SMM5 March 21: on May 20, SQM held a conference call on first-quarter results.
SQM released its first-quarter results on May 19th, reporting a net profit of about $45 million for SQM in the first quarter, down from the same period last year.
SQM said at the meeting that its sales were severely affected by the new crown virus in the first quarter of 2020, with low leverage prices for lithium and derivatives, and lithium prices fell sharply at the beginning of the year. Lithium sales are also lower than recorded in the first quarter of last year and below expectations for this quarter. The current ratio of the company is about 3.2 times. Keeping the company's balance sheet sound all the time will keep the company running smoothly.
Although the current market is full of uncertainty, we are still optimistic and expect that sales of most of the company's business will be higher in the coming quarters. For this reason, the company will continue to press ahead with previously announced expansion plans to put lithium carbonate and lithium hydroxide projects into production by the end of 2021.
The company will press ahead with previous capital spending plans and expects to reach about $350 million this year, down from the previously announced $450 million. The delay in capital expenditure is due to a reduction in unnecessary activities in production facilities, mainly to protect the health and safety of workers.
In a conference call, SQM talked about a few points in response to questions from investors.
Affected by the new crown virus, China's GDP growth rate was negative in the first quarter, the economy was badly hit, and the consumption of new energy vehicles fell sharply. In the first quarter, the company reduced its sales in China by nearly 2000 tons. But the company's lithium sales in Europe are better than expected. At present, China's economy is recovering, and GDP growth in the second quarter is expected to be positive, which may be close to 5%. Electric vehicle consumption is expected to improve greatly. Market performance will be stronger in the third and fourth quarters.
About other lithium industries, portable equipment industry, construction industry and grease, etc. This type of demand will be affected, and these requirements are likely to be similar to those in 2019. Nearly 312000 tons of lithium carbonate equivalent.
The company is expected to be in a good period of increasing market share this year. It means that we will sell more this year than the year before. The company is preparing raw materials, and inventory will help the company to better cooperate with customers. Overall, demand for lithium will grow after the special year of 2021, and should grow by an average of 20 per cent between 2020 and 2025. This means that by 2025, we believe that the total demand for lithium may exceed 800000 tons. These are basically what OEM manufacturers expect. They all seem to devote themselves to the electrification of vehicles. Governments are also working hard to develop such cars. As a result, we remain optimistic about the market in the long run.
As far as we know, China's inventory level has been maintained at a high level since 2020, experienced economic stagnation in the epidemic, and our sales in China are expected to increase in the next few quarters as the economy recovers.
Considering our expected stable environment of total demand, our inventory will increase this year. Because healthy inventory levels will provide us with an advantage in the future demand growth environment. SQM's current healthy and reasonable inventory does not affect the company's financial situation, will not affect the company's operation, at the same time, the company is looking for ways to increase market share. In order to have the inventory that the market may need and to have market flexibility, more inventory is good news, which means that the increased inventory is not affected by the price environment for SQM.
Click to register: "2020 (Fifth) China International Nickel, Cobalt and Lithium Summit Forum"
To sign up for the Nickel-Cobalt-Lithium Summit or apply to join the SMM New Energy vehicle / Cobalt-Lithium Industry Exchange Group, please scan the QR code below:
