Sociedad Química y Minera de Chile (SQM) Q2 2024 earnings summary

Executive summary

• Entered a partnership agreement with Codelco to jointly operate Salar de Atacama until 2060, marking a significant milestone for the lithium industry in Chile.

• Achieved record sales volumes in lithium (up 21% year-over-year) and iodine (up 29% year-over-year) in Q2 2024, driven by strong demand, especially in the EV sector in China.

• Launched SQM International Lithium to expand lithium business outside Chile, with active projects in Australia and new partnerships in Sweden.

• Q2 2024 revenue reached $1,294M, down 37% year-over-year but up 19% sequentially; net income was $214M, a 55% year-over-year decline.

• H1 2024 revenue was $2,378.1M, down 44.9% year-over-year; net loss of $655.9M versus net income of $1,330.1M last year.

Financial highlights

• Net income year-to-date remains negative by about $650 million, mainly due to a $1.1 billion impairment/tax charge and the impact of the new lithium mining tax.

• Interim dividend has been set to zero due to negative net income, in line with the company’s dividend policy.

• Adjusted EBITDA for H1 2024 was $816.8M (34.3% margin), down from $1,964.3M (45.5%) in H1 2023.

• Gross margin for H1 2024 was $752.5M (31.6% of revenue), down from $1,920.7M (44.5%) last year.

• Net financial expenses rose to $52.7M in H1 2024 from $7.7M last year.

Outlook and guidance

• Lithium sales volumes in the second half of 2024 expected to be similar to the first half, with potential upside if market conditions improve.

• Average realized lithium prices in Q3 anticipated to be lower than Q2 due to ongoing price declines since July.

• Full-year lithium production expected at ~210,000 metric tons LCE.

• Iodine sales volumes projected to surpass 14,500 MT in 2024, with average prices likely to increase in 2H2024.

• 2024 capex expected at $1.6B, including acquisitions in Australia and China.