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 six months ended June 30, 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.
Form
20-F
x
Form
40-F
o
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.
Yes
o No
x.
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 HALF OF 2008
Highlights
|
· |
SQM
reported earnings growth of 102.8% for the first half of 2008, with
net
income for the period rising to US$190.5 million.
|
|
· |
Earnings
per ADR for the first six months of 2008 totaled US$0.72, compared
to
US$0.36 for the same period of
2007.
|
|
· |
Worldwide
potassium prices remained strong, driving growth in specialty plant
nutrients and potassium chloride.
|
Santiago,
Chile, August 12, 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 half of 2008
of
US$190.5 million (US$0.72 per ADR), an increase of 102.8% with respect to the
same period of 2007, when earnings totaled US$93.9 million (US$0.36 per ADR
(1)).
Operating
income
reached
US$242.3 million (30.8% of revenues), 83.2% higher than the US$132.3 million
(23.7% of revenues) recorded during the first six months of 2007. Revenues
for the
first half of 2008 totaled US$787.1 million, representing growth of 40.9% over
the US$558.8 million reported in the first half of 2007.
The
Company also announced year-over-year
earnings growth of 146.6% for the second quarter of 2008, reporting
quarterly net income of
US$125.7 million (US$0.48 per ADR) compared to the 2007 figure of US$51.0
million (US$0.19 per ADR (1)).
Operating
income for
the
second quarter reached US$156.1 million, 112.5% higher than the US$73.5 million
recorded for the same period of 2007. Revenues
totaled
US$460.8 million, an increase of approximately 43.3% with respect to the second
quarter of 2007, when revenues amounted to US$321.6 million.
Patricio
Contesse, SQM’s Chief Executive Officer, stated, “The earnings growth we have
reported for both the second quarter and the first half was the result of
worldwide increases in fertilizer prices, as well as solid demand growth and
sales volumes that were higher than we originally expected in our iodine and
lithium businesses.” He went on to say, “Margins on our specialty plant
nutrients have risen considerably, as a result of favorable pricing conditions
together with our strategy of targeting markets that deliver the highest
returns. However, rising costs continue to have an impact, mainly due to higher
energy costs. On balance, we are optimistic about the outlook for the second
half of 2008, and our efforts are focused on achieving third and fourth quarter
results that surpass the second quarter results we have just
reported.”
Segment
Analysis
Specialty
Plant Nutrition
Specialty
plant nutrition revenues for the first half of 2008 totaled US$446.4 million,
62.3% higher than the US$275.1 million recorded for the same period in
2007.
Second
quarter 2008 revenues reached US$275.9 million, an increase of 60.1% over the
US$172.3 million recorded in 2007.
Specialty
Plant Nutrition Volumes and Revenues (six months ended June
30):
|
|
|
|
2008
|
|
2007
|
|
2008/2007
|
|
Sodium
nitrate
|
|
|
Th.
Ton
|
|
|
13.9
|
|
|
30.0
|
|
|
-16.1
|
|
|
-54
|
%
|
Potassium
nitrate and sodium potassium nitrate
|
|
|
Th.
Ton
|
|
|
290.9
|
|
|
379.8
|
|
|
-88.8
|
|
|
-23
|
%
|
Specialty
blends
|
|
|
Th.
Ton
|
|
|
98.3
|
|
|
91.6
|
|
|
6.8
|
|
|
7
|
%
|
Other
non-SQM specialty plant nutrients (*)
|
|
|
Th.
Ton
|
|
|
58.1
|
|
|
54.9
|
|
|
3.2
|
|
|
6
|
%
|
Potassium
sulfate
|
|
|
Th.
Ton
|
|
|
69.0
|
|
|
90.3
|
|
|
-21.3
|
|
|
-24
|
%
|
Specialty
plant nutrition revenues
|
|
|
MUS$
|
|
|
446.4
|
|
|
275.1
|
|
|
171.3
|
|
|
62
|
%
|
*Trading
of other specialty plant nutrients.
Revenue
growth for the Specialty Plant Nutrition segment during the second quarter
and
first six months of 2008 was driven by significant increases in world fertilizer
prices. The upward trend in prices for potassium-based fertilizers -which began
to have a positive effect on our results during the second half of 2007-
continued to gain momentum during the second quarter of 2008, as large potash
producers settled a number of important sales contracts and supply remained
tight.
For
SQM,
rising worldwide potassium prices translated into a significant increase in
the
average price for our Specialty Plant Nutrition division, as compared to the
first half of 2007. We expect the pricing environment to remain strong for
the
rest of the year.
The
higher prices in this business line more than offset the decrease in sales
volumes, where the largest effect came from lower sales of sodium potassium
nitrate, especially in Brazil. Lower volumes were partly explained by delays
in
a few shipments at the end of the second quarter, which affected a number of
products, especially potassium sulfate and sodium potassium nitrate.
