Sqm corp pres 2q16_final

Sqm corp pres 2q16_final

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  August 2016
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  2Corporate Presentation /August 2016 Statements in this presentation concerning the Company’s business outlook or 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. Any forward-looking statements are estimates, reflecting the best judgment of SQM based on currently available information and involve 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 the public filing made with the Securities and Exchange Commission, and forward-looking statements should be considered in light of those factors. Important Notice
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  1INVESTMENT HIGHLIGHTS
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  4Corporate Presentation /August 2016 (1) LTM: Twelve months ended June 30, 2016 (2) EBITDA: gross profit – SGA + depreciation & amortization FERTILIZERS SPECIALTY CHEMICALS Specialty Plant Nutrients Potassium Iodine & Derivatives Lithium & Derivatives Industrial Chemicals  Financial Profile  Revenue LTM(1) : US$ 1.7 billion  EBITDA(2) LTM : US$ 681 million  EBITDA Margin LTM : ~ 39% World Leader in Specialty Businesses: Potassium Nitrate, Iodine, Lithium & Solar Salts 37% 14% 18% 4% 23% SQM at a Glance  Healthy Credit Metrics  Debt/Equity Ratio: .84  NFD/EBITDA LTM .77  Moody’s: Baa1  Standard and Poor’s BBB Contribution to Revenue LTM
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  5Corporate Presentation /August 2016 Sales to thousands of customers in over 110 countries. 110 20 Offices and commercial representation  Sales diversified by industry and region  No customer represents more than 4% of sales Diverse Operations Sales Distribution
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  6Corporate Presentation /August 2016 Sodium nitrate + Potassium chloride = Potassium nitrate + (Sodium chloride)  Caliche ore is only found in Chile  The world’s largest deposits of nitrates and iodine  Proprietary mining rights pursuant to exploitation concessions  Low processing costs due to its high concentrations of potassium and lithium  High evaporation rates  Production rights are pursuant to a lease agreement with CORFO until 2030 Caliche Ore Salar Brines High-quality reserves  low-cost operations Unique and Abundant Natural Resources + NaNO3 KCl = KNO3  Sustainable Operations in the North of Chile.
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  2Business Lines
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  8Corporate Presentation /August 2016 <3% 2015 Market Share(1) Potassium 391mm LTM Revenues US$ 1.324kMT LTM(2) Sales Volumes 14% Contribution to LTM Gross Profit SQM Highlights  Low-cost producer of potassium chloride  Brazil remains the most important market for SQM MOP sales  Flexibility to produce potassium chloride, potassium sulfate, and potassium nitrate depending on market needs  Effective capacity ~ 2.0 million MT  Higher sales volumes expected for 2016 Potassium Chloride: Industry Dynamics  Potassium chloride is the most commonly used potassium-based fertilizer. Sold all over the world  2015 global demand: ~57-58 million MT(1)  2016 est. global demand: ~58-59 million MT(1)  Major players in Belarus, Canada, and Russia  Slight price recovery expected 2H2016 (1) SQM estimates (2) LTM: Twelve months ended June 30, 2016
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  9Corporate Presentation /August 2016 47% 2015 KNO3 Market Share(1) Specialty Plant Nutrition 648mm LTM Revenues US$ 844kMT LTM Sales Volumes (2) (3) 35% Contribution to LTM Gross Profit SQM Highlights  Access to reserves of potassium and nitrate  Developed distribution network and diverse customer base  Lower price elasticity relative to potassium chloride  Focus on water soluble segment  KNO3 capacity expansion  Increase 1 million  1.5 million MT/year  200K MT from increased efficiency at existing plants (2016-2017)  300K MT from new plant (operating mid- 2018; estimated capex US$140 million) Industry Dynamics  Potassium nitrate (KNO3) provides unique benefits: Chlorine-free, water soluble, and fast absorption.  Demand drivers: Higher cost of land, water scarcity, increased demand for higher quality crops  2015 global potassium nitrate demand: ~1 million MT(1)  Water soluble segment drives demand growth (1) SQM estimates. Excludes Chinese KNO3 market. (2) LTM: Twelve months ended June 30, 2016 (3) SPN sales volumes include KNO3 and other specialty fertilizers
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  10Corporate Presentation /August 2016 26% 2015 Market Share(1) Iodine and Derivatives 242mm LTM Revenues US$ 9.5kMT LTM(2) Sales Volumes 10% Contribution to LTM Gross Profit SQM Highlights  Low-cost producer  Developed distribution and sales network  Effective capacity ~10,000 MT per year  Prices have been decreasing. Lower average prices expected in 2016. Industry Dynamics  Main uses: X-ray contrast media, LCD, pharmaceuticals and sanitizers  Global demand: CAGR of ~3% for the period 2004-2015(1)  Expected global demand 2016: ~34,000 MT(1)  Limited sources of iodine worldwide:  Chile 56% (SQM 26%)  Japan (including recycling) 31%  Total recycling 18% (1) SQM estimates (2) LTM: Twelve months ended June 30, 2016
