Sociedad Quimica Y Minera De Chile Sa Pfd Series A · BCS:SQM_A
Sociedad Quimica Y Minera De Chile Sa Pfd Series A — Chemical & Mining Co of Chile — Non-Deal Roadshow (September 2019)
48 slides from Sociedad Quimica Y Minera De Chile Sa Pfd Series A's roadshow presentation, Sep 10, 2019
Slide 1: Breakfast with the CEO
1 1 BREAKFAST WITH THE CEO September 10, 2019 New York
Slide 2: Breakfast Program
2 2 Breakfast Program 1. Speakers Introduction 2. SQM ´ s strategy 2019 - 2025. Ricardo Ramos, CEO 3. Future vision for lithium market. Pablo Altimiras, VP Lithium & Iodine Business 4. Financial position. Gerardo Illanes, CFO 5. Q&A
Slide 3: Today's Speakers: Ricardo Ramos
3 3 Today ´ s Speakers Ricardo Ramos Industrial Engineer Pontificia Universidad Católica de Chile SQM career: 1989 – Finance Advisor 1993 – Deputy CFO 1996 – CFO 2019 – CEO
Slide 4: Today's Speakers: Pablo Altimiras
4 4 Today ´ s Speakers Pablo Altimiras Industrial Engineer, MBA Pontificia Universidad Católica de Chile SQM career: 2007 – Head of Logistics Projects 2010 – Deputy Development Manager 2012 – Development and Planning Manager 2016 – VP Development and Planning 2018 – VP Lithium and Iodine Business
Slide 5: Today's Speakers: Gerardo Illanes
5 5 Today ´ s Speakers Gerardo Illanes Civil Industrial Engineer Pontificia Universidad Católica de Chile MBA Goizueta Business School of Emory University, USA SQM career: 2006 – Finance Director SQM North America 2012 – Finance Director of Commercial Offices 2016 – VP Corporate Finance 2018 – CFO
Slide 6: Pablo Altimiras, VP Lithium and Iodine Business
6 6 PABLO ALTIMIRAS VP Lithium and Iodine Business
Slide 7: Cautionary Note Regarding Forward-looking Statements
7 7 Cautionary Note Regarding Forward - looking Statements SQM (NYSE : SQM, Santiago Stock Exchange : SQM - A, SQM - B) is a global company engaged in strategic industries for human development, such as health, food, clean energy and the technology that moves the world . This presentation includes s
Slide 8: Future vision for lithium market
8 8 Demand opportunities Sustainable operations Supply and price dynamics 2019 - 2025 Future vision for lithium market
Slide 9: End customer view presents more opportunities for lithium demand
9 9 End customer view presents more opportunities for lithium demand LITHIUM INDUSTRY OVERVIEW - DEMAND SQM ´ s demand estimates 1 Demand estimates based on OEMs ´ EV growth announcements 2 58 60 63 65 67 70 72 74 68 72 81 89 99 112 125 139 112 142 177 218 274 352 445 562 269 307 354 407 478 573 684
Slide 10: Demand product mix: LiOH could surpass Li2CO3 market share
10 10 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Market share (%) LFP LMO NCM 111 NCM 532 NCM 622 NCA NCM811 LH Optimistic LH Conservative Demand product mix LiOH could supass Li 2 CO 3 market share in 2024 - 2027 LITHIUM INDUSTRY OVERVIEW - DEMAND
Slide 11: New challenge for lithium producers
11 11 New challenge for lithium producers The interconnected value chain means more complexity for lithium producers LITHIUM INDUSTRY OVERVIEW - SUPPLY Product Flow MINING REFINERY CATHODES BATTERIES EVs – 80% – 20% 14 – 70% 74 – 30% 20 – 80% 77 – 20% 9 – 80% – 20% # of Players – Market share # of P
Slide 12: The majority of new supply in 2025 will be from mineral sources
12 12 The majority of new supply in 2025 will be from mineral sources LITHIUM INDUSTRY OVERVIEW - SUPPLY 1 Source. SQM estimates. Total cost includes cash cost + royalty + Capex ( incl. D&A expenses in 20 - year DCF) 2 Source. SQM estimates Cost curve in 2025 1 0 6.000 500 800 12.000 0 2.000 4.000 8
Slide 13: Incentive price could reflect better future price range than cost curve
