Unassociated Document
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 three months ended March 31, 2008.
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 QUARTER OF 2008
Highlights
|
|
|
·
|
SQM
reported net income for the first quarter of 2008 of US$64.8 million,
an
increase of 50.8% over the first quarter of 2007.
|
|
|
·
|
Earnings
per ADR totaled US$0.25 for the quarter, compared to US$0.16 per
ADR
(1)
for the first quarter of 2007.
|
|
|
·
|
Prices
for SQM’s specialty plant nutrients significantly increased with respect
to the first quarter of 2007, on the back of strong world potassium
prices.
|
Santiago,
Chile, April 29, 2008.-
Sociedad
Química y Minera de Chile S.A. (SQM) (NYSE: SQM;
Santiago
Stock Exchange: SQM-B, SQM-A) reported today earnings
for
the
first quarter of 2008 of US$64.8 million (US$0.25 per ADR), a 50.8% increase
over the US$43.0 million (US$0.16 per ADR (1))
reported for the same period of 2007. Operating
income
for the
quarter grew 46.6% to US$86.2 million (26.4% of revenues), as compared to the
first quarter 2007 figure of US$58.8 million (24.8% of revenues). Revenues
for the
period totaled US$326.3 million, representing growth of 37.6% over the US$237.1
million reported in 2007.
“The
significant growth in revenues and net income that we have reported for the
first quarter has been driven by the favorable pricing scenario in world
fertilizer markets,” stated Patricio Contesse, the Company’s Chief Executive
Officer. He continued, “If the pricing trend observed so far this year continues
through the end of 2008, we are going to see our Specialty Plant Nutrition
and
potash businesses substantially increase their contribution to gross
margin.”
Mr.
Contesse went on to say, “The positive pricing environment in the fertilizer
businesses has more than offset the pressures we face on the cost side. Energy
and raw materials prices, as well as the appreciation of the Chilean peso with
respect to the U.S. dollar, are the factors that have had the largest impact
on
our operating costs.”
Segment
Analysis
Specialty
Plant Nutrition
First
quarter 2008 revenues from sales of specialty plant nutrients totaled US$170.5
million, an increase of 66.0% with respect to the US$102.8 million reported
for
the first quarter of 2007.
During
the first quarter, global prices of potassium-based fertilizers experienced
considerable increases. Given that SQM produces potassium chloride to be sold
to
third parties or used as an input in its production of potassium-based specialty
plant nutrients - such as potassium nitrate, sodium potassium nitrate and other
blends - the price increases taking place on a global level are having a direct
positive impact on the Company’s revenues and margins. SQM also benefits in this
business line from the sales of potassium sulfate, the prices of which have
rallied in line with the increase in potash.
Sales
volumes of specialty plant nutrients increased in the first quarter of 2008
with
respect to the first quarter of 2007. This increase was partly explained by
higher sales of potassium nitrate and sodium potassium nitrate to Brazil; in
2007 these sales were made during the second and third quarters, affecting
the
year-over-year comparison. We also recorded higher sales of potassium nitrate
in
Spain and Mexico, and there was an additional effect on volumes due to the
timing of shipments that were delayed during the fourth quarter of 2007.
However, the bulk of the revenue increase was the result of extremely favorable
pricing conditions. The rising prices we saw in the latter half of 2007 gained
further momentum during the first three months of 2008, and all signs indicate
that this trend will continue for the rest of the year. We believe volumes
for
the full year could be lower than in 2007, mainly due to production capacity
constraints, but the pricing trend should more than offset the volume
effect.
The
effect of higher prices has been further intensified by tight global supply
conditions. As a result, SQM has been able to strengthen its commercial strategy
of selling to the markets that yield the highest returns on our specialty plant
nutrients.
Following
the previous year’s trend, production costs continued to increase during the
first three months of 2008.
Specialty
Plant Nutrition gross
margin (2)
for the
first quarter of 2008 accounted for approximately 46% of SQM’s consolidated
gross margin.
Iodine
and Iodine Derivatives
The
Company reported Iodine and Iodine Derivatives revenues for the first quarter
of
2008 of US$60.1 million, a 15.8% increase with respect to the US$51.9 million
reported for the same period of 2007.
The
year-over-year increase in quarterly revenues was explained primarily by
additional iodine sales volumes. The growth in volumes during the period was
largely the result of higher sales to Europe and North America, due to growing
demand for iodine to be used in iodine derivatives. We also recorded higher
sales to China during the quarter. For the full year, we expect sales volumes
in
this segment to be higher in 2008 than they were in 2007.
Prices
remained relatively stable during the quarter as compared to the fourth quarter
of 2007, increasing slightly as compared to the first quarter of 2007.
Following
the previous year’s trend, production costs continued to increase during the
first three months of 2008.
Gross
margin
for the
Iodine and Iodine Derivatives segment accounted for approximately 16% of SQM’s
consolidated gross margin in the first quarter of 2008.
