What happened
Shares of Chilean lithium miner Sociedad Quimica y Minera de Chile (SQM 0.56%) raced out of the gate on Thursday after the company reported strong earnings through the end of 2021.
As of 12:30 p.m. ET today, shares of the mining company were up 9.9%.
Image source: Getty Images.
So what
Sociedad Quimica y Minera de Chile (SQM for short) said it collected $2.9 billion in revenue in fiscal 2021, up 57.5% year over year. Earnings for the year grew even faster as gross profit margins tacked on a staggering 1,150 basis points, helping annual profits to roughly triple over 2020 numbers at $2.05 per diluted share.
CEO Ricardo Ramos pronounced himself "very proud that production goals set for 2021 were achieved, and in some cases even surpassed." He also seemed to imply that SQM gained some share in the lithium market, inasmuch as "global lithium demand grew approximately 55% during 2021," but SQM's revenue grew faster than that at the aforementioned 57.5%.
Now what
And the good news should keep on coming. Ramos noted that market prices for lithium also grew as supply couldn't match strong demand growth in 2021, and that demand keeps on growing strongly, and could rise as much as 30% this year. Iodine and potassium sales were also said to be growing nicely, but really, in this market, it's lithium that's drawing investors' attention these days.
Management didn't reduce this optimistic forecast to dollars and cents, but did predict that supply won't be enough to meet this growth, ultimately pressuring market prices, reaching levels "never seen before." Furthermore, "our capacity expansion to reach 180,000 tons should be completed in the coming months, allowing us to increase our market share in 2022."
SQM is growing strongly in a growing market. That can only mean good things for future profits.
