ICL Group Ltd., Tel Aviv, reported a net income attributable to shareholders of the company of $563 million ($0.44 per share) for the second quarter ended June 30 on revenue of $2.88 billion, up from the year earlier $140 million ($0.11 per share) and $1.62 billion, respectively.
The diluted earnings per share for the quarter missed analysts’ expectations by $1.01, while revenue beat expectations by $60 million.
Second-quarter adjusted EBITDA came in 249% up on the same year-ago quarter, to $1.26 billion versus $360 million, while revenue increased 78%.
ICL President and CEO Raviv Zoller attributed the strong second-quarter performance to the company’s continued focus on long-term specialties solutions, with additional “significant upside” from commodity prices. The performance was supported by increased demand and higher prices in most markets “and was achieved even as raw materials costs remained inflated and as global supply chain challenges continue,” he said.
Due to very strong results in the first half of 2022, ICL is raising its expectations for full-year adjusted EBITDA to a range of $3.8-$4 billion, up from previous guidance of $3.5-$3.75 billion (GM May 13, p. 31).
Between $1.5-$1.6 billion of 2022 EBITDA is expected to come from the company’s specialties focused businesses, up from previous expectations calling for contribution of $1.3-$1.4 billion.
ICL’s Potash division achieved a significant increase in second-quarter operating income to $576 million, up from the year-ago $42 million, while sales increased 150%, to $951 million (including sales to internal customers) from $380 million the previous year.
Potash segment EBITDA for the quarter surged to $616 million, up year-over-year from $80 million.
The company highlighted that the average potash realized price per ton for the quarter was $750, an increase of 167%, or $469 year-over year, from $281 million, and up $149 from the first quarter of this year, as prices continued to increase amid continued disruptions in global fertilizer availability.
However, ICL expects its average potash realized price in the third quarter to moderate to around $700 per mt due to the recent trend of price convergence in the global market and also as the company is scheduled to increase shipments to India and China, Zoller told participants at a company earnings call on July 27.
Potash production increased 18% year-over-year in the second quarter, to 1.211 million mt from 1.022 million mt, while first-half output was up 6%, to 2.304 million mt versus the previous year’s 2.174 million mt.
ICL saw increased output at its Dead Sea operation at Sdom, as the site achieved both an all-time quarterly production level and an all-time semi-annual production level, as the site continued to benefit from operational improvements and efficiencies.
The company also reported an all-time quarterly granular production record at the Cabanasses mine in Spain as production improvements advanced, and it expects additional progress in the second half of the year.
Second-quarter potash sales (including internal sales) were essentially flat year-over-year at 1.147 million mt versus the year-ago 1.148 million mt, while six-month sales increased 3% to 2.297 million mt on the prior year’s 2.223 million mt.
The Phosphates Solutions division saw second-quarter operating income increase 248% to $268 million from the prior year $77 million, while sales (including internal sales) were up 57%%, to $915 million from $582 million. The division’s second-quarter EBITDA rose 137% to $315 million in the quarter from the year-ago $133 million.
Phosphates Specialties posted a 162% increase in EDITDA to $131 million on a 50% increase in sales to $493 million. Phosphate Commodities saw a 122% rise in EBITDA to $184 million, while sales were up 67% to $422 million.
ICL reported its YPH joint venture in China realized higher prices for both specialty products and commodity fertilizers, combined with increased production efficiency.
The company noted the continuing upward trend in commodity market prices, with raw material prices and production costs also continuing to trend higher.
The Innovative Ag Solutions (IAS) division posted a 571% year-over-year rise in operating income in the second quarter to $141 million, and a 110% rise in sales to $700 million (including sales to internal customers). The segment’s EBITDA was up 356%, to $155 million.
ICL highlighted record sales in specialty fertilizers during the quarter, driven by higher prices across all regions, which it said helped offset raw material price inflation.
“Our Brazil expansion strategy delivered both synergies and robust results ahead of expectations even during this traditionally slower season,” Zoller told company earnings call participants.
He said this Brazil business contributed $177 million in sales in the quarter, up versus the prior year, highlighting that overall demand remains elevated in Brazil, and the company expects continuation of this trend as the key planting season in the Southern Hemisphere gets underway.
ICL separately highlighted for the second quarter that organic polysulfate was “a big winner both in terms and price and market penetration.”
The company said its fertilizer plus products are the preferred product for many farmers due to their additional nutrients and organic composition.
ICL signed a long-term organic polysulfate supply agreement in June with Indian Potash Ltd. through 2026 for an aggregate amount of 1 million mt, inked in June (GM June 17, p. 29). Volumes will increase each year of the agreement, which has a renewal option. The polysulfate is expected to help boost the government of India’s organic agriculture program.
In addition to growth in India, Europe, and China, polysulfate gained new business with expansion into Indonesia.
ICL produces polyhalite – polysulfate is the marketed form – at Boulby in northeast England. The company reported the site remains on target to achieve its 1 million mt target in 2022.
Since the beginning of 2022, ICL Boulby and other European business components, at the start of 2022 come within the company’s IAS segment, having been re-allocated from ICL’s Potash and Phosphate Solutions business segments, respectively, as part of ICL’s consolidation of its specialty agriculture businesses into one segment under the IAS division (GM May 13, p. 31).
In connection with the second-quarter results, ICL’s Board of Directors declared a dividend of 29.18 cents per share, or approximately $375 million, up from 5.26 cents per share, or approximately $68 million, in the second quarter of 2021 The dividend will be payable on Sept. 14, 2022, to shareholders of record as of August 31, 2022.
For the first half of 2022, ICL reported a net income attributable to shareholders of the company of $1.195 billion ($0.93 per share) on revenue of $5.405 billion, up from the year earlier $275 million ($0.22 per share) and $3.127 billion, respectively.
Six-month adjusted EBITDA came in 241% up on first-half 2021 to $2.26 billion, versus the year-ago’s $662 million, while revenue increased 73%.