UNITED
STATES OF AMERICA
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT OF
FOREIGN ISSUER
PURSUANT
TO RULE 13A-16 OR 15D-16
OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Includes
SQM’s earnings release for the nine months ended September 30,
2009.
SOCIEDAD QUIMICA Y MINERA DE
CHILE S.A.
(Exact
name of registrant as specified in its charter)
CHEMICAL AND MINING COMPANY
OF CHILE INC.
(Translation
of registrant's name into English)
El Trovador 4285, Santiago,
Chile (562) 425-2000
(Address
and phone number of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.
Indicate
by check mark whether the registrant by furnishing the information contained in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
If "Yes"
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82________
For
Immediate Release
SQM
REPORTS EARNINGS FOR THE FIRST NINE MONTHS OF 2009
Highlights
|
|
·
|
SQM
reported revenues of US$1,049.2 million for the first nine months of 2009,
a decrease from the US$1,376.2 million of the same period of the previous
year.
|
|
|
·
|
Earnings
per ADR totaled US$0.96 for the first nine months, compared to US$1.45 for
the same period of 2008.
|
Santiago, Chile, October 27, 2009.-
Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock
Exchange: SQM-B, SQM-A) reported today earnings for the first nine months of
2009 of US$251.7 million (US$0.96 per ADR), a decrease of 34.0% with
respect to the same period of 2008, when earnings totaled US$381.1 million
(US$1.45 per ADR). Operating
income reached US$342.0 million (32.6% of revenues), 29.0% lower than the
US$481.4 million (35.0% of revenues) recorded during the first nine months of
2008. Revenues totaled
US$1,049.2 million for the first nine months, representing a decrease of 23.8%
over the US$1,376.2 million reported in the same period of 2008.
Third quarter earnings
declined to US$82.3 million (US$0.31 per ADR) compared to the third quarter 2008
figure of US$190.6 million (US$0.72 per ADR). Operating income for the third
quarter reached US$110.1 million, lower than the US$239.1 million recorded for
the same period of 2008. Revenues totaled US$383.5
million, lower than the third quarter 2008 revenues, which amounted to US$589.1
million.
Patricio
Contesse, SQM’s Chief Executive Officer, stated, “Although quarterly earnings
are significantly lower than those recorded in the third quarter last year, this
decline is overstated given that 3Q08 was the highest quarter ever recorded in
company history. Additionally, net income recorded in 3Q09 is 98% higher than
net income posted in 3Q07, making 3Q09 earnings the second highest third quarter
earnings reported.”
He
continued, “We believe that markets have bottomed out across all of our business
lines and are beginning to turn around. The recovery process is slow and will
most likely remain slow in the following year. In the case of potassium-related
fertilizers, prices in the second half of this year have been lower than in the
first half, so it is reasonable to expect that average prices for 2010 for all
of our fertilizer products should be lower than average prices in
2009. However, we expect moderately higher volumes from our Specialty
Plant Nutrition division and significantly higher potash volumes for next year,
in line with the announced capacity increase.”
Mr.
Contesse commented, “In the case of iodine and lithium, demand has followed a
similar trend compared to our specialty fertilizer business, and we have
observed signs that indicate that demand has started to recover. Considering
that most of our clients have adopted conservative purchasing policies, we
expect demand to recover slowly during the next year.”
Mr.
Contesse concluded, “The underlying fundamentals in all of our businesses remain
strong, and we are confident about the medium- and long-term prospects for all
of them. We believe that by the end of 2010 demand levels for all of
our businesses should reach pre-crisis levels and begin to grow at the high
growth rates observed before the economic crisis. The year 2010 will be a
transition year that should be followed by a growth period positively influenced
by our increased potash production, higher demand for lithium battery
technologies, increased demand of nitrates for solar energy storage and the
potentially better pricing conditions that should accompany demand
growth.”
Segment
Analysis
Specialty Plant Nutrition
(SPN)
Specialty
plant nutrition revenues for the first nine months of 2009 totaled US$481.7
million, 38.8% lower than the US$787.5 million recorded for the same period in
2008.
Third
quarter 2009 revenues reached US$170.4 million, a decrease of 50.0% over the
US$341.1 million recorded in 2008.
