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 nine months ended September 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.
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 2008
Highlights
|
·
|
SQM
reported earnings growth of 181% for the first nine months of 2008,
with
net income for the period rising to US$381.1 million.
|
|
·
|
Earnings
per ADR for the first nine months of 2008 totaled US$1.45, compared
to
US$0.51 for the same period of
2007.
|
|
·
|
Third-quarter
net income exceeded both full-year 2007 and first-half 2008 net
income.
|
Santiago,
Chile, October 28, 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 nine months of 2008
of
US$381.1 million (US$1.45 per ADR), an increase of 181% with respect to the
same
period of 2007, when earnings totaled US$135.4 million (US$0.51 per ADR
(1)).
Operating
income
reached
US$481.4 million (35.0% of revenues), 141% higher than the US$199.4 million
(22.6% of revenues) recorded during the first nine months of 2007. Revenues
for the
first nine months of 2008 totaled US$1,376.2 million, representing growth of
56%
over the US$881.3 million reported in the same period of 2007.
The
Company also announced year-over-year
earnings growth of 359% for the third quarter of 2008, reporting quarterly
net income of
US$190.6 million (US$0.72 per ADR) compared to the 2007 figure of US$41.5
million (US$0.16 per ADR). Operating income for the third quarter reached
US$239.1 million, 256% higher than the US$67.2 million recorded for the same
period of 2007. Revenues totaled US$589.1 million, an increase of approximately
83% with respect to the third quarter of 2007, when revenues amounted to
US$322.5 million.
SQM’s
Chief Executive Officer, Patricio Contesse, stated, “We are pleased to announce
that SQM has once again achieved record earnings, with net income for the third
quarter alone exceeding not only net income for the first six months of this
year but also net income for the full-year 2007. These results are due in large
part to higher prices for our potassium-based fertilizers. In addition, during
2008 we observed positive developments in both the iodine and lithium markets
that allowed us not only to report higher results than we initially projected
for these two businesses, but also to improve our outlook for both of these
markets. In particular, we recently announced a 25% price increase for iodine,
reflecting changes in the equilibrium between supply, which has become tighter
than expected, and demand, which has grown faster than expected.”
Mr.
Contesse continued, “While current world economic conditions have generated
uncertainty about the coming months, we are confident in the fundamentals
underlying our key markets, where we expect to see growing demand and tight
supply conditions.”
Segment
Analysis
Specialty
Plant Nutrition
Specialty
plant nutrition revenues for the first nine months of 2008 totaled US$787.5
million, 80.2% higher than the US$437.1 million recorded for the same period
in
2007.
Third
quarter 2008 revenues reached US$341.1 million, an increase of 110.5% over
the
US$162.0 million recorded in 2007.
The
strong growth we reported in revenues from sales of specialty plant nutrients
was the result of favorable pricing conditions, as global prices for
potassium-based fertilizers continued to benefit our products, such as potassium
nitrate, potassium sulfate and other specialty blends. While the sales volume
trend observed in the first six months of this year remained the same in the
third quarter, year-to-date average prices across all of our products showed
strong growth compared to the previous year.
World
potassium supply is tight, and given the high investment and long lead-times
required to add new capacity, we expect this tightness to continue for several
years to come. Likewise, demand for potassium in the past few years has been
growing consistently as dietary preferences shift towards greater consumption
of
protein and higher-quality fruits and vegetables, where potassium-based
fertilizers play a particularly important role.
As
we
have indicated in our previous earnings releases, we expect specialty plant
nutrition sales volumes for the full-year 2008 to be lower than they were in
2007, primarily because last year’s sales exceeded production levels. In the
short term, we believe some customers may choose to delay part of their
fertilizer purchases, given that farmers have been affected by the tight credit
conditions that have been generated by uncertainty in the financial markets.
However, any delays should be temporary, as demand for our specialty plant
nutrients continues to be robust. A significant portion of our SPN customers
are
farmers who need to attain export-quality standards for their fruits and
vegetables and farmers that use modern agricultural techniques and therefore
need to achieve high crop yields.