13 13 Incentive price could reflect better future price range than the cost curve LITHIUM INDUSTRY OVERVIEW - SUPPLY 1 Source. SQM estimates. Total cost includes cash cost + royalty + Capex ( incl. D&A expenses in 20 - year DCF) 2 Source: SQM estimates. THE INCENTIVE PRICE EXERCISE ASSUMES NPV=0 FOR
Slide 14: SQM's lithium production is sustainable
14 14 SQM’s lithium production is sustainable SUSTAINABLE OPERATIONS Small Carbon Footprint is the main objective CARBON FOOTPRINT • SQM lithium carbonate ´ s carbon footprint is 1.5 kg CO2 - eq/kg 1 . In comparison, copper ´ s is ~3x 2 and cobalt ´ s is ~8x 3 times more. • SQM’s carbon footprint is
Slide 15: Salar de Atacama Water Rights
15 15 Salar de Atacama Water Rights (1) Cradle - to - gate life cycle assessment of global manganese alloy production, International Manganese Institute, 2016. (2) Conc entrator. Cochilco Report, 2017. (3) Covalent Lithium Earl Grey, EPA, Jan. 2019. (4) Covalent Lithium Earl Grey, EPA, Jan. 2019 & T
Slide 16: Positive outlook on lithium market
16 16 Positive outlook on lithium market there will be enough demand to ensure our growth CONCLUSION Solid demand fundamentals support the vision of an important growth in the next several years. Demand Lithium remains the only mineral for which demand grows at a double digit rate. Significant incre
Slide 17: Ricardo Ramos, CEO of SQM
17 17 RICARDO RAMOS CEO of SQM
Slide 18: Reliable operations are our competitive advantage
18 18 Reliable Operations in Chile and abroad are our competitive advantage GROWTH OPPORTUNITIES IN ALL BUSINESS LINES ACCESS TO UNIQUE NATURAL RESOURCES LOW - COST OPERATIONS DIVERSIFIED GLOBAL NETWORK IN - HOUSE DEVELOPED KNOW - HOW MARKET LEADER POSITION IN MOST OF OUR BUSINESSES
Slide 19: Long Term Strategy 2019-2025
19 19 Gross Profit LTM (*) US$ m 653 Specialty Plants Nutrition 159 Industrial Chemicals / Solar Salts 23 Iodine and derivatives 125 Lithium and derivatives 302 MOP / SOP 43 Others 2 (*) LTM: June 18 / June 19 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES 48 й 52 й Strategy
Slide 20: Specialty Plant Nutrition: sales volume target
20 20 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES Specialty Plant Nutrition LTM Target 25 Diff Sales Volume (1) ThTons 1,062 > 1,400 338 5% growth per year 400 600 800 1,000 1,200 1,400 1,600 2015 2016 2017 2018 LTM 2020 2021 2022 2023 2024 2025 SPN Target Sales ThTons •
Slide 21: Specialty Plant Nutrition: margin per ton
21 21 Specialty Plant Nutrition LTM Target 25 Diff Sales Volume (1) ThTons 1,062 > 1,300 238 3.5% gpy (238 ~ eq 170 SQM Pot Nitr) Margin per Ton $/Ton 149 > 220 70 Price: 2% gpy / Cost: 1.5% gpy - 35 $/t Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • Cost Reduction Initiat
Slide 22: Specialty Plant Nutrition: gross profit
22 22 Specialty Plant Nutrition LTM Target 25 Diff Sales Volume (1) ThTons 1,062 > 1,300 238 3.5% gpy (238 ~ eq 170 SQM Pot Nitr) Margin per Ton $/Ton 149 > 220 70 Price: 2% gpy / Cost: 1.5% gpy - 35 $/t SPN Gross Profit US$ m. 159 > 286 127 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL B
Slide 23: Industrial Chemicals / Solar Salts: volumes
23 23 Industrial Chem. / Solar Salts LTM Target 25 Diff Sales Volume Industrial Nitr. ThTons 82 > 120 37 2% gpy. + 25 tht. Sales Volume Solar Salts ThTons - > 200 200 Total ThTons 82 > 320 237 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • Industrial Nitrates business grow
Slide 24: Industrial Chemicals / Solar Salts: thermal storage process
24 24 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES Industrial Chem. / Solar Salts LTM Target 25 Diff Sales Volume Industrial Nitr. ThTons 82 > 120 37 2% gpy. + 25 tht. Sales Volume Solar Salts ThTons - > 200 200 Total ThTons 82 > 320 237 Thermal Storage Process (Solar Salt
Slide 25: Industrial Chemicals / Solar Salts: gross profit
