SQM Inc.’s first-quarter net income was $749.9 million, off 6% from the year-ago $796.1 million. It missed the average analyst estimate (Bloomberg Consensus) of $850 million by 5.8%. Revenue was $2.26 billion, up 12% from the year-ago $2.02 billion, but off 12% from the $2.42 billion estimate. Adjusted EBITDA was $1.09 billion, off from the year-ago $1.19 billion.
“Our quarterly results were in line with our expectations,” said SQM CEO Ricardo Ramos. “We saw record high average prices and high sales volumes in iodine business, and saw some sales volumes recovery in potassium business.”
Revenues and volumes were both off 20% in SQM’s Specialty Plant Nutrition business, with volumes dropping to 168,100 mt from 210,700 mt while revenues sank to $220.9 million from $275.3 million. Potassium nitrate-based products saw a 29% drop in volumes while Specialty Blends were off 21%.
SQM said revenues were impacted by significantly lower sales volumes while prices remained flat year-to-year. The company cited a decline in global potassium nitrate demand coupled with heightened competition compared to the year-ago period. While some recovery in sales volumes is expected during the second-half, SQM believes that the total potassium nitrate demand growth could be flat in 2023 when compared to the previous year.
Potassium Chloride and Potassium Sulfate (MOP/SOP) revenues declined 24% during the quarter to $86.9 million from $114.1 million, though volumes were off only 3% to 137,500 mt from 141,700 mt. SQM attributed the revenue decline to lower average sales prices and sales volumes. When compared to fourth-quarter 2022, sales volumes actually increased 40%, while average sales prices were over 22% lower during the first quarter of 2023.
SQM expects that the price decrease could have a positive impact on market demand and that potassium sales volumes could surpass 500,000 mt in 2023. 2022 total volumes were 480,500 mt, down 46% from 2021’s 893,200 mt (GM March 3, p. 24), with the company citing higher prices.
First-quarter Lithium segment volumes were off 15% to 32,300 mt from the year-ago 38,100 mt, while revenues were up 14% to $1.65 billion from $1.45 billion.
“In the lithium market, as anticipated, advanced purchases in the previous quarter, the change in subsidies in China, and the high level of stock across the battery supply chain led to a weaker demand, predominantly in China, in the beginning of the year,” said Ramos. “As a result, our lithium sales volumes during the first quarter of the year were lower than compared to the same period last year.
“Based on the recent increase in customer activity, we believe that the destocking period has concluded and anticipate our sales volumes to recover in the upcoming quarters,” he continued. “We expect the global lithium demand growth to reach at least 20% this year and will continue to operate at full capacity, producing high-quality lithium products to meet this growth.
“This year, we continue with our growth plans and expect to invest close to US$1.2 billion in expanding our production capacity in Chile and abroad,” he added. “The expansions at the Carmen Lithium Plant advance on schedule, while we make progress in preparing the technical documentation for the Salar Futuro project. The lithium hydroxide pant in China should be in production in the upcoming months. We continue with the construction at the Mt. Holland site and can confirm that the project is on track to begin spodumene concentrate production by the end of this year and battery-grade lithium hydroxide in 2025.”