Specialty
Plant Nutrition gross
margin (2)
for the
first nine months 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 nine months of
2008
totaled US$192.2 million, a 19.0% increase with respect to the US$161.5 million
reported for the first nine months of 2007.
Iodine
and iodine derivatives revenues for the third quarter of 2008 amounted to
US$66.5 million, 26.7% higher than the US$52.5 million recorded the previous
year.
The
higher revenues for both the quarter and the year-to-date have been the result
of growth in sales volumes. In general, demand for iodine and its derivatives
has continued strong, growing more in 2008 than we originally anticipated.
Volume growth was particularly strong during the third quarter, suggesting
a
very positive trend for the future.
Approximately
60% of the end markets for iodine and iodine derivatives are related to human
and animal health and nutrition. As such, going forward we believe that while
a
slowdown in world economic growth may negatively impact demand for iodine in
certain applications, overall iodine demand growth has always been positive,
even during periods of global recession. For 2008, we estimate that total demand
growth will be in the range of 5-6% with respect to 2007, fueled by X-ray
contrast media and LCD polarizing film applications, as well as the new
application for iodine derivatives within the field of
agrochemicals.
On
the
supply side the iodine market is tighter than we initially anticipated. We
believe the tight supply scenario will continue, even though SQM is increasing
its iodine production capacity by 25% by the year 2012. The current tightness
in
supply, together with healthy demand, has reduced the availability of iodine
in
the market. In response to this new supply and demand scenario, we recently
announced that iodine prices will increase by 25% effective October 1, 2008.
The
price increase should affect SQM’s results beginning in January
2009.
Gross
margin
for the
Iodine and Iodine Derivatives segment accounted for approximately 12% of SQM’s
consolidated gross margin in the first nine months of 2008.
Lithium
and Lithium Derivatives
Revenues
for the Lithium and Lithium Derivatives segment totaled US$137.7 million during
the first nine months of 2008, similar to the US$137.1 million recorded for
the
first nine months of 2007.
Third-quarter
2008 lithium revenues increased 14.2% with respect to the third quarter of
2007,
amounting to US$49.8 million, compared to US$43.6 million in 2007.
The
growth in lithium revenues during the third quarter was the result of a
significant increase in sales volumes compared to the year-ago quarter, which
allowed us to recover sales from the first half of this year. We expect this
trend to continue for the remainder of the year, such that full-year 2008 sales
volumes should be similar to or slightly higher than 2007 volumes. In terms
of
market dynamics, we have seen a shift in sales volumes from Europe-North America
to the Asian markets, with lithium-ion batteries being the most important factor
in this shift.
Our
initial view for 2008 was that SQM’s lithium volumes would be lower with respect
to 2007, as other suppliers in China were expected to ramp up their production
levels. We now see a more favorable outlook for this market, as recent reports
suggest that the increases in production will not be as significant as these
producers had originally announced.
During
the third quarter, we completed the expansion of our lithium carbonate facility,
and we now have production capacity of approximately 40,000 metric tons per
year. This new capacity will give us the flexibility to meet the growing demand
for lithium, particularly in the face of lower-than-expected production levels
from other lithium producers.
Gross
margin
for the
Lithium and Lithium Derivatives segment accounted for approximately 14% of
SQM’s
consolidated gross margin in the first nine months of 2008.
Potassium
Chloride
Potassium
chloride revenues for the first nine months of 2008 totaled US$91.3 million,
a
150.3% increase with respect to the first nine months of 2007, when revenues
amounted to US$36.5 million.
Potassium
chloride revenues grew 217.2% in the third quarter, reaching US$51.8 million,
compared to US$16.3 million for the same period of 2007.
Year-to-date
potassium chloride revenues have more than doubled as a result of the favorable
pricing conditions that have been prevailing in the global potassium industry.
During the third quarter we continued to observe an upward trend in prices,
and
while there has been some weakness in prices for nitrogen- and phosphate-based
fertilizers, we believe potassium prices will remain strong. In addition, the
financial crisis may delay or even put an end to the capacity expansion projects
that have been announced by certain producers, which would make it difficult
for
supply to match demand in the coming years.
