Sociedad Quimica y Minera Chile S.A. (SQM) reported a 13.5 percent drop in net income and a 21 percent increase in sales for the first quarter ending March 31, 2010. Net income was $76.5 million ($.29 per ADR share) on sales of $388.5 million, compared to the year-ago $88.4 million ($.34 per ADR share) on sales of $321.1 million.
“After undergoing unprecedented economic challenges during 2009, which negatively impacted global markets, the first quarter of 2010 showed strong signs of a transition to pre-crisis levels,” said Patricio Contesse, SQM CEO. “We observed positive signs of recovery in all of our business lines, with higher volumes in each business segment in the first quarter of the year compared to first quarter of 2009. Although prices in our fertilizer and lithium businesses are lower than the same period last year, they are in line with our expectations for 1Q10. Although there continues to be economic uncertainty in global markets, improved economic conditions and a more encouraging outlook in general have had a positive impact on our businesses, and we expect this positive trend to continue throughout the year.
“Last year’s challenging conditions proved that our diverse businesses and broad customer base make SQM more resilient compared to fertilizer industry players under demanding market conditions,” added Contesse. “Sales volumes for the first quarter of 2010 reflect the turnaround in markets, and we are optimistic that the following quarters will continue to show promising signs of growth and recovery for our businesses.”
All SQM business units saw increased sales during the quarter. Specialty Plant Nutrient’s (SPN) sales moved up 6.2 percent, to $128.2 million from the year-ago $120.7 million. SQM said SPN demand has begun to recover, particularly for soluble potassium nitrate fertilizers. With newly established prices in the potash market, SQM said growers are making plans to purchase and apply fertilizer in all sectors. While average SPN prices were considerably lower versus the year-ago quarter, SQM said current prices are 5-10 percent lower than those for second half 2009. SQM expects current prices to remain stable. SPN volumes increased 35 percent from year-ago levels. SQM expects volumes to improve throughout the year with 2010 volumes significantly higher than 2009.
Potassium chloride and potassium sulfate revenues for the first quarter were $124.7 million, up 30.2 percent from the year-ago $95.7 million. SQM said it was able to double its potash sales during the quarter versus the year-ago period. Average prices fell approximately 41 percent from the year-ago quarter. The company expects current price levels to hold. As with SPN, SQM thinks these products are now getting back to normal usage. SQM said expansion plans have moved forward and it expects this year’s production to be higher than 2009, allowing it to reach a sales target of 1.2 million mt of MOP and SOP for the year.