Additionally, the higher volumes for the first half of 2007 were explained
by
the fact that sales volumes exceeded production levels during that period.
In
the
second half of 2008 we expect to record higher sales volumes than in the first
half. Specialty plant nutrition demand remains strong, and SQM is committed
to
continuing with its announced capacity expansion in order to satisfy that
demand. Our new potassium nitrate plant should be operational during the second
half of 2010.
Specialty
Plant Nutrition gross
margin (2)
for the
first half of 2008 accounted for approximately 54% of SQM’s consolidated gross
margin.
Iodine
and Iodine Derivatives
Revenues
from sales of iodine and iodine derivatives during the first half of 2008
totaled US$125.7 million, a 15.3% increase with respect to the US$109.0 million
reported for the first half of 2007.
Iodine
and iodine derivatives revenues for the second quarter of 2008 amounted to
US$65.6 million, 14.7% higher than the US$57.1 million recorded the previous
year.
Iodine
Volumes and Revenues (six months ended June 30):
|
|
|
|
2008
|
|
2007
|
|
2008/2007
|
|
Iodine
and derivatives
|
|
|
Th.
Ton
|
|
|
5.3
|
|
|
4.6
|
|
|
0.7
|
|
|
15
|
%
|
Iodine
and derivatives revenues
|
|
|
MUS$
|
|
|
125.7
|
|
|
109.0
|
|
|
16.6
|
|
|
15
|
%
|
The
15%
increase in revenues in this business line during the first half of 2008,
compared with the same period of 2007, was driven by growth in sales volumes,
which also increased 15% in the period. The higher sales volumes reflected
healthy worldwide demand for iodine and its derivatives. Liquid crystal displays
(LCDs) continue to be the fastest-growing end market for this product. In
addition, new demand for iodine derivatives has emerged within the field of
agrochemicals. Although initial sales have been small in terms of volume, this
use represents another potential source of demand growth in the
future.
As
a
result of the solid demand growth, combined with SQM’s leading market position,
we expect iodine sales volumes for the second half of 2008 to be higher than
they were in the second half of 2007.
Gross
margin
for the
Iodine and Iodine Derivatives segment accounted for approximately 14% of SQM’s
consolidated gross margin in the first half of 2008.
Lithium
and Lithium Derivatives
Revenues
for the Lithium and Lithium Derivatives segment totaled US$88.0 million during
the first half of 2008, 5.9% lower than the US$93.5 million recorded for the
first half of 2007.
Second-quarter
2008 lithium revenues decreased 6.2% with respect to the second quarter of
2007,
amounting to US$45.9 million, compared to US$48.9 million in 2007.
Lithium
Volumes and Revenues (six months ended June 30):
|
|
|
|
2008
|
|
2007
|
|
2008/2007
|
|
Lithium
and derivatives
|
|
|
Th.
Ton
|
|
|
14.0
|
|
|
15.8
|
|
|
-1.8
|
|
|
-11
|
%
|
Lithium
and derivatives revenues
|
|
|
MUS$
|
|
|
88.0
|
|
|
93.5
|
|
|
-5.5
|
|
|
-6
|
%
|
The
6%
decrease in lithium revenues during the first half of 2008 was the result of
lower sales volumes, which were explained in part by shipping delays. We expect
to recover sales volumes during the second half of this year, and while initial
estimates suggested that total sales volumes for the year would be slightly
lower than in 2007, we now expect full-year 2008 volumes to be similar to 2007.
The
lower
volumes were partially offset by prices, which were higher on average during
the
first half of 2008 than in the same period of 2007. However, that comparison
includes the effect of lithium sales made in early 2007 under a long-term
contract with lower prices. Excluding the effect of those volumes, lithium
prices in 2008 actually decreased slightly with respect to both the first half
of 2007 and year-end 2007.
On
the
demand side, the lithium market continues to grow, and lithium batteries
continue to be the primary driver behind this growth. In order to satisfy future
demand growth, we are in the process of completing our lithium carbonate
capacity expansion, and during the third quarter of this year we will begin
testing operations at the facility.
Gross
margin
for the
Lithium and Lithium Derivatives segment accounted for approximately 17% of
SQM’s
consolidated gross margin in the first half of 2008.
Potassium
Chloride
Potassium
chloride revenues for the first half of 2008 totaled US$39.5 million, a 96.1%
increase with respect to the first half of 2007, when revenues amounted to
US$20.1 million.
Potassium
chloride revenues grew 99.7% in the second quarter, reaching US$24.0 million,
compared to US$12.0 million for the same period of 2007.
Potassium
Chloride Volumes and Revenues (six months ended June 30):
|
|
|
|
2008
|
|
2007
|
|
2008/2007
|
|
Potassium
chloride
|
|
|
Th.
