ICL Group Ltd., Tel Aviv, reported a 368% surge in net income attributable to shareholders of the company to $632 million in the first quarter ended March 31, 2022, up from the prior-year $135 million. Adjusted earnings per diluted share were $0.48, versus $0.11 a year earlier.
Adjusted EBITDA for the quarter was $1.0 billion, up from the previous year $302 million, while first-quarter sales increased by 67% to $2.53 billion, up from $1.51 million.
ICL attributed the quarterly results to the company’s continuing long-term strategic focus on specialty solutions, bolstered by “significant commodity upside,” with increased demand and higher prices in most markets, and despite higher overall costs and worldwide supply chain challenges.
“Once again, all our specialty businesses achieved new quarterly results records, as all four of our divisions contributed to our significant growth and new ICL record sales and EBITDA,” ICL President and CEO Raviv Zoller said on May 11.
“The disruptions caused by the pandemic, sanctions, and the conflict in Ukraine have radically shifted market dynamics and could continue to significantly impact global agriculture, food and industrial markets in the near term,” he said, adding that the company would continue to optimize its customer and supplier relationships, to manage through global supply challenges and to work to ensure “consistent and reliable” product supply to its customers.
Due to the very strong results in the first quarter, and the significant changes in market dynamics, ICL is raising its expectations for full-year adjusted EBITDA to a range of $3.5-$3.75 billion (previous: $1.85-$2.05 billion), with between $1.3-$1.4 billion (previous: $875-$925 million) coming from its specialties focused businesses.
ICL’s Potash division achieved a significant increase in first-quarter operating income to $410 million, up from the year-ago $29 million, while sales increased 128%, to $795 million (including sales to internal customers) from $349 million the previous year.
Potash segment EBITDA for the quarter surged to $450 million, up year-over-year from $62 million.
The company highlighted that the average potash realized price per ton for the quarter was $601/mt, an increase of 134% year-over year, as prices continued to increase due to global disruptions in fertilizer availability, which have been exacerbated by the conflict in Ukraine.
ICL’s potash production fell 5%, to 1.093 million mt versus the year-ago 1.152 million mt, mainly due to a decrease in total production at ICL Dead Sea at Sdom due to the annual maintenance shutdown being completed in March this year versus April in 2021. This was partially offset by higher production at ICL Iberia, where first-quarter potash output increased by 38% year-over-year to 182,000 mt.
The company said production improvements continue to advance at the ICL Iberia Cabanasses mine following the completion of the ramp project in 2021, together with processing plant improvements to the Suria plant.
As a result, ICL expects to increase potash production capacity at ICL Iberia to an expected annual run-rate of approximately 1 million mt by the end of the second quarter of this year, while lowering the cost per ton. It expects to reach a level of about 1.3 million mt/y “in the future,” following the completion of “additional necessary adjustments” to the mine and surface production facilities.
The company reported the P-9 pumping station at ICL Dead Sea became operational at the beginning of the first quarter, after being commissioned late last year.
First potash sales volumes (including internal sales) increased by 7% to 1.15 million mt, up from 1.075 million mt the previous year. The company cited higher sales quantities to Brazil, China, and India, partially offset by lower sales to the US, the UK, and to Spain.
ICL signed framework agreements in February with customers in China and in March with its customers in India to supply 700,000 mt and 600,000 mt of potash (firm tons), respectively, this year, at $590/mt CFR (GM March 25, p. 14; Feb. 18, p.15).
Zoller told analysts at a company earnings call on May 11 that the company was sold out of potash for the second quarter, and expects the average selling price in the second quarter for potash to be around $800/mt before transport costs – so the realized price would be around $760-ish/mt, he said.
He pointed out that one third of the company’s potash for the year is already sold at $590/mt CFR to China and India, adding that the company does not expect that to change.
ICL Boulby, the company’s polyhalite mining operation in northeast England, and other European business components have been allocated from the Potash and Phosphate Solutions segments, respectively, to the company’s Innovative Ag Solutions (IAS), segment, as part of ICL’s consolidation of its specialty agriculture businesses into one segment under the IAS division, and as the company continues to focus on targeting long-term growth through its diversified specialty solutions.
The Phosphates Solutions division saw first-quarter operating income surge to $200 million from the prior year $42 million, while sales (including internal sales) were up 59% to $798 million.
The division’s EBITDA rose 163 percent to $247 million in the quarter, up from $94 million.
Phosphates specialties posted a 140% increase in EDITDA to $115 million on a 49 percent increase in sales to $437 million. Phosphate commodities saw a 187% rise in EBITDA, to $132 million, while sales were up 74%, to $361 million.
ICL reported that its YPH joint venture in China delivered record results and continued growth in profitability, with strength in pricing in both specialties and commodities.
The IAS division posted a surge in operating income in the first quarter to $93 million, up from $20 million a year earlier, and a 66% rise in sales to $566 million (including sales to internal customers) from the prior year $340 million. IAS recorded a 233% increase in first-quarter EBITDA to $110 million versus $33 million a year ago.
ICL cited higher sales prices in most regions and business lines, including “the strong performance” of the newly acquired companies in Brazil (Fertiláqua, completed in January 2021 (GM Jan. 8, 2021) and ADS – formerly Compass Minerals América do Sul SA – completed in July 2021 (GM July 2, 2021), as well as the increase in markets prices in all regions.
The company reported sales to the specialty agriculture market increased year-over-year due to higher sales prices of straight, liquid, and controlled-release fertilizers, as well as the aforementioned strong performance of the newly acquired Brazilian businesses.
Sales of IAS’ Turf and Ornamental business increased in the first quarter versus a year ago, also due to higher sales prices.
First-quarter production of polysulfate at ICL Boulby in the U.K increased 30% year-over-year to 238,000 mt while sales volumes increased by 11%, which ICL said helped ICL Boulby to achieve quarterly profit contribution for the very first time.
Sales of polysulfate-based products branded as FertilizersPluS contributed both in terms of prices and volume.
Zoller told analysts that in order to reach production targets for polysulfate at Boulby, it took down salt production at the site by 65,000 mt.
Responding to an analyst’s question about the company’s expectations for the Boulby business for the rest of this year, Zoller said the expectation is for the output to be relatively stable for the rest of the year, and to end the year at about 1 million mt of production.
Based on the first-quarter results, ICL will pay a dividend of 23.83 cents per share, or $306.5 million, versus 5.25 cents, or $67 million in first quarter 2021.