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Sociedad Quimica (SQM) Q1 Earnings and Sales Miss Estimates

Sociedad Quimica y Minera de Chile S.A. SQM recorded earnings of $2.63 per share for first-quarter 2023, down from $2.79 in the year-ago quarter. Earnings per share for the reported quarter missed the Zacks Consensus Estimate of $3.12.

The company registered revenues of $2,263.9 million for the quarter, up around 12% year over year. It, however, missed the Zacks Consensus Estimate of $2,435 million. The company saw record high average prices and increased sales volumes in iodine business in the reported quarter. It also witnessed some volume recovery in the potassium business. However, lithium sales volumes were lower year over year due to softer demand, especially in China.

 

Sociedad Quimica y Minera S.A. Price, Consensus and EPS Surprise

 

Sociedad Quimica y Minera S.A. Price, Consensus and EPS Surprise
Sociedad Quimica y Minera S.A. Price, Consensus and EPS Surprise

Sociedad Quimica y Minera S.A. price-consensus-eps-surprise-chart | Sociedad Quimica y Minera S.A. Quote

 

Segment Highlights

Revenues from the Lithium and Derivatives segment rose 14% year over year to $1,646.2 million in the reported quarter. The upside was driven by strong sales prices that more than offset the impact of lower sales volumes.

The Specialty Plant Nutrients ("SPN") segment raked in revenues of $220.9 million, down around 20% year over year. Sales were hurt by reduced sales volumes on lower global potassium nitrate demand.

Revenues from the Iodine and Derivatives unit came in at $239.6 million, up around 57% year over year. The segment benefited from increased sales volumes and record high average prices.

Revenues from the Potassium Chloride and Potassium Sulfate business fell roughly 24% year over year to $86.9 million. Sales were impacted by lower average sales prices and sales volumes.

The Industrial Chemicals unit recorded sales of $65.9 million, up around 144% year over year, driven by higher sales volumes.

Financials

The company’s cash and cash equivalents were $2,088.6 million at the end of the quarter, down around 21% on a sequential basis. Long-term debt was $2,417.6 million, up around 1% year over year.

Outlook

Moving ahead, the company envisions lithium demand to rise 20% year over year in 2023. It expects lithium sales volumes increase in the coming quarters on the back of demand recovery. In SPN, the company expects some volume recovery in the second half of 2023.

In Iodine and Derivatives, SQM sees demand in the contrast media segment to remain strong and potentially grow around 7% this year, notwithstanding an anticipated flat year-on-year global demand growth. It expects to grow sales volumes to support this demand growth.

The company also expects its potassium sale volumes to exceed 500,000 metric tons in 2023.

Price Performance

Shares of Sociedad Quimica are down 19.5% over a year compared with the industry’s decline of 37%.

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Zacks Rank & Other Key Picks

Sociedad Quimica currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, PPG Industries, Inc. PPG and Linde plc LIN.

Steel Dynamics currently sports a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 3.9% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 10.7%, on average. STLD has gained around 23% in a year.

PPG Industries currently carries a Zacks Rank #2. The Zacks Consensus Estimate for PPG's current-year earnings has been revised 11.2% upward in the past 60 days.

PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG has gained around 15% in a year.

Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.

Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 5.9% on average. LIN’s shares have gained roughly 15% in the past year.

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