Download - Sqm corporate presentation feb v 9_m12_v1feb
February 2013
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.
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Important Notice
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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SQM at a Glance • World Leader in Specialty Businesses: Potassium Nitrate, Iodine, lithium & Solar Salts • Global Company: Based in Santiago, Chile with over 20 offices on 6 continents • Strong Financial Profile
2011 Revenue: US$ 2.1 Billion (+17%) 9M2012 EBITDA†: US$ 866 Million 9M2012 EBITDA Margin: > 47% Revenue growth: > 49 % since 2009
• Highest liquidity in Chile Listed on the Santiago Stock Exchange, and the NYSE since 1993 Most liquid Chilean ADR on the NYSE in 2011 One of the three largest companies traded in the Chilean Stock Market
• Responsible growth
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† EBITDA: gross profit – SGA + depreciation & amortization
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SQM at a Glance
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SQM: Proud to be the world’s largest producer of lithium, iodine, potassium nitrate and solar salts
Fertilizers Specialty Chemicals
Potassium
24%*
Specialty Plant Nutrients
22%*
Iodine
36%*
Lithium
10%*
Industrial Chemicals
8%*
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* Contribution to Gross Margin First 9 months of 2012 (9M2012)
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Unique Natural Resources
Caliche Ore Salar Brines
Nitrates
Iodine Iodine
Potassium
Lithium
Potassium
NaNO3 + KCl = KNO3 + NaCl (salt)
Sodium nitrate + Potassium chloride = Potassium nitrate + Sodium chloride
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Overview
Fertilizers
Specialty Chemicals
Financial Information
Agenda
Photo: Potassium Nitrate Plant in Coya Sur
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Potassium
9M2012 Revenues* US$457M (25%)
24% of total 9M2012 gross margin*
†Market share figures are based on 2011 SQM estimates.
*Figures are based on IFRS
Specialty Business World Leadership Growth Opportunities
Specialty Plant Nutrition
49% world market share KNO3†
9M2012 Revenues* US$516M (28%)
22% of total 9M2012 gross margin*
Fertilizers: Uniquely Positioned
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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 22% of Total 9M2012 Gross Margin
Vegetables 41%
Fruits 22%
Industrial Crops 28%
Others 9%
Main uses: Premium crops*
*SQM estimates 2011
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SQM
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World Potassium Nitrate Market*
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Fertilizers: Specialty Plant Nutrition 22% of Total 9M2012 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: 49% World Market Share Other producers: Haifa, Kemapco* • Prices are expected to decrease in 2013 as a result of the new potash price environment
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* Figures are based on 2012 SQM estimates. Market estimates do not include imports/exports from China
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2009 2010 2011 2012E
FOB
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MOP Market*
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Fertilizers: Potassium 24% of Total 9M2012 Gross Margin
Potassium Chloride
Market Demand Drivers
• Commodity Fertilizer • ~50 million ton market (2012E) • Largest Global Producers:
• Potash Corp • Uralkali
• Global crop supply pressure should have a positive impact on fertilizer prices
• Contracts with China for
the first half of 2013 closed at $70 under prices seen in 2012
• Main Uses:
•Fruits/Vegetables •Corn •Rice
• Demand growth still being seen in Brazil
• Population Growth • Farmer economics &
yield optimization
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*SQM estimates **Price as of December for respective years
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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 • 2014 effective capacity expected to be between 2.2 – 2.3 million MT
• Three main sources of potassium that exist in market today: SQM is the only company that produces all three sources • Internal development of production technologies has allowed for a better utilization of natural resources and for higher yields through increased efficiencies
Fertilizers: Potassium 24% of Total 9M2012 Gross Margin
• MOP is potassium chloride (KCl), also known as potash • SOP is potassium sulfate (K2SO4)
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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
Iodine & Derivatives
37% world market share†
9M2012 Revenues* US$449M (25%)
36% of total 9M2012 gross margin*
Lithium & Derivatives
35% world market share†⁰
9M2012 Revenues *US$165M (9%)
10% of total 9M2012 gross margin*
Industrial Chemicals
9M2012Revenues US$169M (9%)
8% of total 9M2012 gross margin*
†Market share figures are based on 2011 SQM estimates
⁰ Considering the lithium chemicals market, excluding concentrated minerals
*Figures are based on IFRS
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Specialty Chemicals: Iodine 36% of Total 9M2012 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
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SQM 34%
Japan 31%
Others Chile 23%
Others Recycling 5%
USA 4%
Others 3%
2012 Market Size Estimates: 31 KMT*
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2008 2009 2010 2011 2012E
Iod
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Iodine Market*
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Specialty Chemicals: Iodine 36% of Total 9M2012 Gross Margin
SQM & Iodine: World Leader • Current Capacity 12,500 MT • Future demand growth expected to
maintain a positive trend • Significant Price Growth 2010-2012
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*SQM estimates
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SQM 35%
China 9%
Talsion 22%
Others Chile 19%
FMC 12%Others 3%
Lithium Chemical Market 2012: 125 MT*
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Specialty Chemicals: Lithium 10% of Total 9M2012 Gross Margin
*SQM estimates
Lithium chemicals market
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Lithium
Market Main Uses
• SQM is the leading lithium chemical producer in the world
• Global demand: CAGR (2002-
2012): ~ 8% • Expected growth for 2012: ~
9% • 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 30%) • Glass • Lubricating Greases • Glazes/Frits
Li2CO3
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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 production capacity 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 10% of Total 9M2012 Gross Margin
*SQM estimates
Lithium chemicals market
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2008 2009 2010 2011 2012E
Lithiu
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Price
US$
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MT
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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 • 2012 solar salts are expected to reach ~ 180,000 MT . • 2013 sales expected to drop below
100,000 MT due to a delay of most projects until 2014 as a result of the financial situation in Europe
Specialty Chemicals: Industrial 8% of Total 9M2012 Gross Margin
Traditional Industrial Chemical applications include: metal treatment, water treatment, pyrotechnics, explosives, glass manufacturing, among others
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Overview
Fertilizers
Specialty Chemicals
Financial Information
Agenda
Photo: SQM offices in Santiago
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1. Capacity expansion for potassium-based products in the Salar de Atacama
2. Increased capacity in iodine and nitrates facilities in first region, with increased plant efficiencies and higher quality products
3. Optimization railroad system, other projects aimed at improving yields and reducing costs
Capital Expenditure Program Approximately US$450 million for 2012
*Approximately 70% of capital expenditures will be related to expansion projects
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Financial Performance
* 2008 figures prepared according to Chilean GAAP; 2009-2011 figures are based on IFRS numbers.
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US$
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Revenues*
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Financial Performance*
NFD: interest bearing debt net of cash and cash equivalents, considering the effects of derivatives
30%
42% 41%38%
45%
0%
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30%
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50%
2007 2008 2009 2010 2011
EBITDA/Revenues
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2007 2008 2009 2010 2011
NFD/EBITDA
* 2008 figures prepared according to Chilean GAAP; 2009-2011 figures are based on IFRS numbers.
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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
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