Shares of Sociedad Quimica y Minera de Chile SA (NYSE:SQM) fell more than 16% last month, according to data provided by S&P Global Market Intelligence. The company, also known as SQM, reported second-quarter and first-half 2019 operating results that reflected the numerous headwinds it faces in its core markets.
The lithium segment reported a 25% decline in revenue in the first half of 2019 compared to the year-ago period, while the specialty plant nutrition segment saw revenue decline 11% in that span. That sapped total revenue 14% and gross profit 31% in the year-over-year period.
SQM has been prioritizing lithium production in recent years, but the markets haven't been cooperating. Lithium prices have tumbled this year after China announced significant cuts to subsidies for electric vehicles. That has cooled demand for large battery manufacturing facilities in the country, which is responsible for 57% of global lithium demand.
Global agricultural markets are reeling, too. Historic flooding in the United States has led to one of the worst planting seasons ever recorded, which has delayed and diminished purchases of farm inputs such as fertilizers. The trade war between the United States and China hasn't helped, either.
SQM can only control the factors within reach, which don't include selling prices for lithium or fertilizers. The company has held administrative expenses in check this year and continues to maintain an optimistic long-term outlook, but investors might expect more volatility in the near term. If the business continues to execute, then investors may start to view SQM as a solid value stock at current prices.