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Sociedad Quimica Y Minera SA (SQM)
NYSE:SQM
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Sociedad Quimica Y Minera SA
(NYSE:SQM)
60Neutral
Positive Factors
Commodity Markets
SQM is seeing other benefits from very strong iodine markets and improving potash fertilizer markets.
Market Performance
The road to Chilean elections provides support to SQM shares, with the MSCI Chile index up 19.6% in US$ terms, making Chile a more appealing destination for investors.
Strategic Partnerships
The potential completion of the deal with Codelco and the stabilization of the lithium market are key to removing uncertainties around SQM and driving the shares.
Negative Factors
Financial Performance
SQM reported another weaker than expected result in the 3Q24, with EBITDA of US$339mn, 16% below our estimate and 12% below Visible Alpha consensus, and down 57%YoY.
Market Sentiment
Global lithium remains mixed, with prices expected to decline and order backlogs stalling, affecting the overall sentiment in the lithium market.
Pricing Challenges
Lithium prices of US$9.7k/ton were below the expected US$11k/ton, and SQM is guiding for lower prices in Q4.
Sociedad Quimica Y Minera SA (SQM) vs. S&P 500 (SPY)
Market Cap
$10.81B
Dividend Yield3.46%
Average Volume (3M)1.26M
Price to Earnings (P/E)―
Beta (1Y)0.74
Revenue Growth-39.35%
EPS Growth-120.09%
CountryUS
Employees8,344
SectorBasic Materials
Sector Strength59
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)-1.42
Shares Outstanding142,818,910
10 Day Avg. Volume1,011,308
30 Day Avg. Volume1,261,442
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.68
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$47.67Price Target Upside30.03% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Sociedad Quimica Y Minera SA Business Overview & Revenue Model
Company DescriptionSociedad Química y Minera de Chile S.A. produces and distributes specialty plant nutrients, iodine and its derivatives, lithium and its derivatives, potassium chloride and sulfate, industrial chemicals, and other products and services. The company offers specialty plant nutrients, including potassium nitrate, sodium nitrate, sodium potassium nitrate, specialty blends, and other specialty fertilizers. It also provides iodine and its derivatives for use in medical, pharmaceutical, agricultural, and industrial applications comprising x-ray contrast media, polarizing films for LCD and LED, antiseptics, biocides and disinfectants, pharmaceutical synthesis, electronics, pigments, and dye components. In addition, the company offers lithium carbonates for various applications that include electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-resistant glass, air conditioning chemicals, continuous casting powder for steel extrusion, primary aluminum smelting process, pharmaceuticals, and lithium derivatives, as well as ingredient in manufacturing of gunpowder. Further, it supplies lithium hydroxide for the lubricating greases industry, as well as cathodes for batteries. Additionally, it offers potassium chloride and potassium sulfate for various crops, including corn, rice, sugar, soybean, and wheat; industrial chemicals, including sodium nitrate, potassium nitrate, potassium chloride, and solar salts; and other fertilizers and blends. The company operates in Chile, Latin America and the Caribbean, Europe, North America, Asia, and internationally. Sociedad Química y Minera de Chile S.A. was incorporated in 1968 and is headquartered in Santiago, Chile.
How the Company Makes MoneySQM generates revenue primarily through the extraction, production, and sale of lithium, specialty plant nutrients, iodine, and industrial chemicals. The company's key revenue streams include lithium products, which are in high demand for electric vehicle batteries, driving substantial sales growth. Additionally, SQM capitalizes on the agricultural sector by providing specialty plant nutrients like potassium nitrate and potassium sulfate that enhance crop yields. Iodine products also contribute significantly to its earnings, serving essential roles in pharmaceuticals and industrial applications. Strategic partnerships and long-term contracts with major global companies in the electric vehicle and agricultural sectors further bolster SQM's financial performance, ensuring steady demand for its diverse product offerings.
Sociedad Quimica Y Minera SA Financial Statement Overview
Summary
Sociedad Quimica Y Minera SA is facing financial challenges with declining revenues, negative net income, and increased leverage. Operational margins are under pressure, and cash flow generation is weak. However, the company maintains a solid asset base and equity, providing some resilience in the short term.Income Statement
Sociedad Quimica Y Minera SA has experienced a significant decline in revenue from $7.47 billion in 2023 to $4.53 billion in 2024, indicating a negative revenue growth trend. The net profit margin is negative in 2024 due to a net loss, reflecting profitability challenges. While EBIT and EBITDA margins remain relatively strong, they have decreased compared to prior years, indicative of reduced operational efficiency.45
Neutral
Balance Sheet
The company exhibits a moderate debt-to-equity ratio, which increased from 0.82 in 2023 to 0.93 in 2024, indicating higher leverage. The equity ratio decreased slightly, suggesting a minor reduction in financial stability. However, the company's total assets and equity remain substantial, providing a buffer against liabilities.60
Neutral
Cash Flow
The cash flow analysis shows a troubling trend with operating cash flow at zero in 2024, down from negative figures in 2023. Free cash flow is positive in 2024 but has significantly decreased from prior years, indicating challenges in generating cash from operations. The free cash flow to net income ratio is unfavorable due to the net loss in 2024.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.53B | 7.47B | 10.71B | 2.86B | 1.82B | Gross Profit |
| 1.33B | 3.07B | 5.74B | 1.09B | 482.87M | EBIT |
| 1.07B | 2.89B | 5.53B | 927.29M | 302.50M | EBITDA |
| 1.17B | 3.23B | 5.80B | 1.13B | 516.62M | Net Income Common Stockholders |
| -404.36M | 2.01B | 3.91B | 585.45M | 164.52M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.44B | 2.36B | 3.61B | 2.42B | 854.56M | Total Assets |
| 11.50B | 11.71B | 10.82B | 7.04B | 4.82B | Total Debt |
| 4.82B | 4.55B | 2.91B | 2.61B | 1.95B | Net Debt |
| 3.44B | 3.50B | 255.44M | 1.09B | 1.44B | Total Liabilities |
| 6.30B | 6.14B | 5.89B | 3.83B | 2.66B | Stockholders Equity |
| 5.16B | 5.53B | 4.90B | 3.18B | 2.12B |
| Cash Flow | Free Cash Flow | |||
| 302.89M | -1.28B | 3.00B | 357.80M | -140.01M | Operating Cash Flow |
| 0.00 | -178.29M | 3.91B | 822.52M | 182.23M | Investing Cash Flow |
| -1.21B | -1.48B | -909.40M | -1.01B | -167.09M | Financing Cash Flow |
| 282.38M | 47.91M | -2.00B | 1.21B | -94.13M |
Sociedad Quimica Y Minera SA Technical Analysis
Negative
36.66
Price Trends
40.35
Negative
39.37
Negative
39.23
Negative
Market Momentum
0.10
Positive
42.98
Neutral
10.79
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SQM, the sentiment is Negative. The current price of 36.66 is below the 20-day moving average (MA) of 41.98, below the 50-day MA of 40.35, and below the 200-day MA of 39.23, indicating a bearish trend. The MACD of 0.10 indicates Positive momentum. The RSI at 42.98 is Neutral, neither overbought nor oversold. The STOCH value of 10.79 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SQM.