25 25 Industrial Chem. / Solar Salts LTM Target 25 Diff Sales Volume Industrial Nitr. ThTons 82 > 120 37 2% gpy. + 25 tht. Sales Volume Solar Salts ThTons - > 200 200 Total ThTons 82 > 320 237 Margin per Ton Ind. Nitrates $/Ton 278 > 325 47 Price: 1.5% gpy / Cost: 1.5% gpy - 20 $/t Margin per Ton So
Slide 26: Iodine and derivatives: sales volume
26 26 Iodine and derivatives LTM Target 25 Diff Sales Volume ThTons 13.2 > 16.2 3.0 3.5% growth per year Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • Annual demand growth is expected to be approximately 3% • SQM expects to increase its market share by 1% annually reachin
Slide 27: Iodine and derivatives: margin per kg
27 27 Iodine and derivatives LTM Target 25 Diff Sales Volume ThTons 13.2 > 16.2 3.0 3.5% growth per year Margin per Kg $/Kg 9.5 > 17.2 8 Price IVQ19 + 1.5% gpy / Cost: 1.5% gpy - 2 US$/kg Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • The expected price of the 4Q2019 adjus
Slide 28: Iodine and derivatives: gross profit
28 28 Iodine and derivatives LTM Target 25 Diff Sales Volume ThTons 13.2 > 16.2 3.0 3.5% growth per year Margin per Kg $/Kg 9.5 > 17.2 8 Price IVQ19 + 1.5% gpy / Cost: 1.5% gpy - 2 US$/kg Iodine G.P. US$ m. 125 > 279 154 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES Growth
Slide 29: Nitrates / Iodine capex
29 29 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • Nitrates / Iodine operations Capex includes: • Potassium Nitrate facility NPT III capacity increase • New Dual Potassium Nitrate / Sodium Nitrate facility: NPT IV • New Sodium Nitrate facility: Sur Viejo • Sea water pipe
Slide 30: Nitrates / Iodine capex growth and gross profit target
30 30 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • CAPEX Growth: US$530 million • Gross Profit increase target (SPN, Industrial Chemicals and Iodine) > US$360 million by 2025 • Gross Profit includes depreciation & amortization expenses Nitrates / Iodine CAPEX 2019 / 2023
Slide 31: Lithium demand and sales volume target
31 31 142 562 72 139 93 119 0 100 200 300 400 500 600 700 800 900 1,000 2019 2025 Lithium Demand ThTons Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • 65 k MT of sales volumes in 2020 could help restore SQM s 2017 market share of 18% • The average demand growth is assume
Slide 32: Lithium and derivatives: price and margin
32 32 Lithium and derivatives LTM Target 25 Diff Sales Vol Lithium from Chile ThTons 46.8 > 150 103 65 tht 2020 / 18% gpy Sales Vol Lithium from Austr ThTons > 23 23 50% SQM Lithium Price Average $/kg 14.5 ~ [10.0 - 15.0] Margin Chile $/Kg 6.5 ~ [4.3 - 7.3] 10.0 / 15.0 US$/Kg Margin Australia $/Kg ~
Slide 33: Lithium and derivatives: gross profit
33 33 Lithium and derivatives LTM Target 25 Diff Sales Vol Lithium from Chile ThTons 46.8 > 150 103 65 tht 2020 / 18% gpy Sales Vol Lithium from Austr ThTons > 23 23 50% SQM Lithium Price Average $/kg 14.5 ~ [10.0 - 15.0] Margin Chile $/Kg 6.5 ~ [4.3 - 7.3] 10.0 / 15.0 US$/Kg Margin Australia $/Kg ~
Slide 34: MOP / SOP
34 34 MOP / SOP LTM Target 25 Diff Sales Volume ThTons 620 > 782 163 balance with production of potassium nitrate Margin per Ton $/Ton 67 > 100 32 Price: 1.5% gpy / Cost: 1.5% gpy - 25 $/t MOP / SOP G.P. US$ m. 42 > 78 36 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • Retu
Slide 35: Lithium capex: Chile and Australia
35 35 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • Lithium CAPEX includes: • Lithium carbonate expansion from 70k MT to 120k MT in 2H2021 • Lithium hydroxide capacity expansion • Lithium carbonate expansion from 120 k MT to 160k MT by end of 2023 • Australia: 50% of 45k
Slide 36: Other initiatives
