Sociedad Quimica y Minera or SQM (NYSE: SQM), the world's second-largest lithium producer, continues to suffer from sustained weak prices for the metal used in batteries that power electric vehicles and high-tech electronics, with profit falling almost 38% in the last quarter of 2019.
The Santiago-based company posted fourth-quarter net income of US$66.9 million, compared to US$108.6 million in the same quarter in 2018. Gross profits dropped more than 30% to US$137.8 million.
The lithium giant said that sales to China, the top consumer of battery metals, could be hit by the impact of the coronavirus.
"At this point, we believe sales volumes related to the lithium business line in China could be lower during the first quarter of 2020 when compared to our original expectations," CEO Ricardo Ramos said.
"Depending on the evolution of the coronavirus outbreak, we may be able to recover some of those sales volumes and reach 55,000-60,000 metric tonnes in 2020," he added.
SQM noted that lithium demand improved last year, up 14% compared to 2018, which the company described as "significant" but "lower than expected."
The company believes the fundamentals behind demand growth in the lithium industry are stronger than ever and expects Europe to be the main consumer this year on the back of an expected boom in electric vehicles.
Last month, however, its main rival, Albemarle (NYSE: ALB), offered a gloomier outlook. The world's top lithium producer forecast a double-digit drop in 2020 earnings on weak prices.
- This news item first appeared in our sister publication, MINING.com.