ICL Reports Fourth Quarter and Full Year 2023 Results
Delivers annual sales of
For the fourth quarter of 2023, consolidated sales were
“ICL delivered adjusted EBITDA of
The Company also announced it is making a change to 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 the specialties-driven segments adjusted EBITDA to be between
Financial Figures and non-GAAP Financial Measures
|
10-12/2023 |
10-12/2022 |
1-12/2023 |
1-12/2022 |
||||||||||||
|
$ millions |
% of Sales |
$ millions |
% of Sales |
$ millions |
% of Sales |
$ millions |
% of Sales |
||||||||
Sales |
1,690 |
- |
2,091 |
- |
7,536 |
- |
10,015 |
- |
||||||||
Gross profit |
560 |
33 |
933 |
45 |
2,671 |
35 |
5,032 |
50 |
||||||||
Operating income |
149 |
9 |
540 |
26 |
1,141 |
15 |
3,516 |
35 |
||||||||
Adjusted operating income (1) |
211 |
12 |
562 |
27 |
1,218 |
16 |
3,509 |
35 |
||||||||
Net income attributable to the Company's shareholders |
67 |
4 |
331 |
16 |
647 |
9 |
2,159 |
22 |
||||||||
Adjusted net income attributable to the Company’s shareholders (1) |
123 |
7 |
358 |
17 |
715 |
9 |
2,350 |
23 |
||||||||
Diluted earnings per share (in dollars) |
0.05 |
- |
0.25 |
- |
0.50 |
- |
1.67 |
- |
||||||||
Diluted adjusted earnings per share (in dollars) (2) |
0.10 |
- |
0.28 |
- |
0.55 |
- |
1.82 |
- |
||||||||
Adjusted EBITDA (2) |
357 |
21 |
698 |
33 |
1,754 |
23 |
4,007 |
40 |
||||||||
Cash flows from operating activities |
415 |
- |
467 |
- |
1,595 |
- |
2,025 |
- |
||||||||
Purchases of property, plant and equipment and intangible assets (3) |
255 |
- |
212 |
- |
780 |
- |
747 |
- |
(1) |
See “Adjustments to Reported Operating and Net income (non-GAAP)” below. |
|
(2) |
See “Consolidated Adjusted EBITDA and Diluted Adjusted Earnings Per Share for the periods of activity" below. |
|
(3) |
See “Condensed consolidated statements of cash flows (unaudited)” to the accompanying financial statements. |
|
Industrial Products |
|
Potash |
|
Phosphate Solutions |
|
Growing Solutions |
|||||||||
|
Three-months ended 31 December |
|||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Segment operating income |
39 |
95 |
122 |
340 |
74 |
116 |
(5) |
32 |
||||||||
Depreciation and amortization |
17 |
15 |
46 |
45 |
59 |
49 |
20 |
24 |
||||||||
Segment EBITDA |
56 |
110 |
168 |
385 |
133 |
165 |
15 |
56 |
Segment Information
Industrial Products
The Industrial Products segment produces bromine from a highly concentrated solution in the
Results of operations
|
10-12/2023 |
|
10-12/2022 |
|
1-12/2023 |
|
1-12/2022 |
|
|
$ millions |
|
$ millions |
|
$ millions |
|
$ millions |
|
Segment Sales |
299 |
349 |
1,227 |
1,766 |
||||
Sales to external customers |
294 |
343 |
1,206 |
1,737 |
||||
Sales to internal customers |
5 |
6 |
21 |
29 |
||||
Segment Operating Income |
39 |
95 |
220 |
628 |
||||
Depreciation and amortization |
17 |
15 |
57 |
61 |
||||
Segment EBITDA |
56 |
110 |
277 |
689 |
||||
Capital expenditures |
29 |
27 |
91 |
90 |
Significant highlights
- Flame retardants: Sales of both bromine and phosphorous-based flame retardants decreased year-over-year due to lower prices, as electronics and construction end-market demand remained subdued.
- Industrial solutions: Elemental bromine sales decreased year-over-year, as higher volumes only partially offset lower bromine prices.
- Oil and gas: Record clear brine fluids sales and operating profit for 2023, due to strong end-market demand.
- Specialty minerals: Record operating profit for 2023, despite slightly lower volumes.
Results analysis for the period October –
|
Sales |
Expenses |
Operating income |
|||
|
$ millions |
|||||
Q4 2022 figures |
349 |
(254) |
95 |
|||
Quantity |
63 |
(34) |
29 |
|||
Price |
(115) |
- |
(115) |
|||
Exchange rates |
2 |
6 |
8 |
|||
Raw materials |
- |
7 |
7 |
|||
Energy |
- |
4 |
4 |
|||
Transportation |
- |
8 |
8 |
|||
Operating and other expenses |
- |
3 |
3 |
|||
Q4 2023 figures |
299 |
(260) |
39 |
- Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of bromine-based flame retardants and elemental bromine. This was partially offset by lower sales volumes of phosphorus-based flame retardants, specialty minerals and clear brine fluids.
- Price – The negative impact on operating income was primarily due to lower selling prices of bromine and phosphorus-based flame retardants, bromine-based industrial solutions, and specialty minerals.
- Exchange rates – The favorable impact on operating income was mainly due to the positive impact on operational costs resulting from the depreciation of the average exchange rate of the Israeli shekel against the US dollar, as well as the positive impact on sales resulting from the appreciation of the average exchange rate of the euro against the US dollar.
- Raw materials – The positive impact on operating income was due to a decrease in raw material costs.
- Transportation – The positive impact on operating income was due to a decrease in marine and inland transportation costs.