Lithium
and Lithium Derivatives
Revenues
for the Lithium and Lithium Derivatives segment totaled US$40.1 million during
the first quarter of 2008, a decrease of 10.1% with respect to the first quarter
2007 figure of US$44.6 million.
The
year-over-year decrease in quarterly revenues was primarily the result of lower
sales volumes, reflecting the growing presence of Chinese producers. We maintain
our original outlook for full-year 2008 and expect sales volumes to be slightly
lower than in 2007.
Average
lithium prices were higher during the first quarter of 2008 than they were
during the same period of 2007, although prices have decreased slightly with
respect to year-end 2007. During 2007, tight supply conditions put upward
pressure on pricing; now that new producers have entered the market, the
relationship between supply and demand in this market is more balanced.
While
the
growing worldwide lithium supply may continue to have an effect on our sales
volumes in the short and medium terms, future demand in this market continues
to
look promising. In the short term, rechargeable batteries continue to experience
two-digit growth, and this is mostly benefiting the traditional lithium
producers, including SQM, as customers require a quality that not everyone
in
the industry can provide. In the medium term, we expect demand in this market
to
grow even further, as several large automakers have formally announced plans
to
produce hybrid cars powered by rechargeable lithium-ion batteries.
Following
the previous year’s trend, production costs continued to increase during the
first three months of 2008.
Gross
margin
for the
Lithium and Lithium Derivatives segment accounted for approximately 22% of
SQM’s
consolidated gross margin in the first quarter of 2008.
Industrial
Chemicals
First
quarter 2008 Industrial Chemicals revenues reached US$24.0 million, 22.9% higher
than the US$19.6 million recorded for the same period of the previous
year.
The
increase in revenues for the quarter was largely driven by prices, as volumes
only grew marginally with respect to the first quarter of 2007, whereas average
prices for this segment increased significantly. These price increases are
generally related to the pricing trend prevailing in the Specialty Plant
Nutrition segment, as industrial-grade nitrates only differ from nitrates used
in plant nutrients in the degree of purity of the product. Going forward we
should expect this trend to continue, with industrial nitrates prices tracking
the evolution of agricultural-grade nitrates.
During
the period we recorded higher sales volumes of industrial-grade sodium nitrate
to Spain, where this product is used as a medium for heat storage in a solar
energy project. This effect was slightly offset by lower sales in other markets,
as the relatively tight supply conditions affecting our nitrates have given
us
the flexibility to sell to higher-yield markets. Industrial-grade potassium
nitrate sales volumes remained relatively stable with respect to the first
quarter of 2007.
Following
the previous year’s trend, production costs continued to increase during the
first three months of 2008.
Gross
margin
for the
Industrial Chemicals segment accounted for approximately 4% of SQM’s
consolidated gross margin in the first quarter of 2008.
Other
Products
Potassium
Chloride
First-quarter
2008 potassium chloride revenues totaled US$15.5 million, a 90.8% increase
with
respect to the same period of 2007, when revenues amounted to US$8.1
million.
Prices
for potassium chloride sold to third parties rose significantly with respect
to
the first three months of 2007, reflecting the global trend in potassium prices.
Volumes remained relatively stable during the quarter, but we expect to record
higher total sales volumes in 2008 than we did in 2007.
Other
Commodity Fertilizers
Revenues
from sales of other commodity fertilizers increased to US$16.0 million for
the
first quarter of 2008, from US$10.3 million for the same period of 2007. The
increase in revenues reflected higher fertilizer prices, as sales volumes of
other commodity fertilizers decreased with respect to the previous
year.
Gross
margin
for the
Other Products segment accounted for approximately 12% of SQM’s consolidated
gross margin in the first quarter of 2008.
Selling
and Administrative Expenses
Selling
and administrative expenses totaled US$18.0 million (5.5% of revenues) for
the
first quarter of 2008, compared to the US$14.2 million (6.0% of revenues)
recorded during the same period of 2007.
Non-operating
Income
The
Company recorded a non-operating loss of US$3.6 million for the first quarter
of
2008, which is lower than the US$4.7 million loss recorded for the first quarter
of 2007.
Net
financial expenses (3)
totaled
US$(2.5) million during the first quarter of 2008, which was similar to the
US$(2.8) million recorded for the first quarter of 2007.
Notes:
|
(1) |
Effective
March 31, 2008, the Company modified its ratio of underlying series
B
shares to ADRs, from 10:1 to 1:1. Historical per
ADR information has been adjusted for comparison
purposes.
|
|
(2) |
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
production 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.
|
(3)
|
Net
financial expenses correspond to total financial expenses net of
financial
income.
|
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 a 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:
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·
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Low
production costs based on vast and high quality natural
resources.
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·
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Know-how
and its own technological developments in its various production
processes.
|
|
·
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Logistics
infrastructure and high production levels that allow SQM to have
low
distribution costs.
