September 2013 Important Notice Statements in this presentation - - PowerPoint PPT Presentation

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September 2013 Important Notice Statements in this presentation - - PowerPoint PPT Presentation

Nov 20, 2023 298 likes •548 views

September 2013 Important Notice Statements in this presentation concerning the Companys business outlook or future economic performances, anticipated profitability, revenues, expenses, or other financial items, anticipated cost synergies and

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September 2013

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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. 2

Important Notice

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Overview Fertilizers Specialty Chemicals Financial Information

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Agenda

Photo: Evaporation Pond - Salar de Atacama, from which we produce potassium & lithium products

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4

SQM at a Glance

  • World Leader in Specialty Businesses: Potassium Nitrate,

Iodine, lithium & Solar Salts

  • Global Company: Based in Santiago, Chile with sales in

more than 100 countries and offices in 20 countries.

  • Strong Financial Profile
  • Revenue LTM:

US$ 2.4 Billion

  • EBITDA† LTM:

US$ 1.0 Billion

  • EBITDA Margin LTM:

~ 42%

  • Highest liquidity in Chile
  • Listed on the Santiago Stock Exchange, and the

NYSE since 1993

  • Most liquid Chilean ADR on the NYSE in 2012
  • One of the five most liquid companies traded in the

Chilean Stock Market in 2012

  • Responsible growth

Specialty Business World Leadership Growth Opportunities 4

† EBITDA: gross profit – SGA + depreciation & amortization

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SQM at a Glance

Specialty Business World Leadership Growth Opportunities

SQM: The world’s largest producer of lithium, iodine, potassium nitrate and solar salts

Fertilizers Specialty Chemicals

Potassium

22%

Specialty Plant Nutrients

24%

Iodine

35%

Lithium

11%

Industrial Chemicals

8%

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% of Contribution to SQM Consolidated Gross Profit for the first half of 2013

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Unique Natural Resources

Caliche Ore Salar Brines

Nitrates Iodine Iodine Potassium Lithium Potassium Specialty Business World Leadership Growth Opportunities 6

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Operational Synergies and a low-cost structure

Caliche Ore Salar Brines

 Operational synergies and low-cost structure

  • Similar processes and industrial technologies are

used across our operations: solar ponds, evaporation, salt harvesting, crystalllizing, drying, among others

  • Raw materials are used in the production of

several different products, reducing costs significantly

  • Specialty Plant Nutrients, Potassium Chloride and

Industrial Chemicals volumes create logistics efficiencies  Commercial flexibility according to market conditions

  • Nitrates in different qualities are used for

industrial applications or for the fertilizer industry

  • Potassium can be sold as potassium chloride or

used as raw material in the production of potassium nitrate

  • Potassium chloride/sulfate allocation

Iodine Nitrates Potassium chloride Potassium sulfate Lithium Potassium nitrate

Specialty Business World Leadership Growth Opportunities 7

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Overview Fertilizers Specialty Chemicals Financial Information

Agenda

Photo: Potassium Nitrate Plant in Coya Sur

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†Market share figures are based

  • n SQM 2012 estimates.

*Figures are based on IFRS

Specialty Business World Leadership Growth Opportunities

Fertilizers: Uniquely Positioned

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Specialty Plant Nutrition

46% world market share KNO3† 1H2013 Revenues* US$379M (32%) 24% of total 1H2013 gross margin*

Potassium

1H2013 Revenues* US$317M (27%) 22% of total 1H2013 gross margin*

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Potassium Nitrate

Niche Market Demand Drivers

  • Chlorine free
  • Fully water soluble
  • 100% Natural origin
  • Fast absorption
  • High cost of land
  • Water scarcity
  • Demand for premium

crops

  • North America and

European vegetable and tomato markets Modern Agricultural Techniques

Fertilizers: Specialty Plant Nutrition

24% of Total 1H2013 Gross Margin

Vegetables 41% Fruits 22% Industrial Crops 28% Others 9%

Main uses: Premium crops*

*SQM estimates 2012

Specialty Business World Leadership Growth Opportunities 10

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Fertilizers: Specialty Plant Nutrition

24% of Total 1H2013 Gross Margin SQM & SPN: World Leader

  • Completion of new potassium nitrate facility in Coya Sur (300,000 tons/year)
  • Developed distribution network: Proximity to customers allows for us to meet changing

needs and new market tendencies

  • Largest Producer: 46% World Market Share*

Other producers: Haifa, Kemapco

  • Prices are expected to decrease in 2013 as a

result of the new potash price environment Specialty Business World Leadership Growth Opportunities 11

* Figures are based on 2012 SQM estimates.

