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(Kitco News) - Chilean lithium giant Sociedad Quimica y Minera de Chile (NYSE: SQM) yesterday reported net income of US$749.9 million in Q1 2023, a decline of 6% compared to a net income of US$796.1 million in Q1 2022.
The company said that its Q1 2023 gross profit reached US$1,065.6 million (47.1% of revenues), lower than US$1,164.7 million (57.7% of revenues) recorded in Q1 2022.
SQM's revenues totaled US$2,263.9 million in Q1 2023, representing an increase of approximately 12% compared to US$2,019.8 million in Q1 2022. Adjusted EBITDA was US$1,087.7million (adjusted EBITDA margin of 48.0%) in Q1 2023, compared to US$1,186.4 million (adjusted EBITDA margin of 58.7%) in Q1 2022.
Importantly, the company said that revenues from its lithium and derivatives business totaled US$1,646.2 million in Q1 2023, an increase of 13.8% compared to US$1,446.4 million in Q1 2022. SQM added it sold 32.3 thousand tonnes of lithium and derivatives in Q1 2023, which is a decrease of 15% compared to Q1 2022 (38.1 thousand tonnes).
SQM explained that the impact of the lower sales volumes during the first quarter of 2023 was offset by significantly higher average sales prices when compared to the same period last year.
"We believe that because of high inventory levels and weaker demand in China during the first months of the year, the total lithium demand decreased approximately 20% during the first quarter of 2023 compared to the fourth quarter of 2022," the company said in a press release.
Nevertheless, SQM pointed out that the electric vehicles sales volumes continued to grow, with EV sales increasing over 20% in China and over 50% in the US in the first three months of the year compared to the same period last year.
"We believe that the annual global EV sales will be almost 30% higher this year and the total lithium demand will grow another 20% when compared to the previous year. With the demand recovery seen in the last month and this strong growth ahead of us, we expect to see our sales volumes increase in the coming quarters," it added.
The company also noted that in 2023, it will continue to implement its growth plans and expects to invest close to US$1.2 billion in expanding its production capacity in Chile and abroad.
SQM is a leading lithium producer. The company also has other divisions servicing nutrition and industrial chemicals. In the Atacama Desert, located between Chile's first and second regions, SQM has exclusive access to the world's best and largest reserves of caliche ore and brines. The company possesses the most extensive reserves of iodine and nitrate, as well as the highest concentrations of lithium and potassium on record.
In addition, in 2017 the company began diversifying geographically by acquiring new resources to extract lithium from spodumene in Western Australia.
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