ICL Group, Tel Aviv, swung back to the black in the second quarter, reporting a net income attributable to shareholders of $140 million, versus a year-ago net loss of $168 million. Earnings per share were $0.11, compared with a net loss of $0.13 a share last year.
Adjusted EBITDA came in 43 percent higher at $351 million, up from $246 million, while sales rose 34 percent to $1.62 billion, up from the year-ago $1.20 billion.
“ICL reported another quarter of record-breaking results, driven by its specialties businesses, and augmented by commodity price upside,” said ICL President and CEO Raviv Zoller. “The strong performance across all divisions was supported by increased demand and higher prices in most markets.”
The group’s specialties business contribution represented 53 percent of total EBITDA in the reporting quarter.
Due to the strong second-quarter results and improved market conditions, ICL is raising its guidance for its full-year adjusted EBITDA to a range of $1.315-$1.375 billion, up from the previous guidance of $1.09-$1.18 billion posted in early May (GM May 7, p. 37).
The new guidance includes the acquisition of the Compass Minerals South American Plant Nutrition business, completed on July 1 (GM July 2, p. 28). ICL said it paid approximately $420 million for the business.
ICL’s Potash business reported a 13 percent rise in segment profit to $43 million in the second quarter, with sales up 21 percent to $412 million from a year-ago.
Second-quarter potash production dipped 8 percent, to 1.02 million mt, down from the previous year’s 1.11 million. The group cited the annual one-week maintenance shutdown at the ICL Dead Sea operations as contributing to the production decline. The turnaround was completed in early April.
The group’s second-quarter potash output was also impacted by the shutdown for the commissioning of the ramp connecting the Cabanasses mine and the Suria plant at ICL Iberia in Spain, which began in late March and continued through April. With the ramp project finalized, the group reported that production there is ramping up.
The project is expected to increase the mine’s capacity, with the annual run rate projected to reach approximately 1 million mt by the beginning of 2022. The subsequent ramp-up is to 1.3 million mt/y.
The project completes ICL’s current planned potash capacity increases.
The group’s potash sales volumes (including internal sales) for the quarter were also lower – by 6 percent – at 1.148 million mt, down from 1.226 million mt, while for the first half of the year, sales volumes were essentially flat at 2.22 million mt.
ICL said its potash business is “at capacity,” due to a continued good environment for the nutrient, with tight supply, and “additional upside” expected.
The group is now sold out of potash through October, Zoller told analysts at a company earnings call on July 28. He said the group has “an all-time” low level of potash inventory at the Dead Sea “because the market is undersupplied, and there is excess demand.”
He described pricing as “very, very attractive,” and said ICL’s last potash sale in Brazil was at $620/mt CFR and in the U.S. at around $540 per short ton.
“At $600/mt for potash, the group doesn’t intend to hold inventory. As long as we have enough inventory to operate, we will go as low as we can,” said Zoller.
Zoller put ICL’s average realized potash FOB price per ton for the third quarter as coming in at $297, compared with $251 per ton FOB for the second quarter.
ICL said recent potash price increases were expected to have “a significant impact” in the second half of the year.
At ICL Boulby’s polyhalite mine in northeast England, the group reported a 5 percent year-over-year increase in polysulfate – the marketed form of polyhalite – to 193,000 mt in the second quarter, while sales volumes were up 40 percent over a year ago, at 183,000 mt.
Zoller told analysts at the company earnings call that the second-quarter production level at Boulby was less than planned – about 220,000 mt of output had been targeted. But he said sales for the quarter were above the original target.
However, the CEO revealed that its Boulby business lost over $10 million in the second quarter, as some the second-quarter polysulfate sales contracts were settled at the beginning of the year at lower prices than the group is currently realizing. Nor did the group expect such high transportation costs, he said.
Zoller said ICL is continuing to look at improvements for the Boulby operation, one being increased production, and the other demanding a higher premium on the product.