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Fertilizers: Potassium

22% of Total 1H2013 Gross Margin Potassium Chloride

Market Demand Drivers

  • Commodity Fertilizer
  • Market expected to grow in

2013 compared to 2012

  • Largest Global Producers:
  • Potash Corp
  • Uralkali
  • Global crop supply pressure

should have a positive impact

  • n fertilizer prices
  • Remain vigilant in the

potassium market in light of recent announcements by Uralkali

  • Main Uses:
  • Fruits/Vegetables
  • Corn
  • Rice
  • Demand growth still

being seen in Brazil

  • Population Growth
  • Farmer economics &

yield optimization

Specialty Business World Leadership Growth Opportunities 12

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SQM & Potassium: Growth Opportunities

  • Expansion of potassium-based products:
  • Installed capacity of approximately

2 million MT in 2012

  • 2013 production volumes to be similar

to 2012

  • Effective capacity expected to be

approximately 2.3 million MT by the end

  • f 2014
  • Three main products of potassium that exist in

market today: SQM is the only company that produces all three products

  • Internal development of production

technologies has allowed for a better utilization of natural resources and for higher yields through increased efficiencies

Fertilizers: Potassium

22% of Total 1H2013 Gross Margin

  • MOP is potassium chloride (KCl), also known as potash
  • SOP is potassium sulfate (K2SO4)

Specialty Business World Leadership Growth Opportunities 13

400 800 1200 1600 2000 2006 2007 2008 2009 2010 2011 2012 2013E

  • Th. MT

Year

SQM Production Volumes MOP + SOP

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Overview Fertilizers Specialty Chemicals Financial Information

Agenda

Photo: Salar de Atacama

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Specialty Chemicals: World Leadership

†Market share figures are based on 2012 SQM estimates ⁰ Considering the lithium chemicals market, excluding concentrated minerals *Figures are based on IFRS

Specialty Business World Leadership Growth Opportunities 15

Iodine & Derivatives

34% world market share† 1H2013 Revenues* US$255M (21%) 35% of total 1H2013 gross margin*

Lithium & Derivatives

35% world market share†⁰ 1H2013 Revenues *US$92M (8%) 11% of total 1H2013 gross margin*

Industrial Chemicals

1H2013 Revenues *US$110M (9%) 8% of total 1H2013 gross margin*

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Specialty Chemicals: Iodine

35% of Total 1H2013 Gross Margin

* Market participation based on SQM 2012 estimates Market supply estimates for Japan include supply from traditional production and recycling in Japan

Iodine

Niche Market Main Uses

  • SQM is the leading iodine

producer in the world

  • Global Demand: CAGR

2002-2012: 4%

  • Additional capacity from

Chilean competitors started production in 2012, aiming to reach projected capacity in 2013

  • X-Ray Contrast Media
  • LCD
  • Pharmaceuticals
  • Iodophors
  • Approximately 40% of

uses related to human health and nutrition

Specialty Business World Leadership Growth Opportunities 16

SQM 34% Japan 31% Others Chile 24% Others Recycling 5% USA 4% Others 2%

2012 Market Size Estimates: ~31 kMT*

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Specialty Chemicals: Lithium

11% of Total 1H2013 Gross Margin

*SQM estimates: Lithium chemicals market

Specialty Business World Leadership Growth Opportunities

Lithium

Market Main Uses

  • SQM is the leading lithium

chemical producer in the world

  • Global demand: CAGR (2002-

2012): ~ 8%. Expected growth for 2013: 5 -10%

  • Market seeing new supply

added in 2013

  • Global lithium chemical

demand has increased over 25% between 2010-2012, with batteries being the primary demand driver

  • Battery technology historically

been the demand driver.

