SQM Reports Earnings For The First Quarter 2015

SANTIAGO, Chile, May 20, 2015 /PRNewswire/ -- Sociedad Quimica y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported today earnings for the three month period ended March 31, 2015 of US$71.7 million (US$0.27 per ADR), a decrease from US$81.0 million (US$0.31 per ADR) for the three month period ended March 31, 2014. Gross margin⁽³⁾ reached US$130.7 million (33.7% of revenues) for the three month period ended March 31, 2015, lower than US$154.8 million (29.0% of revenues) recorded for the three month period ended March 31, 2014. Revenues totaled US$387.5 million for the three month period ended March 31, 2015, representing a decrease of 27.4% compared to US$534.1 million reported for the three month period ended March 31, 2014.

SQM's Chief Executive Officer, Patricio de Solminihac, stated, "The first quarter was met with challenges on many levels. As you know, the Company has been responding to a number of inquiries from Chilean authorities including the Public Prosecutor and the Chilean Internal Revenue Service. We are taking all of these issues seriously, and will continue to work diligently with our tax and legal advisors to collaborate with the competent authorities."

"There have been opportunities during the first part of the year as well. On April 24, our shareholders elected a new Board of Directors, whom have been working diligently over the past month to understand the challenges and opportunities that the company faces. I am confident that their expertise in various fields, including corporate governance, will be invaluable in supporting and guiding SQM in the future."

"Even though revenues were lower than expected, margins were very high. Lower revenues were impacted by weaker volumes in potassium chloride resulting from delays. Sales volumes will be significantly higher in subsequent quarters, but despite this, we expect our total sales volumes for 2015 will be lower than sales volumes seen in 2014."  

"The Specialty Plant Nutrition business line also saw lower sales volumes during the first quarter of 2015 when compared to the fourth quarter of 2014. However, the market is seeing strong growth, and in line with our expectations, we expect to see growth of over 5% in the sales volumes of this business line during 2015 when compared to 2014."

"As anticipated, prices in the iodine market fell during the first quarter of 2015, just over 15% when compared to the fourth quarter of 2014, and average prices today are hovering around US$30. Our sales volumes were strong during the first quarter, and we expect to finish the year with volumes slightly higher than volumes seen in 2014. The lithium business continues to see strong market growth, and average prices during the first quarter were close to 10% higher than prices seen during the fourth quarter of 2014."

"In the industrial chemical business line, we see very positive signs in the solar salt⁽⁴⁾ business, and expect to move forward some sales anticipated for 2016 to 2015. This shift should bring sales volume expectations for 2015 to over 75,000 metric tons, an increase of over 50,000 metric tons when compared to last year. We have closed contracts for projects in Chile and South Africa, and continue to work to close more."

"Despite the challenges described in each of our business lines, we were able to increase our margins during the first quarter of 2015 reaching an EBITDA margin of 45.7%, which is significantly higher than EBITDA margins seen during the past nine quarters. We attribute these higher margins to our cost saving initiatives, and to the product mix seen in 2015, when higher percentages of our revenues came from higher margin products, such as iodine and lithium.  As sales volumes of potassium and nitrates should partially recover during the next quarters, these margins could decrease; however, we expect that even considering the lower iodine prices, EBITDA margins will be higher in 2015 than in 2014, mainly due to our cost saving initiatives that started in 2013."

Mr. de Solminihac closed by saying, "We remain focused on our core businesses, and as I have said in the past, we have great assets and a proven track record of growth. Together with the new Board, we will work to execute successful operating and growth strategies focused on maximizing value."

For the complete version of this press release, please visit our IR Web site: http://ir.sqm.com/English/investor-relation/default.aspx

Notes:

1. Net income refers to the comprehensive income attributable to controlling interests.
2. EBITDA = gross profit - administrative expenses + depreciation and amortization. EBITDA margin = EBITDA/revenues.
3. Gross margin corresponds to consolidated revenues less total costs, including  depreciation and amortization and excluding administrative expenses.
4. Solar salts are a mix of 60% sodium nitrate and 40% potassium nitrate used for thermal energy storage.
5. A significant portion of SQM's costs of goods sold are costs related to common productive processes (mining. crushing. leaching. etc.) which are distributed among the different final products. To estimate gross profit by business line in both periods covered by this report, the Company employed similar criteria on the allocation of common costs to the different business areas. This gross margin distribution should be used only as a general and approximated reference of the margins by business line.

About SQM

SQM is an integrated producer and distributor of specialty plant nutrients, iodine, lithium, potassium-related fertilizers and industrial chemicals.  Its products are based on the development of high quality natural resources that allow the Company to be a leader in costs, supported by a specialized international network with sales in over 110 countries. SQM's development strategy aims to maintain and strengthen the Company's position in each of its businesses.

The leadership strategy is based on the Company's competitive advantages and on the sustainable growth of the different markets in which it participates. SQM's main competitive advantages in its different businesses include:

• Low production costs based on vast and high quality natural resources;
• Know-how and its own technological developments in its various production processes;
• Logistics infrastructure and high production levels that allow SQM to have low distribution costs;
• High market share in all its core products;
• International sales network with offices in 20 countries and sales in over 110 countries;
• Synergies from the production of multiple products that are obtained from the same two natural resources;
• Continuous new product development according to the specific needs of its different customers;
• Conservative and solid financial position.

For further information, contact:

Gerardo Illanes 56-2-24252022 / gerardo.illanes@sqm.com
Kelly O'Brien. 56-2-24252074 / kelly.obrien@sqm.com 
Carolyn McKenzie 56-2-24252280 / carolyn.mckenzie@sqm.com

For media inquiries, contact:

Maria Jose Velozo / maria.jose.velozo@sqm.com 
Alvaro Cifuentes / Alvaro.cifuentes@sqm.com 
Tamara Rebolledo / Tamara.rebolledo@sqm.com  (Northern Region)

Cautionary Note Regarding Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as: "anticipate," "plan," "believe," "estimate," "expect," "strategy," "should," "will" and similar references to future periods.  Examples of forward-looking statements include, among others, statements we make 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.

Forward-looking statements are neither historical facts nor assurances of future performance.  Instead, they are estimates that reflect the best judgment of SQM management based on currently available information.  Because forward-looking statements relate to the future, they involve a number of risks, uncertainties and other factors that are outside of our control and could cause actual results to differ materially from those stated in such statements. Therefore, you should not rely on any of these forward-looking statements.  Readers are referred to the documents filed by SQM with the United States Securities and Exchange Commission, specifically the most recent annual report on Form 20-F, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. 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.