Generalized
economic uncertainty at the end of last year undermined demand in fertilizer
markets. Although demand has been sluggish in this industry, we believe that
markets in general have reached a turning point and are beginning to recover,
albeit at a slow pace. Some buyers remain skeptical of prices awaiting the
conclusion of Chinese potash negotiations. Product continues to move at a slow
rate as buyers purchase only necessary quantities, reluctant to accumulate
inventories.
While
volumes fell substantially year over year in the third quarter, we have observed
slightly higher volumes in 3Q09 compared to 2Q09. Prices for our SPN products
have contracted in line with price movements in the potash industry, although
not to the extent seen in the commodity market. Given the volatility of
fertilizer markets in recent months, it is difficult to accurately forecast
future prices. Considering that second half average prices in 2009 are lower
than first half, we anticipate that 2010 prices in our SPN business line will be
lower than our 2009 average prices.
Although
our SPN business line has been hard hit by events in the potash industry,
underlying fundamentals for this business, such as the need to achieve high
yields and premium quality crops while utilizing water and land resources
efficiently, remain intact. SPN markets will undoubtedly reach pre-crisis levels
and continue to grow at the accelerated rates observed during the years leading
up to 2008. We anticipate, however, that the recovery process will be gradual
and that buyers in this industry will maintain conservative buying policies in
the coming months. Volumes should tend to normalize by the end of 2010, and we
expect volumes for 2010 in this business line to be higher than expected volumes
for 2009, although below 2008 levels. Although it is difficult to predict future
prices given volatility observed during recent periods, it is possible that
towards the end of 2010, in conjunction with normalized demand, we observe a
positive trend in pricing conditions.
Specialty
Plant Nutrition gross margin
(1) for
the first nine months of 2009 accounted for approximately 44% of SQM’s
consolidated gross margin.
Iodine and
Derivatives
Revenues
from sales of iodine and derivatives during the first nine months of 2009
totaled US$138.1 million, a 28.1% decrease with respect to the US$192.2 million
reported for the first nine months of 2008.
Iodine
and derivatives revenues for the third quarter of 2009 amounted to US$46.3
million, a 30.4% decrease with respect to the US$66.5 million recorded the
previous year.
The
significant decline in demand that our clients faced during last year and the
beginning months of this year was reflected in a substantial decrease in demand
for our iodine products during the first nine months of this year.
We expect
that 4Q09 sales volumes should be higher than the average of the first three
quarters of this year. We maintain a conservative approach regarding market
recovery in the short term. Volumes should continue to recover in the
coming quarters and tend to normalize by the end of 2010. We expect volumes for
the year 2010 to be below 2008 levels but to improve in comparison to 2009
volumes.
As with
all of our business lines, underlying fundamentals in the iodine industry remain
strong, and our long-term outlook for iodine remains optimistic.
Gross margin for the Iodine
and Derivatives segment accounted for approximately 14% of SQM’s consolidated
gross margin in the first nine months of 2009.
Lithium and
Derivatives
Revenues
for the Lithium and Derivatives segment totaled US$84.4 million during the first
nine months of 2009, a decrease of 38.7% with respect to the US$137.7 million
recorded for the first nine months of 2008.
Third-quarter
2009 lithium revenues decreased 35.9% with respect to the third quarter of 2008,
amounting to US$31.9 million, compared to US$49.8 million in 2008.
Approximately
four weeks ago, SQM announced a price decrease of 20% for its lithium business
line. The company anticipates that these new prices levels will accelerate
demand recovery and create incentives for new applications. These lower prices
should impact average prices for 2010 which will be lower on average than 2009
prices.
Volumes
observed in 3Q09 were higher than those observed in the previous quarters of
this year which establishes a positive trend that we anticipate should continue
into the following quarters and the coming years. In line with expected market
recovery, we anticipate that sales volumes for 2010 will be higher than sales
volumes expected for 2009.
Our
long-term outlook for the lithium market is optimistic as new applications will
drive the growth of this market in the coming years.
Gross margin for the Lithium
and Derivatives segment accounted for approximately 11% of SQM’s consolidated
gross margin in the first nine months of 2009.
Potassium
Chloride
Potassium
chloride revenues for the first nine months of 2009 totaled US$210.6 million, a
130.7% increase with respect to the first nine months of 2008, when revenues
amounted to US$91.3 million.
Potassium
chloride revenues grew 50.2% in the third quarter, reaching US$77.8 million,
compared to US$51.8 million for the same period of 2008.