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  11Corporate Presentation /August 2016 26% 2015 Market Share(1) Lithium and Derivatives 315mm LTM Revenues US$ 44kMT LTM(2) Sales Volumes 36% Contribution to LTM Gross Profit SQM Highlights  Leading lithium chemicals producer in the world and lowest cost producer(1).  Produce lithium carbonate, lithium hydroxide, and lithium chloride.  Current lithium carbonate plant capacity: 48K MT/year Industry Dynamics  Main uses: batteries, lubricant, glass, pharmaceuticals. Future potential related to batteries for e-cars.  2015 global lithium chemicals demand: 155K MT(1).  Demand growth of ~10-15% expected in 2016(1).  Expect new supply in 2016 (1) SQM estimates (2) LTM: Twelve months ended June 30, 2016  Higher sales volumes expected in 2016: +20%  Minera Exar JV in Argentina:  Total capacity 50K MT/year  First stage 25K MT; estimated capex US$425 million pre-VAT  Start production by 2019
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  12Corporate Presentation /August 2016 Industrial Chemicals 75mm LTM Revenues US$ 95kMT LTM(1) Sales Volumes 3% Contribution to LTM Gross Profit SQM Highlights  Operational flexibility with certain industrial sodium and potassium nitrate products  Solar Salts:  SQM produces both potassium nitrate and sodium nitrate, the two raw materials in solar salt production  Portion of 2016 solar salts sales volumes will likely be postponed to 2017 Industry Dynamics  Various traditional uses for industrial nitrates related to glass, metal treatment, water treatment, and explosives  Solar Salts:  Intl. Energy Association expects installed capacity of concentrated Solar Power (CSP) to double by 2020, and supply 20% of the world electricity by 2050.  As a reference, a 50MW parabolic trough CSP plant with 7.5 hours of indirect storage requires about 30K MT of solar salts  Projects being developed globally (1) LTM: Twelve months ended June 30, 2016
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  3Other Information
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  14Corporate Presentation /August 2016 Capital expenditure reached approximately US$111 million, primarily related to:  Optimization of the potassium nitrate facilities  Increasing iodine and nitrate production in Nueva Victoria  Exploration and construction of new wells at Salar de Atacama  Maintenance across all production units in order to ensure fulfillment of production targets, as well as improvements at port of Tocopilla. Capital Expenditures 2015: Capital Expenditures 2016: US$150 million(1) Capital Expenditure Program (1) Excluding Minera Exar joint venture
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  15Corporate Presentation /August 2016  Market conditions  Iodine prices  Potash prices  Arbitration with CORFO  Class action lawsuit  Dividend policy for 2016: 50% of net income  Special dividend paid in May 2016: US$150 million  JV to develop Caucharí-Olaroz lithium project  Strong demand growth in lithium market  higher volumes and prices  Potassium nitrate capacity expansion: positioned to supply growing solar salts and water soluble fertilizer markets  Strong cost position  Strong balance sheet Other Relevant Topics Ownership Structure(1) Dividends Other Considerations SQM Business Opportunities Pampa Group and Kowa Group 32% Potash Corp 32% Bank of New York (ADRs) 23% Others Chile 13% (1) As of June 30, 2016
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  16Corporate Presentation /August 2016 Revenue Contribution 1H2016/1H2015 Second Quarter 2016 Results US$Million Gross Profit Contribution 1H2016/1H2015 871,8 881,5 -3,1 -20,6 92,4 -22 -38,8 2,4 700 800 900 1000 295,3 260,5 -14,0 -24,5 71,2 -8,6 -54,4 -4,3 100,0 150,0 200,0 250,0 300,0 350,0 Impact of lower pricing outweighs higher volumes in most business lines SPN Iodine Lithium I. Chem. Potassium P Q
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  17Corporate Presentation /August 2016 (1) Net income for 2015 and LTM June 2016 includes one-time charge of US$57.7 million related to restructuring iodine and nitrates facilities (2) EBITDA: Gross Profit – administrative expenses + depreciation & amortization (3) Net Financial Debt: interest bearing debt net of cash and cash equivalents, considering the effects of derivatives Revenues Net Income(1) EBITDA(2)/Revenues NFD(3)/EBITDA Financial Performance 2.145 2.429 2.203 2.014 1.728 1.738 0 500 1.000 1.500 2.000 2.500 3.000 2011 2012 2013 2014 2015 LTM Jun 16 US$Million 543 649 467 296 213 200 0 100 200 300 400 500 600 700 2011 2012 2013 2014 2015 LTM Jun 16 US$Million 45% 46% 38% 37% 42% 39% 2011 2012 2013 2014 2015 LTM Jun 16 0,79x 0,83x 1,06x 1,03x 0,73x 0,77x 2011 2012 2013 2014 2015 LTM Jun 16
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  18Corporate Presentation /August 2016 Investment Highlights Unique and abundant natural resources Sales in diverse industries, sold globally SPN: Largest global producer Industrial Chemicals: Dominant player in a niche market Potassium: Uniquely located to supply major markets Lithium: Lowest-cost producer Iodine: Leading player in strong market with diverse uses Metallic Exploration: Exploration with low risk Solid financial position and financial management
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  Contact Information: Gerardo Illanes:VP of Finance and IR, [email protected] Kelly O’Brien: Head of Investor Relations, [email protected]