Ton
|
|
|
69.1
|
|
|
78.4
|
|
|
-9.3
|
|
|
-12
|
%
|
Potassium
chloride revenues
|
|
|
MUS$
|
|
|
39.5
|
|
|
20.1
|
|
|
19.4
|
|
|
96
|
%
|
Potassium
chloride revenues for the first half of 2008 nearly doubled with respect to
the
first half of 2007. In addition to having an indirect impact on SQM’s Specialty
Plant Nutrition division, rising global prices for potassium-based fertilizers
translated directly into price increases for SQM’s third-party sales of
potassium chloride. SQM’s potassium chloride prices for the rest of 2008 should
follow world prices, and in particular they should track prices for potassium
chloride imports to the Brazilian market.
Sales
volumes for this product were 12% lower during the first half of 2008, compared
to the same period of the previous year, but we expect second-half 2008 volumes
to be higher than both first-half 2008 volumes and second-half 2007 volumes.
Furthermore, as we announced recently, we are ramping up potassium chloride
production, and as a result we expect 2009 sales volumes to be significantly
higher than 2008 volumes.
In
light
of the favorable pricing conditions and the expected growth in volumes, we
believe that potassium chloride’s contribution to SQM’s consolidated gross
margin will keep rising in the coming quarters.
Gross
margin
for
potassium chloride accounted for approximately 9% of SQM’s consolidated gross
margin in the first half of 2008.
Industrial
Chemicals
Industrial
chemicals revenues for the first half of 2008 reached US$52.1 million, 33.4%
higher than the US$39.0 million recorded for the same period of the previous
year.
Revenues
for the second quarter totaled US$28.0 million, an increase of 43.9% with
respect to the second-quarter 2007 figure of US$19.5 million.
Industrial
Chemicals Volumes and Revenues (six months ended June 30):
|
|
|
|
2008
|
|
2007
|
|
2008/2007
|
|
Industrial
nitrates
|
|
|
Th.
Ton
|
|
|
81.3
|
|
|
83.3
|
|
|
-2.0
|
|
|
-2
|
%
|
Boric
acid
|
|
|
Th.
Ton
|
|
|
2.2
|
|
|
5.1
|
|
|
-2.9
|
|
|
-57
|
%
|
Industrial
chemicals revenues
|
|
|
MUS$
|
|
|
52.1
|
|
|
39.0
|
|
|
13.1
|
|
|
33
|
%
|
Revenue
growth in the Industrial Chemicals division was driven by favorable pricing
conditions, offset by slightly lower sales volumes.
Gross
margin
for the
Industrial Chemicals segment accounted for approximately 4% of SQM’s
consolidated gross margin in the first half of 2008.
Other
Commodity Fertilizers
Revenues
from sales of other commodity fertilizers increased to US$35.5 million for
the
first half of 2008, from US$22.0 million for the same period of 2007, and
revenues for the second quarter increased from US$11.8 million in 2007 to
US$21.4 million in 2008. Growth in revenues from sales of other commodity
fertilizers is explained by rising worldwide fertilizer prices.
Selling
and Administrative Expenses
Selling
and administrative expenses totaled US$41.9 million (5.3% of revenues) for
the
first half of 2008, compared to the US$32.1 million (5.7% of revenues) recorded
during the same period of 2007.
Operating
Costs
Operating
costs for the first half of 2008 totaled US$502.9 million. As we have observed
in recent periods, pressures on the Company’s costs have come predominantly from
energy, raw materials, and peso-denominated expenses.
Non-operating
Income
The
Company recorded a non-operating loss of US$1.3 million for the first half
of
2008, which is lower than the US$13.1 million loss recorded for the same period
of 2007. The improvement in non-operating results was partly explained by income
from investments in related companies, which increased US$7.5 million with
respect to the first half of 2007. This reflects the favorable conditions in
the
fertilizer business for some of our foreign affiliates. In addition,
net
financial expenses (3)
totaled
US$(4.9) million during the first half of 2008. This figure was lower than
the
US$(5.4) million recorded for the first half of the previous year, primarily
as
a result of lower interest rates.
