SQM - Earnings call transcript Q2 2022 | Sociedad Química y Minera de Chile S.A.

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Operator

Good day, and welcome to the SQM Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Investor of Head O'Brien, Relations. Kelly ma'am. Please, go ahead,

Kelly O’Brien

webcast earnings Good the for conference will is SQM's XX, morning. you for call being and recorded Thank conference be six This call XXXX. joining live. months June ended

Following webcast our the to at we this website, will call, able access be www.sqm.com.

of website press as release summary presentation been have with our earnings results uploaded well. Our a and the to our

and and call Vice Gerardo will Ramos, Asia Lithium Illanes, President and the be today on CEO; Speaking Smith, CFO; Felipe of Iodine Pacific. Ricardo

term earnings Before let and the except law. factors is leave of our US Securities information, of this remind our could future and Exchange economic Executive forward-looking are best to the Ramos. these that of conference under are line from and sustainable new including expenses successfully a issued anticipated filings involves and such you factors concerning or of the defined Officer, night as with estimates profitability, forward-looking release are with factors. our service public differ otherwise, last together future or statements made result forward-looking of to laws. those plan, We assume statements be update you as items, ability statements, a or no growth, anticipated currently that information identified I those obligation light federal and cause to should we Chief judgment statements are considered not statements affect by risks, outlook, materially stated uncertainties in cost such with Any available our other Ricardo such and me as historical in begin, product number now statements that required uncertainties statements development that accuracy developments implement whether that the in could statements in our forward-looking actual Commission reflecting synergies other financial facts results the in company’s SQM performances, on and revenues, based securities business other risks,

Ricardo Ramos

one the Head of that maybe Felipe Kelly, joining Miranda, extra also Yes, clarification Business is call. the Intelligence, who is

Felipe Miranda

Sure.

Ricardo Ramos

you, Thank Felipe. joining you, Good today. the for morning and call Okay. thank Thank Kelly. you

had. period global to in demand that remains, XX%, recession. We XXXX. first we grow with market years there In public-private lithium by a at sales the for June communities whole when was influenced growth, industry. pleased country the conditions related the the along over XXX% will as XX% and the the are in of June during iron very demand were with high show parties, year. this of the our and months moment, electric R&D pandemic of double particularly XX the a least both results gross we lithium, comes saw harder we’ve China with related the compared the year. at are no first sales alliance or work. in to represented These of over vehicles fertilizers, we electric in were same XXXX with it this are results Recent trend in continue industry, know-how, to that This higher profit. compared vehicle We lot CORFO, where last believe Lithium that investments benefits positive to the see enjoying reported half prices during celebrating of the as news growth lithium negative our year six historical engaging of are great through a indicators the [ph] were where XXX% After the China, and of year XXXX reportedly strong pending months a

remainder the this, prices relatively remain will likely of seems of during all stable that XXXX. it Given

to paid more public a While leasing financial be that year, player proud contribution are during a leading the first we funds billion result and sales expertise. lithium the of we of operations in even half our as revolution our of through production, are the $X.X will green

plant global state-of-the-art direct acute the electric world, lithium includes technology is transition. through lithium battery producing reduction positively supporting COX edge throughout vehicle that Our an a

Kelly O’Brien

Chuck, open now to ready questions. to the we are line

Operator

Thank you.

We Bank. begin go will question Instructions] come the now Please ahead. from with Blanchard [Operator first will session question-and-answer And the Corinne Deutsche

Corinne Blanchard

everyone. question good and congratulations the questions. two you have taking on for I Hi, my Thank quarter.

further renegotiated XX% to XQ would significant detail expect It quarter, I prices? pricing. contract. a XX% of cost. benchmark from shorter-term on we further Meaning contracts be have was the negotiation Can The seems like away long-term to on closer It seems first my XQ? the contracts cost in one even of and question to even the move the some would this we there so in into like increase on Then contract index would see move go be this. or you second to could

Felipe Smith

Felipe this Smith. is Corinne, Hello.

that of coming the with we the a can contract of with in situation. we we're market the talking some We that indeed customers weeks, price. are We hope in that with whom terms restricted have moving improve

follow to have also contracts. that the We market. appreciate We agreed understand who modify the makes commercial it our customers, more those strength successfully openness already of to

go coming the we Corinne, ahead, provision you have So that months. hopefully, can would – – yes, I the in Corinne. say that improve if

Corinne Blanchard

maybe like that. in legacy still contract on those up like or of say you you to are like going into have year? next to long-term Would Just any following going XXXX,

Felipe Smith

first market. say, course, to try, following of that of will have we amount possible would I maximum the the that all, from

very a terms As you know, in has of good position costs. SQM

a have And we that price is contract us to gives again have our the that follow of also customers customers it can sense can feel offer So flexibility, that makes possibility. for market. something sense to sorry, to market with it and -- This I index lot that also, think us, comfortable makes contracts.

