ICL, Tel Aviv, on Feb. 11 reported a 35 percent increase in fourth-quarter net income attributable to shareholders of the company to $65 million on sales of $1.32 billion, up from the year-ago $48 million and $1.11 billion, respectively. Adjusted net income increased 42 percent to $68 million (0.05 per share). The adjusted EPS of 5 cents versus 4 cents year-on-year beat the average estimate of 4 cents (range 2 cents to 6 cents), according to Bloomberg Consensus.
Fourth-quarter adjusted EBITDA increased 33 percent to $268 million.
“In 2020, our focus on innovative specialty products drove record operating income for specialty phosphates and the Innovative Ag Solutions division,” said ICL President and CEO Raviv Zoller.” We also had a record year at our YPH joint venture in China, our second-best year in Industrial Products, and we broke the annual potash production record at the Dead Sea.”
The CEO also highlighted the launch of production trials at the new Tetra Bromo Bisphenol A (TBBA) plant at Neot Hovav, southern Israel; beginning full operations of the salt harvester at The Dead Sea; the continued ramp- up of white phosphoric acid production at the China YPH facility; and the completion of excavation for the ramp connecting the Cabanasses mine in Spain with the company’s Suria plant.
The final integration in Spain will be completed in the first half of 2021 and is expected to increase the mine’s capacity with an expected annual run rate to reach approximately 1 million mt by the end of this year, while lowering the cost per ton.
“We also continued to reposition Innovative Ag Solutions for the future by focusing on the development of innovative products and growing our business in target markets, including Brazil – one of the world’s fastest growing agriculture markets – through our acquisition of Fertiláqua, which was completed during the first week of January 2021. We expect these and other innovative efforts to benefit the company in 2021,” said Zoller.
ICL acquired Fertiláqua, one of Brazil’s leading specialty plant nutrition companies, for $122 million (GM Jan. 8, p. 30). It said it expects to leverage Fertiláqua’s strong market presence and distribution capabilities to increase the sales of its organic fertilizers, controlled-released fertilizers, and other specialty plant nutrition products to the Brazilian market.
“The addition of Fertiláqua gives ICL a significant foothold in a major market with rapidly increasing demand for specialty plant nutrition products, and also provides a seasonal sales balance between the Northern and Southern Hemispheres,” Zoller told analysts at a group earnings call on Feb. 11.
“Going forward, we expect to grow our specialty fertilizer markets and to expand our reach in Brazil via both M&A and organic growth,” he said.
Responding to an analyst’s question about its M&A plans, Zoller highlighted ICL’s healthy balance sheet with plenty of liquidity, adding that the group’s potential acquisition focus is in the specialty fertilizers space, as well food technology.
Company-wide potash sales volumes rose 13 percent last year, to 4.67 million mt, up from 4.13 mt, due to higher output and increased sales mainly to China, Brazil, India, and the U.S. Potash production in 2020 reached 4.53 million mt, a 9 percent year-on-year increase.
Fourth-quarter potash production was 364,000 tons higher year-over-year, a 43 percent increase, which ICL attributed to increased production at ICL Dead Sea following the three-week closure in the fourth quarter of 2019 for facilities’ upgrades.
It said the higher output at the Dead Sea site was somewhat offset by lower production at ICL Iberia, mainly due to the Sallent site closure, which reduced potash production quantities by about 80,000 mt.
At ICL Boulby in northeast England, polysulfate – the marketed form of polyhalite – production was down 17 percent, to 158,000 mt in the fourth quarter of 2020, due to a power outage in November. But for the full year, production was 12 percent up year-over-year, to 709,000 mt despite the negative impact of COVID-19. Polysulfate sales volumes remained relatively stable quarter-over-quarter and increased by 13 percent year-over-year to 163,000 mt in the fourth quarter.
In terms of its potash production outlook in 2021 and 2022, ICL said it will see a production stoppage in Spain in the first quarter to complete the consolidation at its operations there.