Going
forward, these supply restrictions at the global level should enable SQM to
grow
in sales volumes. As part of our capex plan, we are increasing production
capacity for potassium chloride, and we therefore expect to record a significant
increase in sales volumes in 2009, to more than double the projected volumes
for
2008. We expect full-year 2008 sales volumes to be similar to 2007
levels.
Gross
margin
for
potassium chloride accounted for approximately 13% of SQM’s consolidated gross
margin in the first nine months of 2008.
Industrial
Chemicals
Industrial
chemicals revenues for the first nine months of 2008 reached US$88.0 million,
55.3% higher than the US$56.7 million recorded for the same period of the
previous year.
Revenues
for the third quarter totaled US$35.9 million, an increase of 103.9% with
respect to the third-quarter 2007 figure of US$17.6 million.
Revenue
growth in the Industrial Chemicals division was driven primarily by favorable
pricing conditions. We continue to see growing demand for industrial-grade
sodium nitrate to be used in solar energy plants, and we expect this trend
to
continue in the future, as we have already settled a number of contracts for
2009 and new projects are currently being developed.
Gross
margin
for the
Industrial Chemicals segment accounted for approximately 5% of SQM’s
consolidated gross margin in the first nine months of 2008.
Other
Commodity Fertilizers
Revenues
from sales of other commodity fertilizers increased to US$79.5 million for
the
first nine months of 2008, from US$52.5 million for the same period of 2007,
and
revenues for the third quarter increased from US$30.4 million in 2007 to US$44.0
million in 2008. Higher worldwide fertilizer prices in 2008 as compared to
the
same period in 2007 explained the revenue growth.
Selling
and Administrative Expenses
Selling
and administrative expenses totaled US$64.0 million (4.7% of revenues) for
the
first nine months of 2008, compared to the US$49.9 million (5.7% of revenues)
recorded during the same period of 2007.
Operating
Costs
Operating
costs for the first nine months of 2008 totaled US$830.8 million, compared
to
the US$632.0 million of the same period of the previous year. The higher costs
this year have resulted mainly from energy, raw materials, and peso-denominated
expenses.
Non-operating
Income
The
Company recorded a non-operating loss of US$11.8 million for the first nine
months of 2008, which is lower than the US$23.4 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
approximately US$10.0 million with respect to the first nine months of 2007.
This effect was partly offset by losses related to foreign currency
translation.
Net
financial expenses (3)
for the
period totaled US$(7.7) million during the first nine months of 2008, slightly
lower than the US$(8.7) million recorded for the same period of
2007.
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.
|
(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 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:
|
|
|
|
|
|
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.
|
|
|
|
|
|
For the 9-month period
|
|
|
|
For the 3rd Quarter
|
|
ended September 30
|
|
(US$ Millions)
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
589.1
|
|
|
322.5
|
|
|
1,376.2
|
|
|
881.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Fertilizers
|
|
