Chile SQM Q3 net income falls 16% year on year

20 November 2013 17:22  [Source: ICIS news]

MEDELLIN, Colombia (ICIS)--Chilean chemical and speciality fertilizer producer Sociedad Quimica y Minera de Chile (SQM) posted on Wednesday a third quarter net income of $138.9m (€102.8m), down by 16% from $165.2m in the prior-year quarter.

Revenues in the July-September period totalled $521.1m, down by 15% from $615.3m, while gross profit fell by 43% to $148.5m from $262.3m, SQM said.

The results were affected by recent conflicting reports on the potash market that had lead to uncertainty in short term potassium chloride (MOP) pricing, according to the company’s chief executive officer, Patricio Contesse.

The breakup of the Belarusian Potash (BPC) export cartel in July sent shockwaves through the global potash industry and triggered a sharp drop in prices for the fertilizer.

SQM’s potassium sales represent around a quarter of the company’s annual turnover.

The executive remained bullish that demand would improve next year.

“We continue to believe that market demand is the most important indicator when assessing the potash market, and we are confident that total demand levels for 2014 will surpass the levels reached in 2013,” Contesse said.

Meanwhile, a drop in sales of products used for alternative energy sources affected results in the company’s industrial chemicals division, while rising competition meant iodine sales volumes were below expectations, SQM said.

For the first nine months of the year, SQM’s net income was down by 22% to $398.1m from $507.4m a year earlier, while revenues reached $1.71bn, down by 6.6% from $1.83bn.

SQM anticipates that capital expenditure (capex) for 2013 will reach $400m – lower than the previously estimated $500m – while spending in 2014 will be “significantly lower” than this year’s level.

However, SQM will press ahead with plans to boost MOP and potassium sulphate (SOP) production capacity over the next twelve months to reach some 2.3m tonnes.

($1 = €0.74)

By: Simon West

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