SQM Reports Earnings for the Twelve Months Ended December 31, 2019

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

Mar 02, 2020, 21:13 ET

SANTIAGO, Chile, March 2, 2020 /PRNewswire/ --

Highlights

SQM reported net income for the twelve months ended December 31, 2019 of US$278.1 million.
Revenues during 2019 were US$1,943.7 million, lower than revenues reported during 2018.
Adjusted EBITDA margin for the twelve months ended December 31, 2019 reached 33%.
SQM will hold a conference call to discuss these results on Tuesday, March 3 at 10:00am ET (12:00pm Chile time).

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Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported earnings today for the twelve months ended December 31, 2019 of US$278.1 million (US$1.06 per ADR), a decrease from US$439.8 million (US$1.67 per ADR) reported for the twelve months ended December 31, 2018. Gross profit reached US$560.1 million (28.8% of revenues) for the twelve months ended December 31, 2019, lower than US$780.2 million (34.4% of revenues) recorded for the twelve months ended December 31, 2018. Revenues totaled US$1,943.7 million for the twelve months ended December 31, 2019, representing a decrease of 14.2% compared to US$2,265.8 million reported for the twelve months ended December 31, 2018.

The Company also announced earnings for the fourth quarter of 2019, reporting net income of US$66.9 million (US$0.25 per ADR) compared to US$108.6 million (US$0.41 per ADR) for the fourth quarter of 2018. Gross profit for the fourth quarter 2019 reached US$137.8 million; lower than the US$201.1 million recorded for the fourth quarter 2018. Revenues for the fourth quarter 2019 totaled US$472.2 million, a decrease of approximately 16.5% compared to the fourth quarter 2018, when revenues amounted to US$565.2 million.

SQM's Chief Executive Officer, Ricardo Ramos, stated: "Our 2019 year-end results were lower than numbers reported last year. Lower sales volumes of potassium chloride and lower average prices in the lithium business line were the main drivers of these results. We saw positive price dynamics in the iodine and derivatives business line where our average price increased when compared to 2018".

"We believe that lithium demand grew approximately 14% in 2019, a significant market growth, but lower than originally expected given some delays we saw in the penetration of electric vehicles in some key markets. We believe that the fundamentals behind demand growth in the lithium industry are stronger than ever, different automakers around the world are fully committed to the electrification of their fleet. At the same time, technological advancements are resulting in more competitive alternatives for customers, and doubts that once existed over lithium battery technology are dissipating. Our commitment to the lithium industry is strong; we continue working on our expansion plans in Chile, expecting to reach a capacity of 120,000 metric tons in 2021. We have decided to complete our previously announced lithium hydroxide expansion in two modules of 8,000 metric tons and believe the first stage should be completed next year. We have plans to further expand lithium carbonate capacity in Chile in the future and will continue working on the Mt. Holland project in Australia with the objective to make our final investment decision in the first quarter of 2021."

Mr. Ramos went on to say: "With the recent developments of the coronavirus in China and around the world, we report that the safety of our employees is our top priority, and necessary precautions have been taken. Logistics in China have been affected, but we have seen signs that things are getting back to normal. At this point, we believe sales volumes related to the lithium business line in China could be lower during the first quarter of 2020 when compared to our original expectations. Depending on the evolution of the coronavirus outbreak, we may be able to recover some of those sales volumes and reach 55-60k metric tons in 2020."

About SQM

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 supports 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.

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.

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