Feb 27 (Reuters) - Chilean lithium producer SQM on Friday reported a rise in fourth-quarter net profit, as a stronger pricing environment lifted average lithium prices and boosted results.

The world's second-largest lithium producer said net income for the quarter was $183.8 million, up 53% from a year earlier.

Revenue for the quarter rose 23.3% to $1.32 billion, from $1.07 billion in the same period last year.

Gross profit for the quarter climbed 52.7% to $448.5 million.

"Our fourth quarter 2025 results reflected record-high sales volumes across both of our lithium businesses, Nova Andino Litio (formerly SQM Salar) and our International Lithium Division," SQM CEO Ricardo Ramos said. "In November 2025, we began to see early signs of an improved supply-demand balance, driven by stronger-than-expected demand from energy storage systems (ESS)."

The company is increasing refining of lithium carbonate from lithium sulfate in China through tolling agreements, Ramos said.

For the full year, SQM posted net income of $588.1 million, compared with a loss of $404.4 million in 2024, while revenue rose 1.0% to $4.58 billion.

SQM, one of only two companies producing lithium in Chile, also makes fertilizers and industrial chemicals.

Lithium prices have cooled from record highs in 2022 as supply growth outpaced demand, pressuring margins for global producers including SQM and rivals such as U.S.-based Albemarle.

Still, demand for the battery metal is expected to rise in the coming years in line with growth in electric vehicles and battery storage.

(Reporting by Mihika Sharma ; Writing by Kylie Madry; Editing by Sam Holmes)