SQM Inc. reported third-quarter net income of $479.4 million, down 56.4% from the year-ago $1.1 billion. The company missed analyst projections (Bloomberg Consensus), which predicted only a 47% drop, to $578.5 million. Revenues were off 37.8%, to $1.84 billion from the year-ago $2.96 billion, while adjusted EBITDA dipped to $788.2 million from $1.66 billion.
“The third quarter 2023 results were impacted by significantly lower average sales prices in lithium and fertilizer business lines, partially offset by higher sales volumes, when compared to the same period last year, and higher iodine sales prices,” said SQM CEO Ricardo Ramos. “When compared to the second quarter this year, our third quarter earnings were lower by 17%, mainly due to lower realized lithium prices.”
“We continue to see strong fundamentals behind long-term lithium demand growth, supported by strong EV sales volumes and decarbonization targets across the globe,” Ramos said. “However, the excess of inventory accumulated across battery and lithium chemical supply chains, particularly in Asia, as well as additional lithium supply, have put pressure on lithium market prices and could continue to have a negative impact on lithium prices in the short-term.”
“As we continue with our expansions in Chile, our lithium carbonate capacity has reached 200,000 mt/y, and we expect to complete the expansion to 210,000 mt in the beginning of 2024, earlier than anticipated,” Ramos added. “This will enable us to redirect our attention to lithium production cost, ensuring that we maintain our cost competitive position. In Australia, the first production of spodumene concentrate at Mt. Holland is expected during this quarter, while in China, we have commenced lithium hydroxide production from lithium sulfate.”
Third-quarter Lithium revenues were off 45%, to $1.28 billion from the year-ago $2.33 billion, while volumes were up 4%, to 43,300 mt from 41,600 mt. Average prices were off 47%, to $30/kg versus $56/kg.
Third-quarter Specialty Plant Nutrition (SPN) revenues were off 24%, to $221.7 million from the year-ago $292.5 million, though sales volumes were up 8%, to 224,400 mt from 207,900 mt. Most of the volume increase was due to Specialty Blends, which saw a 31% uptick, to 81,800 mt from 62,300 mt. Potassium nitrate-based product volumes were off 4%, to 104,100 mt from 108,500 mt.
Average SPN prices were $990/mt, down from the year-ago $1,410/mt. SQM believes that the downward price trend could be over and market prices may have reached the bottom. It said the demand recovery seen in the third quarter is anticipated to continue for the remainder of the year and extend into 2024, potentially resulting in strong potassium nitrate market demand growth during 2024 when compared to 2023.
Third-quarter Potassium segment sales volumes soared 169%, to 168,700 mt from the year-ago 62,700 mt, and revenues were up 25%, to $75.2 million from $60.2 million. The average price for the quarter was $450/mt versus the year-ago $960/mt. SQM believes the price decrease could have a positive impact on global potash market demand, resulting in a growth of approximately 10 million mt during this year when compared to 2022. SQM expects to sell over 500,000 mt of potassium in 2023, up from 2022’s 480,500 mt (GM March 3, p. 24).
SQM’s nine-month net income was $1.81 billion on revenues of $6.16 billion, off from last year’s $2.76 billion and $7.58 billion, respectively. Adjusted EBITDA was $2.75 billion, down from $4.17 billion. SQM noted that its total contribution to the Chilean treasury neared $2.4 billion during the nine-month period, including payments related to its public-private alliance with CORFO.
Nine-month Lithium revenues were down 22%, to $4.39 billion from the year-ago $5.63 billion, while volumes were up 4%, to 118,700 mt from 113,800 mt.
Nine-month SPN revenues declined 23%, to $690.2 million from $898.1 million, while volumes were off 5%, to 614,300 mt from 648,600 mt. Specialty Blend volumes were up 8%, to 181,200 mt from 167,600 mt, while potassium nitrate-based volumes declined 15%, to 316,500 mt from 371,100 mt.
Nine-month Potassium revenues fell 36%, to 228,200 mt from the year-ago 356,700 mt, while volumes were up 13%, to $430.5 million from $382 million.