Sociedad Quimica Y Minera SA Risk Analysis
Sociedad Quimica Y Minera SA disclosed 50 risk factors in its most recent earnings report. Sociedad Quimica Y Minera SA reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sociedad Quimica Y Minera SA Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $8.72B | 9.84 | 16.11% | 4.34% | 1.91% | 2.94% | |
66 Neutral | $10.31B | 14.52 | 12.69% | ― | -2.64% | 120.05% | |
65 Neutral | $24.75B | 35.38 | 3.12% | 2.62% | 2.64% | 80.37% | |
65 Neutral | $22.50B | 16.62 | 19.13% | 2.71% | -4.59% | 11.09% | |
60 Neutral | $10.81B | ― | -7.56% | 3.46% | -39.35% | -120.09% | |
47 Neutral | $2.36B | -3.00 | -21.73% | 3.58% | 3.97% | -28.71% | |
42 Neutral | $6.88B | ― | -12.18% | 2.76% | -44.08% | -183.44% |
* Basic Materials Sector Average
Performance Comparison
SQM
Sociedad Quimica Y Minera SA
36.66
-13.00
-26.18%
ALB
Albemarle
58.51
-70.85
-54.77%
EMN
Eastman Chemical
75.53
-21.67
-22.29%
PPG
PPG Industries
99.15
-37.74
-27.57%
DD
DuPont de Nemours
59.14
-15.72
-21.00%
AVTR
Avantor
15.13
-10.54
-41.06%
Sociedad Quimica Y Minera SA Earnings Call Summary
Earnings Call Date: Mar 4, 2025 | % Change Since: -4.46% | Next Earnings Date: May 15, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant achievements in lithium sales volumes and iodine segment performance, boosted by strong demand and strategic investments in capacity expansion. However, the positive aspects were balanced by challenges such as a substantial onetime charge impacting net income, a decline in potash production, and increased costs. The outlook for 2025 remains optimistic, particularly for the lithium market.Highlights
Record-Breaking Lithium Sales Volumes
SQM achieved record sales volumes in 2024, reaching nearly 205,000 metric tons of lithium. The fourth quarter alone saw sales surpassing 58,000 metric tons of lithium carbonate equivalent.
Strong Iodine and Plant Nutrition Performance
The Iodine segment had an exceptional year in 2024, achieving record volumes and benefiting from strong price growth driven by the recovery in demand, especially in the X-ray contrast media application.
Significant Investment in Expansion
In 2024, SQM invested over $1.6 billion in expansion, with plans to allocate approximately $750 million for lithium capacity expansion in 2025 and close to $350 million in the caliche operation.
Optimistic Lithium Market Outlook
The lithium market is expected to grow approximately 17% in 2025, with SQM's sales volumes anticipated to grow at a similar rate.
Lowlights
Impact of Onetime Charge on Net Income
Net income for 2024 was impacted by a onetime charge of approximately $1.1 billion due to an ongoing dispute regarding the tax treatment of mining activities.
Decline in Potash Production
Potash production is expected to be down 50% due to a focus on lithium production, which affects primarily the sale of potash.
Higher Cost of Sales
Higher cost of sales was noted in the fourth quarter of 2024, attributed to onetime expenditures allocated in Q4 for specific projects.
Company Guidance
During the SQM Fourth Quarter 2024 Earnings Conference Call, the company's financial guidance highlighted several key metrics and projections. Revenues for the full year 2024 slightly exceeded $4.5 billion, with a gross profit of approximately $1.3 billion. Net income was notably impacted by a one-time charge of $1.1 billion related to a tax dispute. The lithium market saw a 25% growth in 2024, driven by electric vehicle demand, with sales volumes reaching nearly 205,000 metric tons. For 2025, SQM anticipates a demand growth of around 17% for lithium, with sales volumes expected to grow at a similar rate. The iodine segment also had a record year, benefiting from strong price growth. Investment in capacity expansion remains a priority, with over $1.6 billion invested in 2024 and plans to allocate approximately $750 million in 2025 for lithium capacity expansion in Chile and abroad. Additionally, $350 million is planned for the caliche operation to boost iron ore capacity. The company's strong financial position supports these investments and provides flexibility for future opportunities.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.