Now, some will course, of of these contracts remain. still

over year, remain next portion. very the will but it probably a be contracts restricted the of will Some small

Corinne Blanchard

Thank you.

Ricardo Ramos

account of our the the exports seeing related price to well corporate are to the and third is the function a corporate. about to cost sales contributor pay we party. main from to payments to Chile We as the question average make you your Regarding cost,

world. while we our As producing capacity more, was XX,XXX we approximately tonnes, Value markets sales the Addition quarter, the near getting volumes other exported while Chile it, in be to XX,XXX are effect main we are into the more particularly Nation, as metrics of markets product relevant in end from were as Pros on this to the increasing future, operations exporting close In participate. we metric tonnes. that the customers the integrated we're keep our of sold in on should, keep which that and reaches different Remember

the an in All accounting coupled this, cost contributions If reflected But was like an change, the on of exports bear cost, increasing half of Alliance production and of we Public ratio [ph], in increase sold keep under of [indiscernible], around cost despite may is is [indiscernible] and and we of our mind that ESG. all with the first that last cost seeing, good is fact, only year, pressure the we of inventory. other and in or also are in doesn't But CostCo as slightly our reported see, as business the our with during higher year. this impact the in improvements we this the in on we're dramatically depreciation, quality line. than make as payments our cash that Anyway, making our prices that future. each part Private quarter had if this between sales saw during

Corinne Blanchard

color. the Thank you. I appreciate Great.

Operator

will come question from The next with ahead. Joel go Capital BMO Markets. Please Jackson

Joel Jackson

all A half few little right sort visibility do Hi, So, you the good of now? ’XX little pricing afternoon. to going morning. rest be of how bit, based. questions. first the you good but you in This have or on of otherwise around, a market Good that fixed sticks a touched pricing have bit morning question much is

really visibility, don't first do or lithium you pricing? have have into half you year? you. the some the visibility On Thank of So,

Ricardo Ramos

this are would demand strong. which lithium the XX% we delay estimating same stream. the bit year, to capacities on has look, coming shown last than the be Hello. estimations. that some comment time, At of new all, to seen in will previous like a of the little first above I very that we is Well Actually, be demand higher in supply our year have

price. So that the is on today, what average the pressure is explaining

Okay.

predict is, that I Now will of months could for sure, of it pressure this happen to thing to for is will year? maybe some coming demand next believe remain what the speak it we strong. difficult that remain course, year is probably that extent, but One could this

metric As of million well expecting are at by above XXXX X.X tons. around look matter fact we if that be will demand million we XXXX, and tons X a

demand, up strong. very is estimating XXXX, the represents, supply course, Demand by are around and deny. we supply of junior depend information some will what that cannot this of we XX% probably need how catch it something in to on come can newcomers risk the is Maybe price. this will supply. to of or So, one from the piece additional the And will be with

Joel Jackson

you thank Ricardo for that.

question got settled lithium whatever already to I reprice really below want guess I agree that tons fixed you guess, So, pricing be customers, up tell to my you to was in been would next a us. low some that contract OEMs, XX,XXX some

over you paying maybe did but you a price, return do some to do commit you -- them volume not Did What you price get year more a you in volume Did some years? What What So, paying they got a a at them now? get? commit for guaranteed that. certain to did now? higher customers to at what the give volume did price? right them few next for

Ricardo Ramos

small are all, business for are of our long-term. saw portion in our risks content release. Most following prices. of months you comment like coming first in represent a this market that our tight are you're I seeing the as today okay Well, that asking you contracts you look we the and there of at to as a imagine, market if some can situation But would

grow. asset I probably volume volume any for most our the customer today. So mean need customers is important to

a So, the way solution this more customers way good is best good been a able offering these and the win-win This understanding we we contract. is can by volume. to with have renegotiate have

Joel Jackson

would And this. helpful. Okay, my next question be that's

lithium seem than would be any is it that it now. can't right So, tighter demand

now lithium running making with You have OEMs companies. deals around

know. you as MOUs non-binding are Some

payments. Some have upfront more are some look legit -- and

So, can And term going you there that never over EV about down? before? customers have to forecast things enough then be therefore to you short the maybe the go lithium a the demand you with couple short-term OEMs now to that and satisfy need had talk leverage is of in

Ricardo Ramos

be my think first I capacity. production has that that increasing comment would successfully SQM Well, been

reach to tons XXX,XXX we reaching next capacity stage expansion now this year in year. going next are to per and our are metric XXX,XXX We start of moment

market the the In this lithium has the reaching few small And we're been have are of of terms start are customers SQM players one capacity able start and this more going metric the also of that next in stage. Chile and from And to the ton also course, XX,XXX commenting in been hydroxide, customers’ we to medium valuing and I lithium. big something that all is, deliver us. because

value are proposition customers, we way okay? is can deliver. to that receive our today So volume, And can our discussing the is because volume commit and we with we this

Joel Jackson

Thank you.

