SQM Inc., Santiago, reported a 44 percent drop in first-quarter net income to $45 million ($0.17 per share) on revenues of $392 million, versus the year-ago $80.5 million ($0.31 per share) and $504.2 million, respectively. Gross profit fell to $107.7 million from $145.5 million. Adjusted EBITDA was $132.9 million, down from $169.2 million.
The drops were driven by the Lithium segment, which saw a near 50 percent drop in prices; a 19 percent decrease in volumes, to 8,600 mt from 10,600 mt; and a 58 percent dip in revenues, to $65.3 million from $155 million.
SQM said COVID-19 particularly impacted the company’s ability to sell during the end of the first quarter, particularly in the lithium market, where auto manufacturing and the need for lithium batteries was hard hit. However, the company believes its volumes should be higher in the remaining quarters of the year. By contrast, fertilizer products were deemed essential in most places, and demand was not as significantly impacted.
SQM told analysts that the first quarter would be its worst of the year. The company intends to continue plans to expand both lithium production and market share. It continues to call 2020 production 65,000-70,000 mt.
It was the first time since 2015 that Specialty Plant Nutrition (SPN) gross profit exceeded that of Lithium, according to Bloomberg. SPN accounted for 36 percent of SQM’s gross profit, versus only 12 percent for the Lithium segment.
SPN volumes were off 9 percent, to 233,600 mt from 255,800 mt. Potassium nitrate-based volumes were off 27.6 percent, to 138,300 mt from 165,900 mt. The company said it is no longer reasonable to believe that demand growth in the water-soluble potassium nitrate market will reach the expected 5-6 percent. Average prices in this business line also dropped about 4 percent versus the year-ago quarter.
Volumes were up 4 percent for the Potassium Chloride and Potassium Sulfate segment, to 129,000 mt from 124,600 mt, though revenues were off 2 percent, to $43.3 million from $44.1 million. Average prices were just over 5 percent lower than year-ago levels. Gross profit from the segment represented 4 percent of company-wide gross profit.
SQM said it continues to expect to sell more potash in 2020 than it did in 2019. It expects to sell close to 700,000 mt in 2020, with very important volumes going into the Brazilian market.