In line
with previous announcements, year-to-date potassium chloride revenues have more
than doubled as a result of increased production. Sales volumes increased more
than 200% compared to the same nine-month period last year, as we continue to
benefit from our advantageous position as a small player in the potash industry.
We expect full-year 2009 sales volumes to reach our target of 550,000 metric
tons. Volumes for 2010 should double 2009 target sales and reached approximately
1.1 million metric tons.
Demand in
the potash industry continues to be hampered by market uncertainty. While the
contracts settled in India have returned some normalcy to the markets, there is
still concern over the stability of pricing in the short term, which is keeping
some buyers out of the market. However, once China finalizes negotiations for
next year, markets should further stabilize. While there are still
doubts in this market in the short term, considering that first half prices were
higher than prices observed in the second half of this year, average prices for
2010 should be lower than average 2009 prices. Although it is difficult to
predict future prices given the volatility observed during the past 18 months,
it is possible that prices towards the end of 2010 move upward slightly as
volumes normalize in the potash industry.
We remain
very positive regarding the medium- to long-term fundamentals of the potash
industry, namely the growing global population and a shift in diet patterns,
among others. Furthermore, the lower application rates of fertilizers observed
in the last few years must be reversed if the world is to meet the growing
demand for grains. We believe that these factors will have a positive influence
on demand recovery in the near future.
Gross margin for potassium
chloride accounted for approximately 22% of SQM’s consolidated gross margin in
the first nine months of 2009.
Industrial
Chemicals
Industrial
chemicals revenues for the first nine months of 2009 reached US$81.0 million,
8.0% lower than the US$88.0 million recorded for the same period of the previous
year.
Revenues
for the third quarter totaled US$34.4 million, a decrease of 4.2% with respect
to the third-quarter 2008 figure of US$35.9 million.
Demand
for traditional applications of industrial chemicals, with the exception of
industrial explosives, continues to be subdued by global economic circumstances.
However, we have seen a positive, upward trend in quarterly volumes for this
business line due to growing demand for nitrates used in thermal storage for
solar electricity generation, which have helped to compensate lower sales in
traditional uses. This trend should continue in the short- to medium-term as new
projects using solar salts come online. Volumes for solar salt
applications in 2010 should be higher than 2009.
Gross margin for the
Industrial Chemicals segment accounted for approximately 9% of SQM’s
consolidated gross margin in the first nine months of 2009.
Other Commodity
Fertilizers
Revenues
from sales of other commodity fertilizers and other income reached US$53.4
million in the first nine months of the year, down from US$79.5 million for the
same period of the previous year. Revenues were impacted by lower generalized
demand for commodity fertilizers and lower average prices.
Selling
and Administrative Expenses
Selling
and administrative expenses totaled US$58.8 million (5.6% of revenues) for the
first nine months of 2009, compared to the US$64.0 million (4.7% of revenues)
recorded during the same period of 2008.
Operating
Costs
During
the first nine months of 2009 operating costs fell due to lower sales volumes
and improved operating efficiencies. In addition, operating costs declined due
to a stronger U.S. dollar and lower average energy costs.
Non-operating
Income
The
Company recorded a non-operating loss of US$30.6 million for the first nine
months of 2009, which is higher than the US$11.8 million loss recorded for the
same period of 2008:
|
|
·
|
The
Company has increased its financial debt and cash position/liquidity since
4Q08, which has led to higher financial expenses due to the negative carry
of debt.
|
|
|
·
|
Lower
earnings from investments in related companies also affected non-operating
results, as the fertilizer business activities of our offshore affiliates
were affected by lower global fertilizer
prices
|
Notes:
|
|
(1)
|
Gross
margin corresponds to consolidated revenues less total costs, including
depreciation and excluding sales and administration
expenses.
|
A
significant portion of SQM’s costs of goods sold are costs related to common
productive processes (mining, crushing, leaching, etc.) which are distributed
among the different final products. To estimate gross margins by business lines
in both periods covered by this report, the Company employed similar criteria on
the allocation of common costs to the different business areas. This gross
margin distribution should be used only as a general and approximated reference
of the margins by business line. During the 3Q09, adjustments were made to the
methodology used to calculate margin which slightly increased the margins of SPN
and slightly decreased the margin of potassium chloride.
