These efforts are increasingly important to investors and can have a long-term impact on the company's reputation and access to capital.

SANTIAGO, Chile, Feb. 28, 2024 /PRNewswire/ -- 

Highlights SQM reported net income for the twelve months ended December 31, 2023 of US$2,012.7 million compared to US$3,906.3 million for the same period last year. Earnings per share totaled US$7.05 for the twelve months ended December 31, 2023. Revenues for the  twelve months ended December 31, 2023, reached US$7,467.5 million compared to US$10,710.6 million reported for the same period last year. Lithium sales volumes reached new record with over 170,000 metric tons sold in 2023; first production of spodumene concentrate commenced at Mt. Holland during the fourth quarter of 2023.

SQM will hold a conference call to discuss these results on Thursday, February 29, 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=R77ofIWz

Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported today earnings for the twelve months ended December 31, 2023, of US$2,012.7 million (US$7.05 per ADR), a decrease of approximately 48.5% from US$3,906.3 million (US$13.68 per ADR) for the twelve months ended December 31, 2022.

Gross profit reached US$3,075.1 million (41.2% of revenues) for the twelve months ended December 31, 2023, lower than US$5,736.6 million (53.6% of revenues) recorded for the twelve months ended December 31, 2022. Revenues totaled US$7,467.5 million for the twelve months ended December 31, 2023, representing a decrease of approximately 30.3% compared to US$10,710.6 million reported for the twelve months ended December 31, 2022.

The Company also announced earnings for the fourth quarter of 2023 of US$203.2 million (US$0.71 per share), a decrease of approximately 82.3% compared to US$1,151.0 million (US$4.03 per share) for the fourth quarter of 2022. Gross profit for the fourth quarter of 2023 reached US$400.7 million, approximately 75.6% lower than the US$1,641.9 million reported for the fourth quarter 2022. Revenues totaled US$1,311.6 million for the fourth quarter of 2023, a decrease of approximately 58.1% compared to US$3,133.6 million for the fourth quarter of 2022.

SQM's Chief Executive Officer, Ricardo Ramos, stated: "Our fourth quarter 2023 results reflected record-high sales volumes in lithium business and increased sales volumes in iodine and potassium business lines when compared to the previous quarter and the same period last year. Despite a downturn in lithium market prices when compared to the previous year, our focus on operational efficiency and ability to successfully execute capacity expansion projects have facilitated notable production growth in lithium and iodine businesses over the past year. While we continue with our expansions in Chile and expect our lithium carbonate capacity to reach 210,000 metric tons during the first quarter of this year, we also celebrated first production of spodumene concentrate at our Mt. Holland operation site during the fourth quarter of 2023. In the iodine business, as a result of successful start-up of Pampa Blanca operation, record-high production volumes were achieved during the year, reconfirming SQM´s position as industry leader with ability to deliver growth ahead of competition."   

He continued by saying: "As we enter into 2024, we anticipate another robust year of growth in lithium market, with global demand increasing by at least 20%, supported by electric vehicle sales growth globally and increasing demand for battery materials. However, the excess in lithium and battery materials capacity seen during last year is expected to continue during this year, keeping pressure on lithium market prices. We expect our average lithium prices to remain relatively stable throughout the year and our sales volumes to increase slightly during this year, subject to market conditions and any changes in supply-demand balance."

He finished by saying: "In December last year, we signed a Memorandum of Understanding with Codelco to jointly develop the Salar Futuro project and sustainably operate in the Salar de Atacama beyond 2030. Together with the communities, we are working on the definitive documentation in the upcoming months and will inform the market once this process is concluded. Last year, SQM was included into both DJSI World and Emerging Markets indices, several years ahead of our internal goal. This is the result of ongoing work and our commitments to increase the transparency and sustainability of our operations."

Total capital expenditure in 2023 was close to US$1.1 billion. For the period 2024-2025, total capex is expected to be approximately US$2.4 billion, including:

• US$1.4 billion related to lithium capacity expansion projects in Chile, including US$130 million of maintenance.
• US$700 million related to nitrates and iodine capacity expansion project in Chile, including US$160 million of maintenance.
• US$340 million related to Mt. Holland lithium project in Australia and exploration projects.

The capex for 2024 is expected to be approximately US$1.3 billion, including maintenance.

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
Irina Axenova  / irina.axenova@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 implementation of the MoU and potential 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, 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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SOURCE Sociedad Quimica y Minera de Chile, S.A. (SQM)

FAQ

What was SQM's net income for the twelve months ended December 31, 2023?

SQM reported a net income of US$2,012.7 million for the twelve months ended December 31, 2023.

How did SQM's revenues for the twelve months ended December 31, 2023, compare to the previous year?

SQM's revenues for the twelve months ended December 31, 2023, were US$7,467.5 million, a decrease of 30.3% from the previous year.

What lithium sales volume record did SQM achieve in 2023?

SQM achieved a record lithium sales volume of over 170,000 metric tons in 2023.

When did SQM commence production of spodumene concentrate at Mt. Holland?

SQM commenced production of spodumene concentrate at Mt. Holland during the fourth quarter of 2023.

What is the CEO's outlook on the lithium market for 2024?

The CEO anticipates growth in the lithium market in 2024 with stable prices and increased sales volumes.

Who did SQM sign a Memorandum of Understanding with for sustainable operations?

SQM signed a Memorandum of Understanding with Codelco for sustainable operations in the Salar de Atacama.

What is the total capital expenditure expected for SQM for 2024-2025?

The total capital expenditure for SQM for 2024-2025 is expected to be approximately US$2.4 billion for capacity expansion projects.

What is the estimated total capex for SQM in 2024?

The estimated total capital expenditure for SQM in 2024 is US$1.3 billion, including maintenance costs.