CUSTOMARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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Transcription:

SQM 3Q2018 RESULTS

CUSTOMARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements in this presentation concerning the Company s business outlook, future economic performance, 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 the U.S. Private Securities Litigation Reform Act of 1995. Any forward-looking statements are estimates, reflecting the best judgment of SQM management based on currently available information and involve a number of risks, uncertainties and other factors that are outside SQM s control 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 SQM s public filing made with the U.S. Securities and Exchange Commission, specifically SQM s most recent annual report on Form 20-F. All forward-looking statements are based on information available to SQM on the date hereof and SQM assumes no obligation to update such statements whether as a result of new information, future developments or otherwise, except as required by law. 2

SQM at a Glance 2 0 1 8 L T M (1) R e v e n u e s : U S $ 2. 3 b i l l i o n 2 0 1 8 L T M A d j u s t e d E B I T D A : U S $ 9 1 1 m i l l i o n A d j u s t e d E B I T D A (2) M a r g i n L T M : 4 0 % N F D / E B I T D A : 0. 5 M o o d y s : B a a 1 S t a n d a r d a n d P o o r s : B B B + F E R T I L I Z E R S S P E C I A L T Y C H E M I C A L S P o t a s s i u m S p e c i a l t y P l a n t N u t r i e n t s I o d i n e & D e r i v a t i v e s L i t h i u m & D e r i v a t i v e s I n d u s t r i a l C h e m i c a l s Contribution to Revenue vs. Gross Profit 9M2018 (2) 54% 13% 5% 36% 22% 14% 13% 29% 6% 5% Revenue Gross Profit (1) Twelve months ended September 30, 2018 (2) Adjusted EBITDA = gross profit - administrative expenses + depreciation and amortization. Adjusted EBITDA margin = Adjusted EBITDA/revenues (3) Excluding Others 3

Natural Resources and Experience Caliche Ore Sustainable Operations in the North of Chile Caliche ore is only found in Chile The world s largest deposits of nitrates and iodine Proprietary mining rights pursuant to exploitation concessions Salar Brines High concentrations of potassium and lithium High evaporation rates Production rights are pursuant to a lease agreement with CORFO until 2030 Technology and experience to efficiently operate NaNO 3 + KCl = KNO 3 Sodium nitrate + Potassium chloride = Potassium nitrate + (Sodium chloride) Technology and experience to efficiently operate 4

US$ Million US$ Million Review of Results SPN Iodine Lithium I.Chem. Potassium P Q Revenue Contribution 3Q2018/3Q2017 Gross Profit Contribution 3Q2018/3Q2017 800 300 700 600 500 559 9 21 5 559 568 (15) 574 574 (33) 545 545 (2) 543 250 200 150 189 12 12 189 201 9 0 164 (40) 173 173 (10) 163 163 400 100 Prices increased in all business lines except SPN in the 3Q2018 compared to the same period of 2017. Significantly higher iodine prices and SPN sales volumes outweighed the impact of lower lithium and potassium sales volumes in the 3Q2018. 5

Payments 1 Production allowance Li 2 CO 3 LiOH US$/MT % US$/MT % <4,000 6.80% <5,000 6.80% 4,000-5,000 8.00% 5,000-6,000 8.00% 5,000-6,000 10.00% 6,000-7,000 10.00% New Agreement CORFO Total production quota until 2030: 349,553 MT of LME: New quota: 185,767 Additional quota: 112,723 Efficiency quota: 51,063 Reminder original quota: 64,816 Total 2.2 million MT of LCE 6,000-7,000 17.00% 7,000-10,000 17.00% 7,000-10,000 25.00% 10,000-12,000 25.00% >10,000 40.00% >12,000 40.00% Capacity Expansion Options Expansion 1: 50,000 MT by 2023 Expansion 2: 100,000 MT (in 4 stages of 25k MT) Example 2 Original Agreement % US$/MT Li 2 CO 3, LiOH 6.80% 884 KCL 1.80% 5.04 New Agreement Li 2 CO 3 23.58% 3,772 LiOH 19.56% 3,130 KCL 3.00% 9.60 SQM Capacity Expansions in Chile Li 2 CO 3 : 70,000 MT to 120,000 MT in 2019 120,000 MT to 180,000 MT in 2021 LiOH: 6,000 MT to 13,500 MT in 2018 1 Effective as of April 10, 2018 2 Avg. price lithium: US$16,000/MT, potassium: US$320/MT 6

Lithium and Derivatives Lithium Carbonate & Hydroxide 2018 LTM 1 : 23% Market Share 2 43.6k MT Sales Volumes US$680 mm Revenues 55% Contribution to Gross Profit SQM Lithium Projects Chile LITHIUM CARBONATE Current capacity 70,000 MT Expansion to 120,000 MT in 2019 Expansion to 180,000 MT in 2021 LITHIUM HYDROXIDE Current capacity 13,500 MT Australia Mt. Holland fully integrated project, 50/50 JV One of the world s most significant hard rock lithium deposits. Expected to be at the low end of the global hard rock cost curve Focus on lithium hydroxide production, estimated capacity of 45,000 MT of LiOH/year Estimated commission date: 2020 - spodumene concentrate, 2021 - LiOH 1 Twelve months ended September 30, 2018 2 As of December 31, 2017 7

