ICL Group Ltd. reported a 70% drop in adjusted net income attributable to shareholders of the company for the year ended Dec. 31, 2023, to $715 million from $2.35 billion the previous year. Diluted adjusted earnings per share were $0.55 versus $1.82 per share the previous year.
FY2023 adjusted EBITDA declined 56%, to $1.75 billion from the year-ago $4.01 billion, while sales fell 25% year-over-year, to $7.54 billion from $10.02 billion.
The company noted “the significant impact” that lower prices, especially for potash, had on the annual EBITDA. The impact was partially offset by lower raw material costs, and also savings and efficiency programs initiated in the fourth quarter.
ICL
President and CEO Raviv Zoller described FY2023 as one of challenging market
conditions and, in the fourth quarter of the year, resilience in the face of
war.
“While we continued to face various operational challenges in the fourth
quarter, which were caused by the war, our efforts to minimize disruption and
maintain good production levels were successful,” Zoller told analysts at a
company earnings call on Feb. 28.
“Additionally, the majority of our employees who had been called up for service
have now returned to full-time work at ICL,” he said, noting that the many
people called for reserve duty had stretched the company on the maintenance
side, and had even caused some loss of production.
Fourth-quarter net income attributable to shareholders fell 66%, to $123 million from $358 million the previous year. The quarter’s diluted adjusted earnings per share were $0.10 versus $0.28 per share the prior year. Fourth-quarter adjusted EBITDA fell 49%, to $357 million, while sales declined 19%, to $1.69 billion.
While the company sees improving demand for 2024, it expects the situation in the Red Sea to remain challenging. “We currently see improving demand in the company’s key end-markets, and, while we expect there will be new and continued challenges in 2024, we are looking forward to achieving our goals for the year, including inorganic growth,” Zoller said.
In the fertilizer sector, Zoller sees market demand strengthening this year as fertilizer prices remain affordable. In addition, he sees soil nutrient deficiency around the world as remaining an issue due to under application of fertilizers for the previous two years. The company noted industry expectations to see global potash demand of more than 68 million mt in 2024.
The Red Sea situation has become a global issue, not just a local issue, Zoller noted. ICL was able to get all of the products it wanted through the Red Sea in the fourth quarter and in the first quarter so far, but Zoller said he does not expect the situation to improve in the next few weeks “until the war settles in one way or another.”
“The overall result is a hike in transportation costs,” he said. “And I think if it continues in the next few weeks, these higher transportation costs will translate into higher product costs.”
ICL reported that it is making a change to its guidance practices “in order to provide greater transparency for its shareholders.” Going forward, the company will be providing guidance for expected potash sales volumes and EBITDA guidance for all of its business segments other than potash, which will be referred to as specialties-driven business segments.
For 2024, the company expects adjusted EBITDA for its specialties-driven segments to be between $0.7-$0.9 billion. ICL expects 2024 potash sales volumes to be between 4.6-4.9 million mt, compared with 4.683 million mt in FY2023. It said fourth-quarter Potash segment EBITDA of $168 million should give a good indication of EBITDA at current prices, and ICL expects every $20 change in the average potash CIF price from current levels to result in a $100 million annual impact to EBITDA.
The Potash segment reported a 34% year-over-year drop in sales, to $2.18 billion from $3.31 billion in FY2022, while EBITDA declined 58%, to $843 million from $1.99 billion. Production was 6% lower, at 4.42 million mt from 2022’s 4.691 million mt. ICL cited operational challenges such as weather and war-related issues in the fourth quarter, as well as on-going geological constraints in Spain.
Sales volumes were up 4% in 2023, however, to 4.683 million mt from the prior year’s 4.499 million mt. The company attributed the increase mainly to increased sales volumes to Europe and China, partially offset by lower sales volumes to India, Brazil, and the US.
The average potash price in the fourth quarter was $345/mt CIF, 1% higher than the third quarter’s average but 42% lower than the $594/mt CIF average for the fourth quarter of 2022.
ICL’s Phosphate Solutions segment posted a 20% drop in sales in 2023, to $2.48 billion from $3.11 billion the previous year, while segment EBITDA declined 43%, to $550 million from $966 million. ICL described the results as “more normalized” after 2022’s price spike.
The Growing Solutions segment, which now includes ICL’s polyhalite mining operation at Boulby, England, reported a 14% drop in sales, to $2.07 billion from the prior year’s $2.42 billion. The segment’s EBITDA slumped 73%, to $119 million from $448 million.
The company said specialty agriculture sales decreased slightly year-over-year due to lower prices, partially offset by an increase in volumes. Turf and ornamental sales also decreased year-over-year.
ICL
said weather-related challenges delayed fourth-quarter orders in Brazil, impacting
both the quarter and full-year results for the Growing Solutions segment.
However, the company said it gained market share in Brazil, with Brazil and
China now accounting for approximately 40% of Growing Solutions sales.
Production of polysulfate at Boulby decreased 6% in the fourth quarter, to
238,000 mt, but annual production in 2023 reached 1.009 million mt, which ICL
described as a production record. Sales of FertilizerpluS, one of the company’s
main polysulfate-based products, decreased last year, however, as higher
volumes only partially offset lower prices.
In connection with the company’s fourth-quarter results, ICL’s Board has declared a cash dividend of 4.76 cents, or about $61 million in total. This compares to 13.83 cents, or about $178 million in total, for fourth-quarter 2022. The 2023 dividend will be paid on March 26.