What factors drove SQM's earnings volatility this year?

Sociedad Quimica y Minera de Chile S.A. (SQM) experienced earnings volatility this year due to a combination of factors:

1. **Tax Dispute Impact**: SQM's net income was impacted by a one-time charge of approximately USD 1.1 billion due to a tax dispute. This significant non-recurring expense distorted the company's earnings, making them less comparable to previous years and obscuring the true operational performance.
2. **Lithium Price Fluctuations**: Although lithium prices softened in the fourth quarter, there was a decline in lithium prices quarter over quarter in 2024. This trend negatively affected SQM's earnings, especially in the earlier quarters of the year, as the company is heavily reliant on lithium sales.
3. **Production Focus Shift**: SQM plans to decrease potash production by 50% in 2025 to focus more on lithium production. This strategic shift might have temporarily disrupted earnings as the company manages the transition from one product to another.
4. **Geopolitical and Market Uncertainties**: The global lithium market is influenced by geopolitical considerations and potential policy changes, such as those related to electric vehicle incentives. These uncertainties can lead to volatile demand and prices, affecting SQM's earnings.
5. **Investment and Financing Needs**: SQM invested over USD 1.6 billion in 2024 and plans further investments, including USD 750 million in lithium capacity expansion in 2025. Financing these investments can strain financial resources and impact earnings, especially if financing costs rise or funding is not secured as expected.

In summary, SQM's earnings volatility this year was primarily driven by a tax dispute, lithium price fluctuations, production focus shift, geopolitical and market uncertainties, and investment-related financing needs. These factors combined created a challenging environment for the company's financial performance.