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·
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High
market share in all its core
products
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|
·
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International
sales network with offices in more than 20 countries and sales in
over 100
countries.
|
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·
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Synergies
from the production of multiple products that are obtained from the
same
two natural resources.
|
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·
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Continuous
new product development according to the specific needs of its different
customers.
|
|
·
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Conservative
and solid financial position
|
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
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|
|
For
the 3-month period
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|
|
|
ended
March 31
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2008
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|
2007
|
|
|
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|
|
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|
Revenues
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|
326.3
|
|
|
237.1
|
|
|
|
|
|
|
|
|
|
Specialty
Fertilizers
|
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|
170.5
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|
102.8
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|
Potassium
Nitrate and Blended Fertilizers(1)
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|
151.8
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89.5
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|
Potassium
Sulfate
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18.8
|
|
|
13.3
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|
Industrial
Chemicals
|
|
|
24.0
|
|
|
19.6
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|
Industrial
Nitrates
|
|
|
23.2
|
|
|
18.1
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|
Boric
Acid
|
|
|
0.8
|
|
|
1.4
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|
Iodine
and Iodine Derivatives
|
|
|
60.1
|
|
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51.9
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Lithium
and Lithium Derivatives
|
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|
40.1
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44.6
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Other
Income
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31.5
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18.4
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|
Potassium
Chloride (Potash)
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|
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15.5
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|
8.1
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|
Others
|
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|
16.0
|
|
|
10.3
|
|
|
|
|
|
|
|
|
|
Cost
of Goods Sold
|
|
|
(196.9
|
)
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|
(141.4
|
)
|
Depreciation
|
|
|
(25.2
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)
|
|
(22.7
|
)
|
|
|
|
|
|
|
|
|
Gross
Margin
|
|
|
104.2
|
|
|
73.0
|
|
|
|
|
|
|
|
|
|
Selling
and Administrative Expenses
|
|
|
(18.0
|
)
|
|
(14.2
|
)
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
86.2
|
|
|
58.8
|
|
|
|
|
|
|
|
|
|
Non-Operating
Income
|
|
|
(3.6
|
)
|
|
(4.7
|
)
|
Financial
Income
|
|
|
3.0
|
|
|
2.6
|
|
Financial
Expenses
|
|
|
(5.5
|
)
|
|
(5.4
|
)
|
Others
|
|
|
(1.1
|
)
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
|
Income
Before Taxes
|
|
|
82.6
|
|
|
54.1
|
|
Income
Tax
|
|
|
(13.3
|
)
|
|
(10.6
|
)
|
Other
Items
|
|
|
(4.6
|
)
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
64.8
|
|
|
43.0
|
|
Net
Income per ADR (US$)
|
|
|
0.25
|
|
|
0.16
|
|
|
|
|
|
|
|
|
|
(1)
Includes Yara Specialty Fertilizers and Other Specialty Fertilizers
Balance
Sheet
|
|
|
|
|
(US$
Millions)
|
|
As
of March 31
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
1,058.6
|
|
|
858.2
|
|
Cash
and cash equivalents
(1)
|
|
|
166.4
|
|
|
168.2
|
|
Accounts
receivable (2)
|
|
|
348.2
|
|
|
242.2
|
|
Inventories
|
|
|
442.2
|
|
|
384.0
|
|
Others
|
|
|
101.8
|
|
|
63.8
|
|
|
|
|
|
|
|
|
|
Fixed
Assets
|
|
|
1,006.5
|
|
|
932.6
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
99.9
|
|
|
105.4
|
|
Investments
in related companies
(3)
|
|
|
58.4
|
|
|
52.8
|
|
Others
|
|
|
41.5
|
|
|
52.6
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
2,165.0
|
|
|
1,896.2
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
280.6
|
|
|
180.6
|
|
Short-term
interest-bearing debt
|
|
|
16.4
|
|
|
43.7
|
|
Others
|
|
|
264.2
|
|
|
136.9
|
|
|
|
|
|
|
|
|
|
Long-Term
Liabilities
|
|
|
585.4
|
|
|
548.3
|
|
Long-term
interest-bearing debt
|
|
|
502.3
|
|
|
479.7
|
|
Others
|
|
|
83.1
|
|
|
68.6
|
|
|
|
|
|
|
|
|
|
Minority
Interest
|
|
|
51.0
|
|
|
39.0
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
1,248.0
|
|
|
1,128.3
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders’ Equity
|
|
|
2,165.0
|
|
|
1,896.2
|
|
|
|
|
|
|
|
|
|
Current
Ratio (4)
|
|
|
3.8
|
|
|
4.8
|
|
Net
Debt / Total Capitalization (5)
|
|
|
21.3
|
%
|
|
23.3
|
%
|
(1)
Cash + time deposits + marketable securities
|
(2)
Accounts receivable + accounts receivable from related
co.
|
(3)
Investments in related companies net of 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 R.
Ricardo
Ramos R.
Chief
Financial Officer
Date:
April
29,
2008