Yahoo Finance Sociedad Química y Minera de Chile S.A. (NYSE:SQM) Q3 2023 Earnings Call Transcript
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) Q3 2023 Earnings Call Transcript November 16, 2023
Operator: Good day, and welcome to the SQM Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Irina Axenova, Head of Investor Relations. Please go ahead.
Irina Axenova: Thank you, Dave. Good morning. Thank you for joining SQM’s earnings conference call for the third quarter of 2023. This conference call will be recorded and is being webcast live. Our earnings press release and the presentation with a summary of the results have been uploaded to our website, where you can also find a link to the webcast. Ricardo Ramos, our Chief Executive Officer, will be speaking on the call today; Gerardo Illanes, our Chief Financial Officer; Carlos Diaz, Executive Vice President of Lithium; Felipe Smith, Commercial Vice President of Lithium; Mark Fones, Vice President of Strategy and M&A, Lithium; and Juan Pablo Bellolio, Commercial Vice President of Iodine and Industrial Chemicals will be also available to answer any questions.
Before we begin, I would like to remind you that statements made in this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses and other financial items, along with expected cost synergies and product or service line growth are considered forward-looking statements under federal securities laws. These statements are not historical facts and may be subject to changes due to new information, future developments or other factors. We assume no obligation to update these statements, except as required by law. For a complete forward-looking statement, please refer to our earnings press release and presentations. I now leave you with our Chief Executive Officer, Ricardo Ramos.
Ricardo Ramos: Thank you, Irina. Good morning. Thank you for joining the call today. Yesterday, we reported our third quarter 2023 earnings. And on this call, I would like to focus on the key drivers in each of the business behind our performance during this quarter. In the lithium business, we reported close to $1.3 billion in revenues, approximately 10% lower than compared to the previous quarter this year primarily as a result of significant lower realized sales prices, partially offset by record high sales volumes over 43,000 metric tons during the quarter. We will observe a downward price trend that commenced at the beginning of this year and could continue for the remainder of 2023, signs the majority of our sales contracts are linked to price indices which move with the market, our realized sales prices have followed the same trend with a small delay and it is reasonable to expect that they should continue to reflect market price dynamics in the upcoming months.
We continue to see strong fundamentals behind long-term growth of lithium demand supported by EV production and sales volume submission reduction targets worldwide. In the short-term, however, the excess of inventories along chemicals and battery material supply chains as well as additional supply, which entered the market this year have been negatively affecting customer purchasing activity. As a result, we expect to see quarter-on-quarter similar or lower sales volumes during the fourth quarter this year. In the iodine business, we reported over $210 million in revenues for the third quarter 2023 driven by a strong pricing environment with sales prices close to $70 per kilogram with year-to-date higher volumes than last year. This is supported by increased demand from x-ray contrast media segment based on reduction in demand coming from other price-sensitive applications.
We believe that SQM remains the only iodine producers to increase its supplies this year while we keep on increasing our capacity. Moving to fertilizer business. Our revenues in specialty plant nutrition and potassium business segments reached almost $300 million during the third quarter. as a result of positive demand growth, which began during the third quarter this year and is expected to continue into 2024. In the Industrial Chemicals business, during the third quarter, we completed solar salts delivery to the concentrated solar power plant project in the Middle East with a total of more than 430,000 metric tons of solar salts produces and shipped between 2020 and 2023. This mission proved to be challenging, particularly as the majority of the deliveries occurred amidst the global pandemic, which has changed both our production capabilities and logistical conditions.
We are proud of our accomplishments and the successful competition of this contract. I will also like to comment our progress with our expansion plans, both in Chile and abroad. Our lithium carbonate capacity in Chile has reached the 200,000 metric tons per year and we expect to complete the expansion to 210,000 metric tons in the beginning of 2024, almost a year earlier than anticipated. This gives us a space to focus on production costs optimization and to ensure that we remain one of the most cost-efficient lithium producers in the world. In Australia, the first production of spodumene concentrate on Mt Holland is expected during this quarter. While in China, we have started lithium hydroxide production from lithium sulfate. As we continue our progress toward more sustainable operations and other very significant milestone reached last quarter was an international recognition from IRMA of our commitment to becoming the world’s most sustainable source of lithium.
Our operations in the Salar de Atacama received the highest score to date of IRMA 75, reflecting our dedication to transparency and community engagement. While, there is a considerable amount of work ahead of us in collaboration with our communities and stakeholders. We will persist in the collective efforts to achieve our sustainable objectives. Thank you, operator, and we will now open for the line to questions.
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