36 36 Long Term Strategy 2019 2025 GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • Other initiatives: • M&A opportunities • Geological work on SQM natural resources in the search for metallic deposits • SQM is defined as: “A mining operator based on high quality natural resources, selectively integrate
Slide 37: Summary
37 37 Summary GROWTH OPPORTUNITIES IN ALL BUSINESS LINES • Significant opportunities to increase operational results • Growth opportunities in all business lines • Investment plan consistent with business targets Although lithium is very important for the future of SQM .... SQM is much more than lit
Slide 38: Gerardo Illanes, CFO
38 38 GERARDO ILLANES CFO
Slide 39: Responsible management of natural resources
39 39 OF THE ENERGY REQUIRED FOR OUR OPERATIONS IS SOLAR ϵϱ͘ϴй OF THE INDUSTRIAL WASTE GENERATED IS RECYCLED BY THE COMPANY 58 й Responsible management of natural resources COMMITMENT TO SUSTAINABLE GROWTH SQM is working on almost quadrupling lithium production without extracting more brine from the
Slide 40: Continue to uphold commitments to communities
40 40 Continue to uphold commitments to communities COMMITMENT TO SUSTAINABLE GROWTH Working with our neighbors to create programs which improve their quality of life and preserve their traditions. SOLIDARY WORK 2,000 hours of voluntary work in 2018 DEVELOPMENT PROGRAMS Various agricultural programs
Slide 41: Upcoming Capex to finance the growth
41 41 Upcoming Capex to finance the growth Lithium Chile Lithium Carbonate expansion of 50k MT. PROJECT Lithium Australia Iodine & Nitrates Maintenance CAPEX PERIOD Lithium Hydroxide expansion of 16k MT. US$280 million US$100 million 2019 - 2021 Mt. Holland Lithium Hydroxide integrated project of 45
Slide 42: Low debt profile
42 42 NFD 2 /Adjusted EBITDA 3 Short - term debt Long - term debt NFD 2 Low debt profile 1 access to markets in Chile and abroad US$ 509 m US$ 1,336 m US$ 605 m 0.82 1 Twelve months ended June 30, 2019 2 Net Financial Debt (NFD) = Other current financial liabilities + other non - current financial l
Slide 43: Strong financial position to support growth
43 43 Strong financial position to support current and future growth Accounts Receivables ( Months of Sales) Inventory ( Months of Sales) Cash / Short - Term Financial Debt 2.3 2.4 2.7 2.7 3.0 3Q18 4Q18 1Q19 2Q19 8.1 7.1 7.4 7.7 6.0 3Q18 4Q18 1Q19 2Q19 37.3 36.8 23.4 1.6 1.0 3Q18 4Q18 1Q19 2Q19 Liqu
Slide 44: Debt Maturity Profile
44 44 Debt Maturity Profile 7,5 265 15 15 385 15 265 15 15 137 465 7,5 61 122 740 1 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 US$ million 1 Adjusted EBITDA for the twelve months ended June 30, 2019. Adjusted EBITDA = Profit for the Perio
Slide 45: Dividend payout
45 45 Dividend payout Dividend Policy 1 Dividend Payout (% of Net Income) 100% 80% 60% Current Assets / Current Financial Liabilities ≥ 2.5 2.0 1.5 (Liabilities – Cash – Other Current Fin. Assets)/Equity ≤ 0.8 0.9 1.0 If none of the above parameters are met, dividend payout would be 50% of 2019 net
Slide 46: Proven cash generation capabilities
46 46 Proven cash generation capabilities (million US$) 0 500 1,000 1,500 2,000 2,500 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H118 H218 1H19 Cash Generated NFD Accumulated Dividend Accumulated CAPEX
Slide 47: Contact Information
47 47 CONTACT INFORMATION GERARDO ILLANES CFO gerardo.illanes@sqm.com KELLY O’BRIEN HEAD OF INVESTOR RELATIONS kelly.obrien@sqm.com IRINA AXENOVA INVESTOR RELATIONS irina.axenova@sqm.com
Slide 48: Non-IFRS Financial Measures Reconciliation
48 48 LTM 06 - 2019 ( ThUS $) Profit for the Year 345,695 (+) Depreciation and amortization expenses 206,539 (+) Finance costs 70,118 (+) Income tax 141,307 EBITDA 763,659 ( - ) Other income 31,683 ( - ) Other gains (losses) 6,143 ( - ) Share of Profit of associates and joint ventures accounted for
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