|
341.1
|
|
|
162.0
|
|
|
787.5
|
|
|
437.1
|
|
Potassium
Nitrate and Blended Fertilizers(1)
|
|
|
281.0
|
|
|
146.3
|
|
|
669.2
|
|
|
388.8
|
|
Potassium
Sulfate
|
|
|
60.1
|
|
|
15.7
|
|
|
118.3
|
|
|
48.3
|
|
Iodine
and Iodine Derivatives
|
|
|
66.5
|
|
|
52.5
|
|
|
192.2
|
|
|
161.5
|
|
Lithium
and Lithium Derivatives
|
|
|
49.8
|
|
|
43.6
|
|
|
137.7
|
|
|
137.1
|
|
Potassium
Chloride
|
|
|
51.8
|
|
|
16.3
|
|
|
91.3
|
|
|
36.5
|
|
Industrial
Chemicals
|
|
|
35.9
|
|
|
17.6
|
|
|
88.0
|
|
|
56.7
|
|
Industrial
Nitrates
|
|
|
33.0
|
|
|
16.3
|
|
|
83.3
|
|
|
52.4
|
|
Boric
Acid
|
|
|
2.9
|
|
|
1.3
|
|
|
4.6
|
|
|
4.2
|
|
Other
Income
|
|
|
44.0
|
|
|
30.4
|
|
|
79.5
|
|
|
52.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Goods Sold
|
|
|
(295.2
|
)
|
|
(212.7
|
)
|
|
(747.3
|
)
|
|
(560.2
|
)
|
Depreciation
|
|
|
(32.8
|
)
|
|
(24.8
|
)
|
|
(83.5
|
)
|
|
(71.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Margin
|
|
|
261.2
|
|
|
85.0
|
|
|
545.4
|
|
|
249.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and Administrative Expenses
|
|
|
(22.1
|
)
|
|
(17.9
|
)
|
|
(64.0
|
)
|
|
(49.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
239.1
|
|
|
67.2
|
|
|
481.4
|
|
|
199.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Operating
Income
|
|
|
(10.5
|
)
|
|
(10.3
|
)
|
|
(11.8
|
)
|
|
(23.4
|
)
|
Financial
Income
|
|
|
1.2
|
|
|
1.9
|
|
|
6.7
|
|
|
6.5
|
|
Financial
Expenses
|
|
|
(4.0
|
)
|
|
(5.2
|
)
|
|
(14.4
|
)
|
|
(15.2
|
)
|
Others
|
|
|
(7.7
|
)
|
|
(7.0
|
)
|
|
(4.1
|
)
|
|
(14.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Before Taxes
|
|
|
228.5
|
|
|
56.9
|
|
|
469.5
|
|
|
176.0
|
|
Income
Tax
|
|
|
(37.9
|
)
|
|
(14.2
|
)
|
|
(81.0
|
)
|
|
(38.3
|
)
|
Other
Items
|
|
|
(0.0
|
)
|
|
(1.2
|
)
|
|
(7.5
|
)
|
|
(2.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
190.6
|
|
|
41.5
|
|
|
381.1
|
|
|
135.4
|
|
Net
Income per ADR (US$)
|
|
|
0.72
|
|
|
0.16
|
|
|
1.45
|
|
|
0.51
|
|
(1)
Includes Yara Specialty Fertilizers and Other Specialty Fertilizers
|
|
As of September 30
|
|
(US$ Millions)
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
1,290.4
|
|
|
904.2
|
|
Cash
and cash equivalents (1)
|
|
|
156.8
|
|
|
113.8
|
|
Accounts
receivable (2)
|
|
|
454.5
|
|
|
337.2
|
|
Inventories
|
|
|
562.5
|
|
|
385.9
|
|
Others
|
|
|
116.5
|
|
|
67.3
|
|
|
|
|
|
|
|
|
|
Fixed
Assets
|
|
|
1,045.7
|
|
|
967.7
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
109.0
|
|
|
99.9
|
|
Investments
in related companies (3)
|
|
|
68.1
|
|
|
54.9
|
|
Others
|
|
|
40.9
|
|
|
45.0
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
2,445.1
|
|
|
1,971.9
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
380.4
|
|
|
236.8
|
|
Short-term
interest-bearing debt
|
|
|
36.2
|
|
|
16.0
|
|
Others
|
|
|
344.2
|
|
|
220.8
|
|
|
|
|
|
|
|
|
|
Long-Term
Liabilities
|
|
|
567.2
|
|
|
557.6
|
|
Long-term
interest-bearing debt
|
|
|
479.9
|
|
|
484.1
|
|
Others
|
|
|
87.2
|
|
|
73.5
|
|
|
|
|
|
|
|
|
|
Minority
Interest
|
|
|
51.4
|
|
|
42.5
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
1,446.1
|
|
|
1,135.0
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
2,445.1
|
|
|
1,971.9
|
|
|
|
|
|
|
|
|
|
Current
Ratio (4)
|
|
|
3.4
|
|
|
3.8
|
|
Net
Debt / Total Capitalization (5)
|
|
|
19.4
|
%
|
|
24.7
|
%
|
(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:
October
29,
2008