SQM Inc.’s second-quarter net income soared to $859.3 million ($3.01 per share), or 857%, compared to the year-ago $89.8 million ($0.31 per share), however, it still missed the analyst average estimate (Bloomberg Consensus), which was $876.8 million. Revenues were $2.6 billion, up 342% over the year-ago $588 million and also topping the analyst estimate of $2.3 billion. Gross profit was $1.3 billion, up from $185.9 million. Adjusted EBITDA was $1.32 billion versus the year-ago $210 million.
“We are very pleased with our results for the first half of the year,” said Ricardo Ramos, SQM CEO. “These results were related to favorable market conditions related to fertilizers, iodine, and lithium, and decades of investment, hard work, R&D, and know-how. In fact, this year we are celebrating 25 years in the lithium industry. During this time, we have become a great partner to the government in this ‘public-private’ alliance with CORFO. As a result of our operations during the first half of the year, over US$2.2 billion are going to public coffers due to the lithium operations.
“We are close to reaching 180,000 mt of lithium carbonate capacity, and as mentioned previously, we are not stopping there,” he added. “Today, we are working to complete a lithium carbonate capacity of 210,000 mt of sought after, top quality, value-added product, which will be produced right here in Chile. We remain committed to reducing our usage of brine and water through technology and continuous innovation. This new capacity will let us produce high value-added lithium products to power more than 5 million electric vehicles.”
Lithium represented 73% of SQM’s six-month gross profit and 40% of revenues. The company said the average lithium price surpassed $54,000 mt, and that sales of electric vehicles in China in June more than doubled the year-ago month. SQM expects lithium demand to grow at least 35% this year, adding that new lithium supply outside of SQM has been delayed and slow to come online.
Second-quarter Specialty Plant Nutrition (SPN) revenues were up 52%, to $330.3 million from the year-ago $217.2 million on higher prices for all products, particularly potassium nitrate, though total SPN volumes were off 22%, to 230,100 mt from 296,200 mt. Potassium nitrate-based volumes were off 21%, to 138,300 mt from 174,300 mt.
SQM said prices increased almost 10% compared to the first quarter, and that as a result of historically high prices, demand in the agricultural potassium nitrate market could decrease about 10% this year compared to global demand last year. As a result, SQM believes 2022 potassium nitrate sales volumes will be lower than 2021.
Six-month SPN revenues were up 47%, to $605.6 million from the year-ago $411.2 million. Volumes were off 24%, at 440,800 mt compared to the year-ago 576,700 mt. Potassium nitrate-based volumes were down 22%, to 262,600 mt from 337,500 mt.
Second-quarter Potassium Chloride and Potassium Sulfate (MOP/SOP) revenues were up 209%, to $182.4 million from the year-ago $59 million. Volumes were off 4%, to 177,600 mt from 184,500 mt.
SQM reported record-level prices in the MOP market with average prices of over $1,000 mt during the quarter, up 28% from the first quarter. However, in recent weeks, it said it had seen higher stock levels in the market that are pressuring prices, especially in Brazil, a market important to the company.
SQM believes average prices could decrease during the remainder of the year compared to those in the second quarter. However, the company still believes 2022 total MOP/SOP sales will reach approximately 750,000 mt.
Six-month MOP/SOP revenues were up 148.6%, to $296.5 million from the year-ago $119.3 million, while volumes were off 17.4%, to 319,300 mt from 386,800 mt.
Company-wide SQM six-month net income was $1.66 billion ($5.80 per share) on revenue of $4.62 billion, up from the year-ago $157.8 million ($0.55 per share) and $1.12 billion, respectively. Gross profit was $2.46 billion, up from $322.5 million, while adjusted EBITDA was $2.51 billion versus $375.1 million.