SQM is an
integrated producer and distributor of specialty plant nutrients, iodine and
lithium. Its products are based on the development of high quality natural
resources that allow the Company to be leader in costs, supported by a
specialized international network with sales in over 100 countries. SQM’s
development strategy aims to maintain and strengthen the Company’s world
leadership in its three core businesses: Specialty Plant Nutrition, Iodine and
Lithium.
The
leadership strategy is based on the Company’s competitive advantages and on the
sustainable growth of the different markets in which it participates. SQM’s main
competitive advantages in its different businesses are:
|
|
·
|
Low
production costs based on vast and high quality natural
resources.
|
|
|
·
|
Know-how
and its own technological developments in its various production
processes.
|
|
|
·
|
Logistics
infrastructure and high production levels that allow SQM to have low
distribution costs.
|
|
|
·
|
High
market share in all its core
products
|
|
|
·
|
International
sales network with offices in more than 20 countries and sales in over 100
countries.
|
|
|
·
|
Synergies
from the production of multiple products that are obtained from the same
two natural resources.
|
|
|
·
|
Continuous
new product development according to the specific needs of its different
customers.
|
|
|
·
|
Conservative
and solid financial position
|
|
For
further information, contact:
|
Patricio
Vargas, 56-2-4252485 / patricio.vargas@sqm.com
|
|
|
Mary
Laverty, 56-2-4252074 / mary.laverty@sqm.com
|
|
|
Carolina
Rojas, 56-2-4252250 / carolina.rojas@sqm.com
|
For media
inquiries, contact: Fernanda Guerra, 56-2-4252027 / fernanda.guerra@sqm.com
Statements
in this press release concerning the Company’s business outlook, future economic
performances, anticipated profitability, revenues, expenses, or other financial
items, anticipated cost synergies and product or service line growth, together
with other statements that are not historical facts, are “forward-looking
statements” as that term is defined under Federal Securities Laws.
Any
forward-looking statements are estimates, reflecting the best judgment of SQM
based on currently available information and involve a number of risks,
uncertainties and other factors that could cause actual results to differ
materially from those stated in such statements. Risks, uncertainties, and
factors that could affect the accuracy of such forward-looking statements are
identified in the public filing made with the Securities and Exchange
Commission, and forward-looking statements should be considered in light of
those factors.
|
Income
Statement
|
|
|
|
|
|
|
|
|
|
|
For
the 9-month period
ended
Sept. 30
|
|
|
(US$
Millions)
|
|
For
the 3rd Quarter
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
383.5 |
|
|
|
589.1 |
|
|
|
1,049.2 |
|
|
|
1,376.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Plant Nutrition
|
|
|
170.4 |
|
|
|
341.1 |
|
|
|
481.7 |
|
|
|
787.5 |
|
|
Potassium
Nitrate and Blended Fertilizers(1)
|
|
|
143.9 |
|
|
|
281.0 |
|
|
|
405.1 |
|
|
|
669.2 |
|
|
Potassium
Sulfate
|
|
|
26.5 |
|
|
|
60.1 |
|
|
|
76.5 |
|
|
|
118.3 |
|
|
Iodine
and Iodine Derivatives
|
|
|
46.3 |
|
|
|
66.5 |
|
|
|
138.1 |
|
|
|
192.2 |
|
|
Lithium
and Lithium Derivatives
|
|
|
31.9 |
|
|
|
49.8 |
|
|
|
84.4 |
|
|
|
137.7 |
|
|
Potassium
Chloride
|
|
|
77.8 |
|
|
|
51.8 |
|
|
|
210.6 |
|
|
|
91.3 |
|
|
Industrial
Chemicals
|
|
|
34.4 |
|
|
|
35.9 |
|
|
|
81.0 |
|
|
|
88.0 |
|
|
Industrial
Nitrates
|
|
|
33.5 |
|
|
|
33.0 |
|
|
|
78.8 |
|
|
|
83.3 |
|
