Sociedad Química y Minera de Chile S.A. (NYSE:SQM) Q4 2022 Earnings Call Transcript March 2, 2023
Operator: Good morning, and welcome to the SQM Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Irina Axenova of Investor Relations. Please go ahead.
Irina Axenova: Good morning. Welcome to joining SQM’s earnings conference call for the fourth quarter of 2022. This conference call will be recorded and is being webcast live. Our earnings press release and our presentation with a summary of the results have been uploaded to our website where you can also find a link to this webcast. Speaking on the call today will be Ricardo Ramos, Chief Executive Officer; and Gerardo Illanes, Chief Financial Officer; Carlos Diaz, Executive Vice President of Lithium; Felipe Smith, Commercial Vice President of Lithium and Juan Pablo, Bellolio Commercial Vice President of Iodine will be also available to answer any questions. Before we begin, let me remind you that, statements in this conference concerning the company’s business outlook, future economic performances, 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 federal securities laws.
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Any forward-looking statements are estimates, reflecting the best judgment of SQM based on currently available information and involves a number of risks, uncertainties and other factors that 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 our public filings made with the U.S. Securities and Exchange Commission and in our earnings release issued today. And these forward-looking statements should be considered in light of those factors. We assume no obligation to update such statements, whether as a result of our new information, future developments or otherwise, except, as required by law.
I now leave you with our Chief Executive Officer, Ricardo Ramos.
Ricardo Ramos: Thank you, Irina. Good morning and thank you for joining the call today. We are very pleased with the 2022 results we published last night. Leasing business contributed to almost 80% of our gross profit for the year, driven by significantly higher sales volumes and average prices. Our long-term vision for the lithium market investments in technology, innovation and new capacity along with the risks we took and our operational success enable us to make the most of favorable market conditions since last year. Through the public private alliance with CORFO for our total contribution $2 trillion, including corporate taxes surpassed $5 billion in 2022. We see a strong indicators of demand growth in the lithium market driven by the electric vehicle sales growth worldwide, and the investment in renewable energy that require energy storage systems.
We estimate that the total global lithium demand will reach 1.5 million metric tons by 2025 and deliver at least 20% growth in 2023. After unexpected a slowdown in demand during the Chinese New Year celebrations, electric vehicle sales have increased in recent weeks in China, while the U.S. market electric vehicles sales are doubling when compared to last year. This growth rate should continue for the remainder of the year, with major OEMs showing an increase in their production volumes. Consequently, our sales volume during the second half of the year should be higher than compared to the first half of the year. We will continue to invest in growing our lithium production globally. Our capital expenditure plan for the next three years includes investment in lithium iodine and Nitrates capacity expansion in Chile.
Competition of the Mt. Holland project in Australia and lithium refining capacity in China. We are also active on lithium mining exploration and we will continue looking for attractive assets worldwide. This CapEx plan also includes investment in certain activities and initiatives related to our Salar Futuro project, which technically documentation we expect to submit for evaluation to the Chilean authorities in 2024. I would like to highlight our operations success during last year. We successfully completed a ramp up of our lithium capacity, reaching 180,000 metric tons, and finished the year with record high IRM production volume. So, over those 12,000 metric tons. None of these schools have been possible without the continuous dedication, support and commitment of our team at SQL.
Thank you.
Irina Axenova: Operator, we will now open the line for questions.
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