Iodine and Derivatives Iodine 2018 LTM 1 : 35% Market Share 2 13.1k Sales Volumes US$304 mm Revenues 12% Contribution to Gross Profit Lowest-cost producer Main uses: X-ray contrast media - 23%, pharmaceuticals 13%, LCD - 12%. Current capacity: 14,000 MT per year Average prices in 3Q2018 ~US$25 Global demand in 2018 ~37,000 MT (~3% annual growth) 1 Twelve months ended September 30, 2018 2 As of December 31, 2017 8

Specialty Plant Nutrients Potassium Nitrate (KNO3) 2018 LTM 1 : 54% KNO3 Market Share 2 1,099k MT Sales Volumes US$793 mm Revenues 22% Contribution to Gross Profit Potassium nitrate (KNO3) provides unique benefits: chlorine-free, water soluble, and fast absorption Water soluble segment grows at ~10% per year, KNO3 ~6% SQM competitive advantage: Access to reserves of both potassium and nitrates Developed distribution network and diverse customer base 16 NPK plants around the world Current production capacity: 1.3 million MT/year, expansion to 1.5 million MT/year in 2018 1 Twelve months ended September 30, 2018 2 As of December 31, 2017 9

Potassium Potassium Chloride & Sulfate 2018 LTM 1 : <3% Market Share 2 964k MT Sales Volumes US$298 mm Revenues 5% Contribution to LTM Gross Profit MOP is the most common used potassium based fertilizer 2018 market size ~ 62 million MT Major players in Belarus, Canada and Russia SQM competitive advantage: Low-cost producer of MOP Flexibility to produce MOP, SOP and KNO3 depending on market needs 1 Twelve months ended September 30, 2018 2 As of December 31, 2017 Expected sales in 2018 ~<1 million MT, lower sales volumes expected in 2019 10

Industrial Chemicals Solar Salts 2018 LTM 1 : 182k MT Sales Volumes US$149 mm Revenues 6% Contribution to Gross Profit Various traditional uses for industrial nitrates related to glass, metal treatment and explosives Solar Salts: o A 50MW parabolic CSP plant with 7.5 hours of indirect storage requires ~30k MT of solar salts o Project being developed in Europe, Northern and Southern Africa, Middle East, Chile, China and Australia o Prices remain flat in 2018 o Sales volumes ~ 48k MT in 2018 SQM competitive advantage: Operational flexibility with certain industrial sodium and potassium nitrate products Production of both potassium nitrate and sodium nitrate, the two raw materials in solar salts production 1 Twelve months ended September 30, 2018 11

Capex Historical Maintenance CAPEX: ~US$100 million 2016-2018: Lithium Hydroxide Expansion to 13.5k MT: ~US$30 million 2017-2018: Potassium Nitrate Expansion to 1.5m MT: ~US$50 million 2017-2021: Lithium Carbonate Expansion to 180k MT: ~US$525 million 2017-2018: Iodine capacity expansion to 14k MT: ~US$30 million 2018 CAPEX in Chile: ~US$360 million 12

Other Relevant Topics Ownership Structure (1) (2) Dividend Policy (3) Ownership Structure 1 2018 Net Income distribution Dividend in 3 interim Policy 2 & 1 final dividend 100% 80% 60% Sep 30, 2018 27% 15% (a) cash+other current financial assets current financial liabilities 2.5 2.0 1.5 37 2% 24% (b) total liabilities total equity 1.1 1.2 1.3 1.0 32% If none of the above parameters is met: 50% of 2018 Net Income Dividends announced and paid in 2018 Bank of New York (ADRs) Nutrien Pampa Group Kowa Group Other Chile May 2018 US$110 million Final dividend 4Q2017 May 2018 US$100 million Special dividend June 2018 US$114 million Interim dividend 1Q2018 September 2018 US$134 million Interim dividend 2Q2018 December 2018 US$84 million Interim dividend 3Q2018 (1) Registered shareholders as of November 20, 2018 (2) On May 17, 2018, Nutrien Ltd. announced the sale of its Series A shares to Tianqi Lithium (3) Please see the full version on our website at www.sqm.com 13

SQM C O N T A C T I N F O R M A T I O N : G e r a r d o I l l a n e s : C F O & V P o f C o r p o r a t e F i n a n c e g e r a r d o. i l l a n e s @ s q m. c o m K e l l y O B r i e n : H e a d o f I n v e s t o r R e l a t i o n s k e l l y. o b r i e n @ s q m. c o m I r i n a A x e n o v a : I n v e s t o r R e l a t i o n s i r i n a. a x e n o v a @ s q m. c o m