  • Batteries (over 41%)
  • Glass
  • Lubricating Greases
  • Glazes/Frits

Li2CO3

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SQM 35% China 10% Talison 22% Others Chile 19% FMC 11% Others 3%

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Lithium & SQM: Growth Opportunities

  • Current lithium carbonate plant capacity 48,000

MT/year

  • We believe SQM is one of the lowest cost

producer in the world

  • New supply is expected from Australia & China

during 2013

Lithium & Electric Cars: Outlook

  • Total production of e-cars (HEV-PHEV-EV) using

lithium-ion batteries (LIB) is expected to reach 1.5-3.0 million (2015), 5.0-10.0 million (2020)

  • Total lithium demand is expected to reach 250-

300 KMT-LCE (2020)

Specialty Chemicals: Lithium

11% of Total 1H2013 Gross Margin

*SQM estimates: Lithium chemicals market

Specialty Business World Leadership Growth Opportunities 18

2.000 4.000 6.000 40 60 80 100 120 140 2009 2010 2011 2012 2013E Lithium Average Price US$/ton

  • TH. MT

World Lithium Chemicals Market*

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Solar Salts:

New demand for industrial nitrates for thermal energy storage in solar power plants means increasing our nitrate consumption

  • Mixture of 60% sodium nitrate and 40%

potassium nitrate

  • Main projects: ACS Cobra-Sener, Aries,

Rocketdyne, Abengoa, SAMCA, Solar Reserves

  • 50 MW → ~30,000 MT of salts
  • 2013 sales expected to decrease to around

70,000 MT due to a delay of most projects as a result of the financial situation in Europe

Specialty Chemicals: Industrial

8% of Total 1H2013 Gross Margin

Traditional Industrial Chemical applications include: metal treatment, water treatment, pyrotechnics, explosives, glass manufacturing, among others Specialty Business World Leadership Growth Opportunities 19

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Overview Fertilizers Specialty Chemicals Financial Information

Agenda

Photo: SQM offices in Santiago

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21 1. Capacity expansion for potassium- based products in the Salar de Atacama 2. Preparing water supply for a potential iodine and nitrates expansion in first region, with increased plant efficiencies and higher quality products 3. Optimization railroad system,

  • ther projects aimed at improving

yields and reducing costs

Capital Expenditure Program

Approximately US$400 million for 2013

Specialty Business World Leadership Growth Opportunities 21

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500 1.000 1.500 2.000 2.500 3.000 2008 2009 2010* 2011* 2012* 1H12 1H13 US$ Billion

Revenues*

100 200 300 400 500 600 700 2008 2009 2010 2011 2012 1H12 1H13 US$ Million

Net Income*

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Financial Performance

* 2008 figures prepared according to Chilean GAAP; 2009-2013 figures are based on IFRS numbers.

Specialty Business World Leadership Growth Opportunities 22

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Financial Performance*

NFD: interest bearing debt net of cash and cash equivalents, considering the effects of derivatives * 2008 figures prepared according to Chilean GAAP; 2009-2013 figures are based on IFRS numbers.

Specialty Business World Leadership Growth Opportunities 23

42% 41% 38% 45% 46% 38% 2008 2009 2010 2011 2012 1H13

EBITDA/Revenues

0.45 1.16 0.85 0.79 0.83 0.91 0,5 1 1,5 2 2,5 3 2008 2009 2010 2011 2012 1H13

Net Financial Debt / Adjusted EBITDA (LTM)*

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Key Conclusions

Business flexibility according to market conditions

  • Largest global producer, lowest cost producer, market growth.
  • Specialty Plant Nutrition
  • Iodine
  • Lithium
  • Solar Salts
  • Growth opportunities and a low cost producer.
  • Potassium
  • Industrial Chemicals
  • Solid financial position
  • Focused on long-term growth

24 Specialty Business World Leadership Growth Opportunities 24