ICL Group Ltd. reported a 78% drop in third-quarter net income attributable to shareholders, to $137 million from $633 million in last year’s third quarter. Diluted earnings per share for the quarter were $0.11 versus $0.49 the previous year.
Adjusted EBITDA was down 67% year-over-year, to $346 million from last year’s $1.05 billion. ICL cited lower pricing across all its businesses, which more than offset increases in volumes and lower raw material prices and transportation rates.
Sales in the third quarter declined 26%, to $1.86 billion from last year’s $2.52 billion, but ICL noted they sales were up versus 2021 on both a quarter and year-to-date basis.
“ICL delivered solid results, while continuing to target long-term growth and consistently strong cash generation, enhanced by efficiency initiatives,” said ICL President and CEO Raviv Zoller. “While some competitive pressures remain in certain end-markets, demand recovery is on the horizon for our specialty businesses, and we are expecting a return to a more stabilized growth trajectory during 2024.”
In the company earnings call, Zoller referenced the Oct. 7 attack on Israel by Hamas, noting that “while there are some challenges, ICL’s operations there continue to function without significant disruption.”
ICL lost several members of “its ICL family” in the attacks and in the aftermath (GM Oct. 20, p.1). Approximately 600 of its more than 4,500 Israeli employees have been called to reserve duty, “a situation that has required some adjustments,” Zoller said.
Transportation of goods also has become “a unique challenge” for the company, he said. Despite these headwinds, Zoller said ICL remains committed to its customers, to its focused long-term growth strategy, and to its employees, their families, and the communities where the company does business.
ICL reaffirmed its guidance for full-year adjusted EBITDA, which it now expects at the middle of the previously announced range $1.6-$1.8 billion, with the company’s specialties focused businesses expected at approximately $0.7 billion.
ICL’s Potash segment reported a 38% year-over-year decline in third-quarter sales, to $526 million from $854 million, and a 69% decline in segment EBITDA, to $164 million from $537 million.
ICL said its production in Spain continued to face “geological constraints” in the third quarter as the company continues to transition away from a lower-grade mineral zone at the Cabanasses mine. This shift is in concert with other efficiency efforts as the company strives to increase output and decrease costs in Spain.
Third-quarter potash sales volumes, including sales to internal customers, increased to roughly 1.28 million mt, with higher volumes to Europe, Brazil, and China. ICL said its potash supply is now sold out for 2023.
The average potash price in the third quarter was $342/mt CIF, down significantly from $679/mt CIF last year but slightly above the third-quarter 2021 average price of $335/mt CIF. ICL said potash prices are stabilizing and expects its fourth-quarter average price to be almost level with the third quarter price.
ICL projects global potash demand next year at 68-69 million mt, following an expected 64-65 million mt in 2023 and some 60-61 million mt last year. ICL expects to produce 4.7-4.8 million mt of potash in 2024.
“In general, inventories are low in most regions, and there is a need for replenishment of inventory,” Zoller said. “China’s inventory is not low, but at the same time, there’s a lot of demand coming out of the country, so there’s a healthy environment for next year as well.”
ICL’s Phosphate Solutions segment reported “strong results relative to current market conditions,” the company said, with resilience demonstrated across Specialties. The segment posted a 51% drop in third-quarter segment EBITDA, to $117 million on sales of $620 million, down from last year’s $239 million and $766 million, respectively. Sales were 19% lower year-over-year.
Phosphate commodities contributed $62 million to the segment’s third-quarter EBITDA, while Phosphate specialties contributed $55 million. This compares to $128 million and $111 million, respectively, for the same period last year.
Phosphate specialties third-quarter sales totaled $364 million versus $455 million a year ago, while Phosphate commodities sales fell to $256 million from $311 million. ICL said sales volumes of white phosphoric acid, industrial specialties, and food specialties were all lower year-over-year.
ICL’s Growing Solutions segment, which now includes the company’s polyhalite mining operation at Boulby, England, reported a slide in third-quarter EBITDA, to $37 million from last year’s $127 million. Segment sales were off 13% year-over-year, to $550 million from $629 million. The company highlighted record sales volumes in Brazil for the Growing Solutions segment, and strong market share gains.
For other key geographies, ICL sees demand returning in Europe, especially for its polysulfate-based FertilizerPlus products. Production of polysulfate at Boulby increased 13% in the third quarter, reaching 245,000 mt.
ICL said its first large-scale lithium battery materials (LFP) manufacturing plant in St Louis, Mo., remains on track to be operational in late 2025. ICL broke ground on the $400 million facility in early August. The plant will produce 30,000 mt/y of LFP. Zoller said ICL is in the process of Board approvals for the first long-term offtake agreement for the facility and expects to announce this strategic partnership “during the coming days.” ICL expects the facility to serve no more than two or three customers.
For the first nine months, ICL reported a 68% decline in net income attributable to shareholders, to $580 million from the year-ago $1.83 billion. Diluted earnings per share were $0.45 against $1.42 the previous year. Nine-month adjusted EBITDA was down 58%, to $1.4 billion from $3.31 billion, while sales were off 26% year-over-year, to $5.85 billion from $7.92 billion.
Based on the third-quarter results, ICL’s Board has declared a dividend of 5.31 cents per share, or approximately $68 million, compared with 24.35 cents per share, or approximately $314 million, in last year’s third quarter. The dividend will be payable on Dec. 20, 2023.