ICL selected business segments
| 2Q-2021 | 2Q-2020 | 1H-2021 | 1H-2020 | |
| Potash | ||||
| Segment sales (including internal sales) $m | $412 | $340 | $797 | $654 |
| Segment profit $m | $43 | $38 | $72 | $52 |
| Segment EBITDA $m | $85 | $80 | $151 | $133 |
| Production ‘000 mt | 1,022 | 1,110 | 2,174 | 2,255 |
| Sales (including internal sales) ‘000 mt | 1,148 | 1,226 | 2,223 | 2,222 |
| Phosphate Solutions | ||||
| Segment sales (including internal sales) $m | $623 | $439 | $1,168 | $941 |
| Segment profit $m | $77 | $8 | $117 | $17 |
| Segment EBITDA $m | $134 | $60 | $228 | $118 |
| Innovative Ag Solutions | ||||
| Segment sales (including internal sales) $m | $237 | $196 | $478 | $395 |
| Segment profit $m | $20 | $15 | $42 | $29 |
| Segment EBITDA $m | $27 | $22 | $56 | $41 |
For its Phosphates Solutions business segment, ICL reported record second-quarter sales of $623 million, a 42 percent increase over the previous year. Sales of phosphate specialties rose 20 percent on the year, to $328 million, while phosphate commodities sales grew by 78 percent from a year-ago, reaching $295 million.
The business segment reported a significant improvement in profit, to $77 million, up from the year ago $8 million, with the group citing “a significant increase” in market prices and strong volumes.
ICL highlighted the higher phosphate fertilizer sales in the quarter compared with the previous year, with sales driven by higher volumes and “as prices continued to surge,” especially in the U.S. and Brazil, while raw material prices, notably for sulfur, and freight costs also increased, the group noted.
Among other highlights for the segment, the group said white phosphoric acid sales were “up appreciably,” driven by increased volumes in all regions, especially South America, and higher prices in all regions.
The group reported the YPH phosphates joint venture in China also delivered year-over-year improvement in results, due to increased volumes, higher commodities prices, and continued efficiency improvements.
ICL’s Innovative Ag Solutions (IOA) business segment reported a 21 percent increase in second-quarter sales compared with a year-ago, to $237 million. Segment profit was up 33 percent, at $20 million, despite higher raw material prices and freight rates, the group said.
All IOA product lines showed year-over-year growth due to higher prices, increased volumes, and positive exchange rate impact.
ICL highlighted solid sales growth in Specialty agriculture, due to higher volumes of straights, liquid, and controlled-release fertilizers, mainly in Europe, China, and North and South America.
Record results were seen in Turf and Ornamental, the group said, with all geographies showing growth, and new markets “doing especially well.” It said higher volumes and selling prices translated into higher profit, despite the raw material price pressure.
Zoller highlighted the completion of the acquisition of the Specialty Plant Nutrition business of Compass Minerals.
“This acquisition will significantly expand our product portfolio and profitability and allow us to deliver the critical mass we have been seeking in Brazil,” he said. “It will also provide further seasonal balance between Northern and Southern hemispheres and make us the leading plant nutrition company in Brazil, one of the world’s fastest-growing agriculture markets.”
The CEO told analysts at the company earnings call that the group has modeled $45 million of adjusted EBITDA contribution for the second half of this year from the Compass Minerals South American Plant Nutrition business acquisition.
He declined to comment on the potential EBITDA contribution for 2022, as at the present time he said it would depend on the synergies that are targeted for next year.
For the six-months to June 30, ICL Group posted a net income attributable to shareholders of $275 million, versus a year-ago $108 million loss. Earnings per share were $0.22, compared with a net loss of $0.08 a share last year.
Six-month adjusted EBITDA came in 30 percent higher on the year at $646 million, versus $496 million a year ago. Revenues increased 24 percent to $3.13 billion, up from $2.52 billion.
On the basis of its second-quarter results, ICL Group’s Board of Directors declared a dividend of 5.26 cents per share, or approximately $68 million, which will be payable on Sept. 1 to shareholders of record as of Aug.18, 2021.