SANTIAGO (Reuters) -Chile’s SQM, the world’s second-largest lithium producer, reported a 40.9% fall in fourth-quarter net profit on Wednesday, as higher sales volumes failed to offset a sharp decline in lithium prices.

The miner, which also produces fertilizers and industrial chemicals, reported net profit of $120.1 million, or 42 cents a share for the October-December period, compared to $205.9 million a year earlier.

Analysts were expecting a net profit of $130.95 million, or 52 cents per share, according to data compiled by LSEG.

SQM’s revenue of $1.07 billion was marginally ahead of $1 billion expected by analysts. However, the results were impacted by prices of lithium, which have fallen more than 80% in two years.

SQM said its lithium sales throughout 2024 increased by about a fifth compared to the prior year, but were unable to offset the weaker prices.

"As a result, our average realized price dropped by more than 64%," SQM said in a statement accompanying results.

The company said it expected sales volumes to rise 15% this year, but for prices to dip further in the first quarter, affecting the year-long average.

"We also anticipate that the average realized price in 2025 should be lower than in 2024, with first quarter of 2025 prices slightly below those recorded in the fourth quarter of 2024," SQM said.

SQM lowered its plan for 2025 capital expenditures to $1.1 billion, compared to $1.6 billion spent in 2024.

The Chile lithium division will take the bulk of the spending, with $550 million, followed by $350 million for the iodine unit, and another $200 million for the international lithium division.

SQM will discuss results with analysts on Wednesday at 1600 GMT.