SQM swung to a first-quarter net loss due to “significantly lower” prices of lithium and a $1.1 billion tax revision. The company reported a net loss of $870 million on revenues of $1.08 billion compared to the year-ago net income of $749.9 million and $2.26 billion, respectively. Adjusted EBITDA was $403.6 million, down from $1.09 billion.
The net loss far exceeded analyst estimates (Bloomberg Consensus) for a loss of $249.5 million. Global lithium producers have had a difficult earnings season for a first quarter that saw prices for the metal plunge to three-year lows. However, SQM lithium sales volumes rose 34% year-over-year.
SQM’s average sales price of lithium dropped 75% year-over-year in the first quarter, to almost $12,600/mt. Still, SQM is optimistic about longer term consumption of the battery ingredient, estimating global demand will expand this year by 20% to surpass 1.1 million mt. The low-cost producer is plowing ahead with plans to expand capacity in an effort to increase lithium sales guidance to 200,000 mt this year. It expects total capital expenditure of $1.3 billion in 2024.
Setting aside the tax adjustment, SQM said its first-quarter net income was $228.1 million, down about 70% from a year earlier.
“We are pleased with the positive year-on-year growth in sales volumes across all of our major businesses,” said CEO Ricardo Ramos. “During the first quarter of 2024, we delivered record-high quarterly sales volumes in the iodine business, almost 9% higher when compared to the same period last year.”
“Sales volumes in our specialty nutrition and potassium business lines were approximately 20% higher year-on-year, while lithium sales volumes were over 30% higher during the first quarter of 2024 compared to the same period last year,” Ramos continued. “This growth was offset by lower year-on-year realized average sales prices in these business lines as a result of lower market prices during the first quarter of 2024.”
Specialty Plant Nutrition volumes were up 21%, to 204,000 mt from the year-ago 168,100 mt, while revenues were off 6%, to $207.8 million from $220.9 million. Average sales prices were down 22.5% year-over-year. Sales volumes for potassium nitrate-based products were up 34%, to 118,600 mt from 88,800 mt.
SQM said it saw positive trends in the potassium nitrate business during the initial months of this year, characterized by robust demand growth and stable prices. It expects demand could increase by about 15% compared to total demand for 2023. It said stable prices in the past few quarters suggests that prices may have bottomed out and the company believes this trend could continue throughout the year.
Potassium sales volumes were up 19%, to 163,400 mt from the year-ago 137,500 mt, while revenues sank 27%, to $63.6 million from $86.9 million. The company cited significantly lower prices, but said the lower price environment – along with increased supply availability – could grow global potash demand by 10% in 2024 compared to last year. It expects its own sales to reach 600,000 mt in 2024.