SQM Inc.’s fourth-quarter net income sank to $203.2 million, off 82.3% from the year-ago $1.15 billion, with revenues off 58%, to $1.31 billion from $3.13 billion, after a sharp worldwide drop in lithium prices. Gross profit was $400.7 million, down from $1.64 billion, while adjusted EBITDA fell to $427.6 million from $1.67 billion.
SQM’s full-year net income was off 48.5%, to $2.01 billion on revenues of $7.47 billion, down from 2022’s $3.91 billion and $10.71 billion, respectively. Gross profit was $3.08 billion, down from $5.74 billion, while adjusted EBITDA was $3.18 billion, down from $5.84 billion.
“Our fourth quarter 2023 results reflected record-high sales volumes in lithium business and increased sales volumes in iodine and potassium business lines when compared to the previous quarter and the same period last year,” said Ricardo Ramos, SQM CEO. “Despite a downturn in lithium market prices when compared to the previous year, our focus on operational efficiency and ability to successfully execute capacity expansion projects have facilitated notable production growth in lithium and iodine businesses over the past year.”
Ramos said SQM is continuing with its expansions in Chile and expects lithium carbonate capacity to reach 210,000 mt during the first quarter of this year. He said the company also celebrated first production of spodumene concentrate at its Mt. Holland operation site during the fourth quarter of 2023.
“In the iodine business, as a result of successful start-up of Pampa Blanca operation, record-high production volumes were achieved during the year, reconfirming SQM´s position as industry leader with ability to deliver growth ahead of competition,” he said.
“As we enter into 2024, we anticipate another robust year of growth in lithium market, with global demand increasing by at least 20%, supported by electric vehicle sales growth globally and increasing demand for battery materials,” he added. “However, the excess in lithium and battery materials capacity seen during last year is expected to continue during this year, keeping pressure on lithium market prices.”
Ramos said SQM expects average lithium prices to remain relatively stable throughout the year and sales volumes to increase slightly during this year, subject to market conditions and any changes in the supply-demand balance.
Ramos noted the signing of a Memorandum of Understanding in December 2023 between SQM and Codelco (GM Jan 5, p.1) to jointly develop the Salar Futuro project and sustainably operate in the Salar de Atacama beyond 2030. “Together with the communities, we are working on the definitive documentation in the upcoming months and will inform the market once this process is concluded,” he said.
“Last year, SQM was included into both DJSI World and Emerging Markets indices, several years ahead of our internal goal,” he added. “This is the result of ongoing work and our commitments to increase the transparency and sustainability of our operations.”
Fourth-quarter Specialty Plant Nutrition revenues were off 18%, impacted by significantly lower prices versus year-ago levels, though volumes increased 13%. The average price decreased almost 28% year-over-year, but SQM believes the market price may have reached its bottom and it should see less price volatility in 2024.
The company estimates potassium nitrate demand decreased about 8% in 2023, but it saw demand recovery in the fourth quarter and anticipates this momentum will continue into 2024, driving nearly a 10% increase in demand during the year.
Revenues
were $223.7 million, down from $274.2 million, while volumes increased to
226,000 mt from 199,200 mt. Nitrate-based volumes were up 20%, to 127,000 mt
from 106,300 mt, while Specialty Blends were up 24%, to 62,300 mt from 50,300
mt.
Full-year revenues were off 22%, to $913.9 million from 2022’s $1.17 billion,
while volumes were off only 1%, to 840,200 mt from 847,800 mt. Specialty Blend
volumes were strong for the year, up 12% to 243,500 mt from 217,900 mt, while
nitrate-based volumes declined 7%, to 443,500 mt from 477,400 mt.
Fourth-quarter Potassium revenues dropped 37%, to $50.8 million from the year-ago $80.5 million due to significantly lower prices, while volumes increased 14%, to 112,500 mt from 98,600 mt. SQM believes that due to lower prices and increased supply, global potash demand grew about five million mt during 2023, reaching 65 million mt. It expects to see a similar demand growth during 2024 and said its sales for the year may top 600,000 mt.
Full-year revenues were off 36%, to $279.1 million from 2022’s $437.2 million, while volumes increased 13%, to 543,100 mt from 480,500 mt.