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.