In 2021, the group expects potash production at Sodom at the Dead Sea to be between 3.9 million mt and 4 million mt, and in Spain 700,000 mt to 800,000 mt, depending on the degree of success of the consolidation there, which it said it expects to be finalized in March or April. Zoller said the group expects to “exit 2021 in Spain at a run rate of 1 million mt,” which, he said, means group-wide potash production of close to 5 million mt.
For its Phosphate Solutions division, ICL reported a 20 percent increase in fourth-quarter sales to $501 million, up from the previous year’s $417 million. It said Phosphate specialties achieved an 11 percent increase in sales to $291 million in the quarter over fourth-quarter 2019, despite the divestment of Hagesüd Group, a German producer of premium spice blends and food ingredients for meat processing.
The company said the YPH phosphate joint venture in China continued to gradually shift from commodities to specialties and saw a year-over-year improvement in sales and operating income – due, in part, to cost-reduction efforts.
The company also highlighted higher white phosphoric acid (WPA) sales in the final quarter of 2020 versus the same year-earlier period, driven by increased volume in China, Europe, and South America, while North American sales remained stable. The WPA plant in China continued to ramp up and is scheduled to produce commercial food-grade acid by the end of first quarter 2021.
Fourth-quarter phosphate fertilizers sales were also up year-over-year, due to higher sales volumes.
ICL’s Innovative Ag Solutions division saw a 9 percent increase in fourth-quarter sales, to $163 million over the same prior-year quarter.
The company highlighted that in specialty agriculture, sales of straight fertilizers and controlled release fertilizers (CRF) continued to improve due to strong demand in all regions. It said there was a continued increase in sales to fast -growing emerging markets such as India and Turkey.
In the Turf & Ornamental sector, fourth-quarter sales were up 7 percent year-over-year, due to growth in Europe, North America, Australia, and New Zealand, and in both Turf and Landscape and Ornamental Horticulture. The company reported strong demand across most products, as buyers secured stocks in advance of any potential additional COVID-19 lockdowns.
For full-year 2020, ICL posted a decline in net income attributable to shareholders of the company to just $11 million (diluted EPS of $0.01), down from the year-ago $475 million ($0.37). Adjusted net income came in at $258 million versus FY2019’s $479 million, and an adjusted EPS of $0.20 versus the year-ago $0.37.
Full-year adjusted EBITDA fell 17 percent, to $990 million, down from $1.198 billion. Sales declined 4 percent, to $5.04 billion against the year-ago $5.27 billion.
In order to provide better clarity around expectations for 2021, ICL has issued an adjusted EBITDA guidance range of between $1.02 billion to $1.12 billion for the full year, which it said is based on commodity prices and exchange rates as of the beginning of 2021.
Based on its fourth-quarter results, the company’s board has declared a dividend of 2.65 cents per share, or approximately $34 million in the aggregate. The dividend will be paid on March 16, 2021. The record date is March 3, 2021.
Selected Segment Results
| 4Q-2020 | 4Q-2019 | FY2020 | FY2019 | |
| Potash | ||||
| Segment sales1 $m | 379 | 302 | 1,346 | 1,494 |
| Segment profit $m | 40 | 22 | 120 | 289 |
| Average realized price $/mt | 228 | 274 | 230 | 286 |
| Production ‘000 mt | 1,208 | 844 | 4,527 | 4,159 |
| Sales1 ‘000 mt | 1,333 | 785 | 4,666 | 4,130 |
| Phosphate Solutions | ||||
| Segment sales1 $m | 501 | 417 | 1,948 | 1,980 |
| Segment profit $m | 21 | 1 | 66 | 100 |
| Innovation Ag Solutions | ||||
| Segment sales1 $m | 163 | 150 | 731 | 717 |
| Segment profit $m | 5 | (2) | 40 | 21 |
1 Includes sales to internal customers