SQM
SQM Reports Earnings For The Nine Months Ended September 30, 2016
http://www.stockwatch.com/News/Item.aspx?bid=U-prMX53342-U:SQM-20161123&symbol=SQM®ion=U
2016-11-23 19:46 ET - News Release
SANTIAGO, Chile, Nov. 23, 2016 /PRNewswire/ -- Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported today earnings for the nine months ended September 30, 2016 of US$197.4 million (US$0.75 per ADR), an increase from US$168.6 million (US$0.64 per ADR) for the nine months ended September 30, 2015. Gross profit reached US$406.2 million (29.3% of revenues) for the nine months ended September 30, 2016, lower than US$424.8 million (32.3% of revenues) recorded for the nine months ended September 30, 2015. Revenues totaled US$1,385.5 million for the nine months ended September 30, 2016, representing an increase of 5.2% compared to US$1,317.0 million reported for the nine months ended September 30, 2015.
The Company also announced earnings for the third quarter of 2016, reporting net income of US$55.8 million (US$0.21 per ADR) compared to US$13.7 million (US$0.05 per ADR) for the third quarter of 2015. Gross profit for the third quarter of 2016 reached US$145.7 million; higher than the US$129.5 million recorded for the third quarter of 2015. Revenues totaled US$504.0 million, an increase of approximately 13.2% compared to the third quarter of 2015, when revenues amounted to US$445.2 million.
As a result of the rains that affected the area of Tocopilla in August 2015, the railway between Coya Sur and Tocopilla was damaged and the train stopped operating at that time. Since then, SQM has been using trucks to move the product from Coya Sur to Tocopilla. Detailed engineering studies were performed to assess the damage of the railway. During the third quarter of 2016, the report was completed; it concluded that the cost and time needed to repair the railway at this time is not economical in the short and medium term. As a result of this determination, the Company wrote-off the assets related to the train, and reported a non-cash, one-time before-tax impact of approximately US$33 million to its third quarter 2016 financial statements. The amount represents approximately 0.7% of the total assets of the Company. The net income comparison between the third quarter of 2016 and the third quarter of 2015 is also affected by the write-off related to stopping the operations of the mines in Pedro de Valdivia, which had a one-time, before-tax effect of US$56.3 million on net income in 2015.
SQM's Chief Executive Officer, Patricio de Solminihac, stated, "The third quarter results were mainly driven by the higher lithium prices seen during this quarter. In general, trends seen during the third quarter were in line with what we have seen in previous months: higher prices in lithium, lower prices in iodine, lower average prices in the potassium chloride market, and increased price pressure in the specialty plant nutrient market. Lithium volumes and prices exceeded expectations during the third quarter. We expect total market demand growth to be between 12-13% this year. For upcoming years, we expect growth to be between 8-10%. During the third quarter, we also announced plans to invest approximately US$30 million in a lithium hydroxide expansion project, which would allow us to more than double our lithium hydroxide capacity. We believe this expansion will allow us to further expand margins and maximize value in this business line."
He continued by saying, "Our sales volumes of iodine continue to grow, and this was no different in the third quarter when sales volumes topped 2,600 MT. Sales volumes will grow during 2016, and we expect total sales volumes to exceed 9,500 MT this year.
"In the fertilizer markets, potassium chloride sales volumes for the first nine months of 2016 were up over 22% when compared to the same period last year. We expect the sales volumes for 2016 to be at least 20% stronger than the sales volumes we saw last year."
Mr. de Solminihac concluded by saying, "As part of our growth strategy we are continuously looking for opportunities to develop low-cost projects related to our core businesses where we believe we can add value at the development stage and will have sustainable competitive advantages. In March of this year, we announced a joint venture with Lithium Americas to develop the Caucharí-Olaroz lithium project in the Jujuy province of Argentina. We currently have sixty people working on this project, and can report that the project still expects to begin construction during the first half of 2017. In September, we announced an investment of US$20 million in Elemental Minerals Limited, which would grant us access to some potassium deposits in the Republic of Congo; preliminary studies suggest these deposits boast some of the highest grade potassium available and could therefore potentially lead to some of the lowest-cost production in the market. Feasibility studies are currently being evaluated, and should be completed during 2018."
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