Ricardo Ramos

you. Thank

Operator

America. The next question Please from of Bank Guilherme with go will ahead. come Palhares

Guilherme Palhares

question. taking Hello, for you everyone. my Thank

quick one Just on question SPM.

going same on time you first year. the of XX% by but fall this more expect the we right? So -- the in volumes year, said release press volumes that than that see the half at to down You

a a you are in you. the some terms in for terms of could if you the expecting in do that bit of Thank volumes, division? company So expect the what change outlook pickup you or market the that share And is explore half. second has

Ricardo Ramos

Okay. you. Thank

try today. you Let that view give fertilizer global see of we me the to a

has As war been affected industry the you may in Ukraine. know by the whole

in and the potash have are today's But we the exports we of in lack will year. of months of local of to is lower last the the In have the expect. one prediction in innovations In second this we [indiscernible] market. important likely term. Russia It the even in it's though the small unique you any potash we Considering prices potash On quarter very a very worldwide. demand significantly the from potash. That's what the industry observed be the of than the first prices Europe volume have mid-Russia an that affected difficult, medium [ph] for low second have case situations lower of the the a fertilizers, we us of the to hand, a for semester know, have production for environment. That's the we Russia current to main as the if the on have market that and demand because our very situation, affect case, gas affected course of very by we in sell know Again, specialty fertilizer, churn Europe the growth is affected one go projection. environment being as is medium-term the the and growth. of difficult have you price it markets to of price

think year. we of specialty fertilizers And will to those situation the during is of are than seen remain and However, similar half relatively believe the we've second potash that first different constant during be the the prices with that think year. half likely we volumes we to the

Guilherme Palhares

That’s very clear. Thank you.

Operator

Pactual. will Go question ahead. with next Pérez-Novoa César The come BTG from

César Pérez-Novoa

everyone, Good for and results. afternoon, again congratulations Yes. your

capacity tons for That on will final incremental there XXX,XXX completion? completed? you. capital any you deliver some expansion perhaps for XX,XXX require investments, my And ongoing production be and carbonate basic metric this what perhaps alteration do And million $XXX would with the you're a quarter? And milestones third this maybe specific Just would time then restrain been lithium your here has the final be to Thank question. into the question when line metric ton expecting on associated cost a the provide to tie-in? that

Ricardro Ramos

continues September do will a there milestone improving about be expect That's key because is be some to the XXX,XXX that, we increasing probably Keep XXX,XXX to close months process. the in capacity. of are that, I milestone metric XXX,XXX order the the continuous there's that tons step the production the in in are the XXX,XXX. every capacity month, why reach first onwards. in we we every So, production mind metric it's one for no that lithium expecting production that tons

fine-tuning give as for same new market this expect the best Some have bit we're that it's And the we my three years be have XXXX total XXX,XXX. in the will capacity That's will – a capacity XXX,XXX in program, September to guess lower, probably the half inform months is be order ones close results the September in on little we to of included we metric to probably About onward. September in because when order increasing that it's new increase second will year. CapEx I are going to trying conference why XXX,XXX in we working we've from XXX,XXX are update the that as XXXX. investment the you the tons, in the macro next we think we the CapEx – we that capacity CapEx Anyway, of increasing we XXXX, already been half will we is one to the again, three-year quality, the working the next and first the next after way for speak. XXXX, results. call the announced be side. But in the producing I in reach the have – because to the

program. of expect in we to lot CapEx a the have next announce We initiatives

in expect the a metric order We forward from tons. in in this move step increase this we announce to agreement to Wesfarmers, order order together move XX,XXX have final during with final to in year XXX,XXX will to anyway. are Australia, in publicly I

César Pérez-Novoa

All right. much, very for that you information. Thank sharing Thank Ricardo you.

Operator

closing turn to question-and-answer over like concludes remarks. Ms. Kelly to O'Brien any I session. our This the ahead. go for conference back would Please

Kelly O’Brien

for everyone you joining. Thank

that, will September Before we close, wanted you Investor to Day we I remind XX. on an hold

So, us please day. more website, good detail. Have our contact a visit for or

Operator

attending conference now you has for Thank today's The concluded. presentation.

disconnect. now may You

Sociedad Química y Minera de Chile (SQM) 18 Aug 222022 Q2 Earnings call transcript