Notes:
|
(1) |
Effective
March 31, 2008, SQM 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
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.
|
(2)
|
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 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
|
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 6-month period
|
|
(US$
Millions)
|
|
For
the 2nd Quarter
|
|
ended
June 30
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
460.8
|
|
|
321.6
|
|
|
787.1
|
|
|
558.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Fertilizers
|
|
|
275.9
|
|
|
172.3
|
|
|
446.4
|
|
|
275.1
|
|
Potassium
Nitrate and Blended Fertilizers
(1)
|
|
|
236.4
|
|
|
153.0
|
|
|
388.1
|
|
|
242.5
|
|
Potassium
Sulfate
|
|
|
39.5
|
|
|
19.3
|
|
|
58.3
|
|
|
32.6
|
|
Iodine
and Iodine Derivatives
|
|
|
65.6
|
|
|
57.1
|
|
|
125.7
|
|
|
109.0
|
|
Lithium
and Lithium Derivatives
|
|
|
45.9
|
|
|
48.9
|
|
|
88.0
|
|
|
93.5
|
|
Potassium
Chloride
|
|
|
24.0
|
|
|
12.0
|
|
|
39.5
|
|
|
20.1
|
|
Industrial
Chemicals
|
|
|
28.0
|
|
|
19.5
|
|
|
52.1
|
|
|
39.0
|
|
Industrial
Nitrates
|
|
|
27.1
|
|
|
18.0
|
|
|
50.4
|
|
|
36.1
|
|
Boric
Acid
|
|
|
0.9
|
|
|
1.5
|
|
|
1.7
|
|
|
2.9
|
|
Other
Income
|
|
|
21.4
|
|
|
11.8
|
|
|
35.5
|
|
|
22.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Goods Sold
|
|
|
(255.2
|
)
|
|
(206.1
|
)
|
|
(452.1
|
)
|
|
(347.4
|
)
|
Depreciation
|
|
|
(25.5
|
)
|
|
(24.3
|
)
|
|
(50.7
|
)
|
|
(47.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Margin
|
|
|
180.0
|
|
|
91.3
|
|
|
284.3
|
|
|
164.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and Administrative Expenses
|
|
|
(23.9
|
)
|
|
(17.8
|
)
|
|
(41.9
|
)
|
|
(32.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
156.1
|
|
|
73.5
|
|
|
242.3
|
|
|
132.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Operating
Income
|
|
|
2.3
|
|
|
(8.4
|
)
|
|
(1.3
|
)
|
|
(13.1
|
)
|
Financial
Income
|
|
|
2.5
|
|
|
2.1
|
|
|
5.5
|
|
|
4.7
|
|
Financial
Expenses
|
|
|
(4.9
|
)
|
|
(4.7
|
)
|
|
(10.4
|
)
|
|
(10.0
|
)
|
Others
|
|
|
4.7
|
|
|
(5.8
|
)
|
|
3.6
|
|
|
(7.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Before Taxes
|
|
|
158.4
|
|
|
65.1
|
|
|
241.0
|
|
|
119.2
|
|
Income
Tax
|
|
|
(29.8
|
)
|
|
(13.5
|
)
|
|
(43.1
|
)
|
|
(24.1
|
)
|
Other
Items
|
|
|
(2.9
|
)
|
|
(0.6
|
)
|
|
(7.4
|
)
|
|
(1.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
125.7
|
|
|
51.0
|
|
|
190.5
|
|
|
93.9
|
|
Net
Income per ADR (US$)
|
|
|
0.48
|
|
|
0.19
|
|
|
0.72
|
|
|
0.36
|
|
(1)
Includes Yara Specialty Fertilizers and Other Specialty
Fertilizers
Balance
Sheet
(US$
Millions)
|
|
As
of June 30
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
1,139.7
|
|
|
819.8
|
|
Cash
and cash equivalents (1)
|
|
|
90.4
|
|
|
117.2
|
|
Accounts
receivable (2)
|
|
|
408.8
|
|
|
274.9
|
|
Inventories
|
|
|
536.0
|
|
|
377.5
|
|
Others
|
|
|
104.5
|
|
|
50.2
|
|
|
|
|
|
|
|
|
|
Fixed
Assets
|
|
|
1,004.2
|
|
|
951.9
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
107.8
|
|
|
99.9
|
|
Investments
in related companies (3)
|
|
|
66.0
|
|
|
53.8
|
|
Others
|
|
|
41.8
|
|
|
46.1
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
2,251.7
|
|
|
1,871.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
378.7
|
|
|
193.1
|
|
Short-term
interest-bearing debt
|
|
|
80.8
|
|
|
11.0
|
|
Others
|
|
|
297.9
|
|
|
182.1
|
|
|
|
|
|
|
|
|
|
Long-Term
Liabilities
|
|
|
566.0
|
|
|
549.5
|
|
Long-term
interest-bearing debt
|
|
|
481.1
|
|
|
478.1
|
|
Others
|
|
|
84.9
|
|
|
71.4
|
|
|
|
|
|
|
|
|
|
Minority
Interest
|
|
|
51.3
|
|
|
39.2
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
1,255.7
|
|
|
1,089.8
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
2,251.7
|
|
|
1,871.6
|
|
|
|
|
|
|
|
|
|
Current
Ratio (4)
|
|
|
3.0
|
|
|
4.2
|
|
Net
Debt / Total Capitalization (5)
|
|
|
26.5
|
%
|
|
24.8
|
%
|
|
(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:
August
13,
2008