|
Boric
Acid
|
|
|
0.8 |
|
|
|
2.9 |
|
|
|
2.2 |
|
|
|
4.6 |
|
|
Other
Income
|
|
|
22.8 |
|
|
|
44.0 |
|
|
|
53.4 |
|
|
|
79.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Goods Sold
|
|
|
(215.7 |
) |
|
|
(295.1 |
) |
|
|
(536.0 |
) |
|
|
(747.3 |
) |
|
Depreciation
|
|
|
(38.9 |
) |
|
|
(32.8 |
) |
|
|
(112.4 |
) |
|
|
(83.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Margin
|
|
|
128.9 |
|
|
|
261.2 |
|
|
|
400.7 |
|
|
|
545.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and Administrative Expenses
|
|
|
(18.8 |
) |
|
|
(22.1 |
) |
|
|
(58.8 |
) |
|
|
(64.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
110.1 |
|
|
|
239.1 |
|
|
|
342.0 |
|
|
|
481.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Operating
Income
|
|
|
(8.9 |
) |
|
|
(10.5 |
) |
|
|
(30.6 |
) |
|
|
(11.8 |
) |
|
Financial
Income
|
|
|
2.2 |
|
|
|
1.2 |
|
|
|
10.1 |
|
|
|
6.7 |
|
|
Financial
Expenses
|
|
|
(7.4 |
) |
|
|
(4.0 |
) |
|
|
(23.1 |
) |
|
|
(14.4 |
) |
|
Others
|
|
|
(3.8 |
) |
|
|
(7.7 |
) |
|
|
(17.5 |
) |
|
|
(4.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Before Taxes
|
|
|
101.2 |
|
|
|
228.5 |
|
|
|
311.4 |
|
|
|
469.5 |
|
|
Income
Tax
|
|
|
(18.0 |
) |
|
|
(37.9 |
) |
|
|
(60.4 |
) |
|
|
(81.0 |
) |
|
Other
Items
|
|
|
(0.9 |
) |
|
|
(0.0 |
) |
|
|
0.8 |
|
|
|
(7.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
82.3 |
|
|
|
190.6 |
|
|
|
251.7 |
|
|
|
381.1 |
|
|
Net
Income per ADR (US$)
|
|
|
0.31 |
|
|
|
0.72 |
|
|
|
0.96 |
|
|
|
1.45 |
|
(1)
Includes Yara Specialty fertilizers and Other Specialty fertilizers
|
Balance
Sheet
|
|
|
|
|
|
|
|
|
|
|
(US$
Millions)
|
|
As
of September 30
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
1,712.3 |
|
|
|
1,290.4 |
|
|
Cash
and cash equivalents
(1)
|
|
|
485.1 |
|
|
|
156.8 |
|
|
Accounts
receivable (2)
|
|
|
413.7 |
|
|
|
454.5 |
|
|
Inventories
|
|
|
646.7 |
|
|
|
562.5 |
|
|
Others
|
|
|
166.8 |
|
|
|
116.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Assets
|
|
|
1,264.4 |
|
|
|
1,045.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
110.6 |
|
|
|
109.0 |
|
|
Investments
in related companies
(3)
|
|
|
63.5 |
|
|
|
68.1 |
|
|
Others
|
|
|
47.1 |
|
|
|
40.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
3,087.3 |
|
|
|
2,445.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
533.7 |
|
|
|
380.4 |
|
|
Short-term
interest-bearing debt
|
|
|
269.5 |
|
|
|
36.2 |
|
|
Others
|
|
|
264.1 |
|
|
|
344.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Liabilities
|
|
|
1,020.1 |
|
|
|
567.2 |
|
|
Long-term
interest-bearing debt
|
|
|
909.5 |
|
|
|
479.9 |
|
|
Others
|
|
|
110.6 |
|
|
|
87.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Minority
Interest
|
|
|
43.7 |
|
|
|
51.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
1,489.7 |
|
|
|
1,446.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities & Shareholders' Equity
|
|
|
3,087.3 |
|
|
|
2,445.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Current
Ratio (4)
|
|
|
3.2 |
|
|
|
3.4 |
|
|
Net
Debt / Total Capitalization (5)
|
|
|
31.2 |
% |
|
|
19.4 |
% |
(1) Cash
+ time deposits + marketable securities
(2)
Accounts receivable + accounts receivable from related co.
(3)
Investments in related companies net oe goodwill and neg. goodwill
(4)
Current assets / current liabilities
(5) Net
interest-bearing debt/ (Net interest-bearing debt + equity+ minority
int.)
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SOCIEDAD
QUIMICA Y MINERA DE CHILE S.A.
Conf:
/s/ Ricardo
Ramos
Ricardo
Ramos
Chief
Financial Officer & Business Development SVP
Date:
October 27, 2009