OREANDA-NEWS. Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) held a conference call today to discuss the first quarter 2016 results, which were published on May 18, 2015.

The following items were discussed by executive management as part of the conference call:

"We reported net income of US$58.5 million, down from the US$71.7 million we reported for the first quarter of 2015. Revenues for the first quarter of this year totaled US$391.8 million, similar to the first quarter of last year. EBITDA margin for the quarter was approximately 40%, which is lower than the first quarter of 2015.

Overall, the main trends we saw during the quarter were lower prices and higher volumes. The higher volumes helped keep revenues stable, but the lower prices put pressure on margins. The exception is our lithium business, where higher prices and higher volumes led to higher revenues and margins.

Although our gross profit of US$114 million for the quarter was lower than expected, we expect that gross profit for the full year 2016 will be better than 2015 gross profit.

In specialty plant nutrition, revenues and sales volumes were flat compared to the first quarter of 2015. However, the product mix demonstrates the positive results we are obtaining from our strategy of targeting the water soluble fertilizer market. Water soluble fertilizers make up about two-thirds of our SPN sales volumes. Focusing on this market has allowed us to make up for the lower sales volumes of specialty field fertilizers, which compete with lower-priced commodity fertilizers. In addition, since water soluble fertilizers are more value-added products, increasing our sales to this segment helps to support average prices for the business line. We expect total SPN sales volumes to increase approximately 5% in 2016.

In the potassium business, higher sales volumes helped to compensate for lower prices. However, margins have been impacted. In the first quarter of last year, our sales volumes were much lower than normal, due to shipping and production delays. This year we reported higher volumes, despite some shipping delays due to weather-related issues at the port. Volumes should be higher in the coming quarters, and as we have said before, we expect volumes for the full year to be similar to 2014 volumes. However, the weak pricing will continue to have a negative effect on our margins. We expect uncertainty in pricing to continue at least until negotiations between China and the big potash producers have concluded.

Lower prices have also had a negative impact on our iodine business line. Average prices for the quarter were down by more than 7% compared to the previous quarter, and we believe the downward trend may continue. We continue to focus on regaining market share, and we believe that volumes for the full year 2016 will be higher than full year 2015 volumes. We remain focused on keeping costs down. Today’s costs reflect high iodine inventory levels, but in the future we should benefit from our efforts, including last year’s operational restructuring at Pedro de Valdivia and Nueva Victoria.

In the lithium business line, we are seeing strong demand growth, and we were pleased to report a 62% increase in revenues compared to the first quarter of 2015. Average prices for the quarter were up nearly 30% compared to the first quarter of 2015. We have seen price increases in both our spot sales and our contract sales. The majority of our lithium sales are covered by contracts that set annual volumes with price adjustments. There have been reports of high spot prices in China, as a result of supply shortages at the end of last year and strong demand, partly due to Chinese government subsidies of electric buses. Going forward, we believe new production will satisfy the growing demand".