Potash
The Potash segment produces and sells mainly potash, salts, magnesium, and electricity. Potash is produced in
Results of operations
|
10-12/2023 |
10-12/2022 |
1-12/2023 |
1-12/2022 |
|
$ millions |
$ millions |
$ millions |
$ millions |
Segment Sales |
474 |
713 |
2,182 |
3,313 |
Potash sales to external customers |
336 |
568 |
1,693 |
2,710 |
Potash sales to internal customers |
49 |
36 |
129 |
184 |
Other and eliminations (1) |
89 |
109 |
360 |
419 |
Gross Profit |
231 |
456 |
1,171 |
2,292 |
Segment Operating Income |
122 |
340 |
668 |
1,822 |
Depreciation and amortization |
46 |
45 |
175 |
166 |
Segment EBITDA |
168 |
385 |
843 |
1,988 |
Capital expenditures |
132 |
92 |
384 |
346 |
Potash price - CIF ($ per tonne) |
345 |
594 |
393 |
682 |
(1) |
Primarily includes salt produced in |
Significant highlights
-
ICL's potash price (CIF) per tonne of
$345 in the quarter was 1% higher than the third quarter of 2023 and 42% lower year-over-year. - The Grain Price Index decreased by 6.7% during the quarter due to decreased prices of wheat, corn and soybean by 16.2%, 12.8% and 8.5%, respectively, partially offset by an increase in prices of rice by 5.4%.
-
The WASDE (World Agricultural Supply and Demand Estimates) report, published by the
USDA inJanuary 2024 , showed a continued decrease in the expected ratio of global inventories of grains to consumption to 27.7% for the 2023/24 agriculture year, compared to 28.1% for the 2022/23 agriculture year and 28.4% for the 2021/22 agriculture year. -
Freight rates have been increasing, with disruptions in the
Red Sea and inPanama .Suez Canal shipments have plummeted due to the security situation in the area with many vessels rerouted around southernAfrica , and thePanama Canal is navigating a historic water crisis, limiting the number of ships crossing.
Additional segment information
Global potash market - average prices and imports:
Average prices |
|
10-12/2023 |
10-12/2022 |
VS Q4 2022 |
7-9/2023 |
VS Q3 2023 |
||||||
Granular potash – |
CFR spot ($ per tonne) |
336 |
570 |
(41.1)% |
351 |
(4.3)% |
||||||
Granular potash – |
CIF spot/contract (€ per tonne) |
388 |
813 |
(52.3)% |
392 |
(1.0)% |
||||||
Standard potash – |
CFR spot ($ per tonne) |
318 |
675 |
(52.9)% |
309 |
2.9% |
||||||
Potash imports |
|
|
|
|
|
|
||||||
To |
million tonnes |
3.4 |
1.5 |
126.7% |
3.6 |
(5.6)% |
||||||
To |
million tonnes |
3.6 |
1.8 |
100.0% |
2.9 |
24.1% |
||||||
To |
million tonnes |
0.8 |
0.5 |
60.0% |
0.6 |
33.3% |
Sources: CRU (Fertilizer Week Historical Price:
Potash – Production and Sales
Thousands of tons |
10-12/2023 |
10-12/2022 |
1-12/2023 |
1-12/2022 |
||||
Production |
1,139 |
1,224 |
4,420 |
4,691 |
||||
Total sales (including internal sales) |
1,179 |
1,068 |
4,683 |
4,499 |
||||
Closing inventory |
284 |
547 |
284 |
547 |
Fourth quarter 2023
-
Production – Production was 85 thousand tonnes lower year-over-year, mainly due to operational challenges and war related issues in the
Dead Sea , as well as a planned production shutdown inSpain . -
Sales – The quantity of potash sold was 111 thousand tonnes higher year-over-year, mainly due to increased sales volumes to
Brazil ,China andEurope .
Full year 2023
-
Production – Production was 271 thousand tonnes lower year-over-year, in the
Dead Sea mainly due to operational challenges, such as weather conditions and war related issues in the fourth quarter, as well as on-going geologic constraints inSpain . -
Sales – The quantity of potash sold was 184 thousand tonnes higher year-over-year, mainly due to increased sales volumes to
Europe andChina , partially offset by lower sales volumes toIndia ,Brazil and the US.
Results analysis for the period October –
|
Sales |
Expenses |
Operating
|
|||
|
$ millions |
|||||
Q4 2022 figures |
713 |
(373) |
340 |
|||
Quantity |
11 |
2 |
13 |
|||
Price |
(255) |
- |
(255) |
|||
Exchange rates |
5 |
3 |
8 |
|||
Raw materials |
- |
4 |
4 |
|||
Energy |
- |
5 |
5 |
|||
Transportation |
- |
(2) |
(2) |
|||
Operating and other expenses |
- |
9 |
9 |
|||
Q4 2023 figures |
474 |
(352) |
122 |
-
Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of potash to
China ,Brazil andEurope , partially offset by lower sales volumes toIndia and the US. -
Price – The negative impact on operating income resulted primarily from a decrease of
$249 in the potash price (CIF) per tonne, year-over-year. - Exchange rates – The favorable impact on operating income was due to a positive impact on sales resulting from the appreciation of the average exchange rate of the euro and the British pound against the US dollar, as well as a positive impact on operational costs resulting from the depreciation of the average exchange rate of the Israeli shekel against the US dollar.
- Energy – The positive impact on operating income was primarily due to a decrease in electricity and gas prices.
- Operating and other expenses – The positive impact on operating income was primarily related to operational savings.
Phosphate Solutions
The Phosphate Solutions segment operates ICL's phosphate value chain and uses phosphate rock and fertilizer-grade phosphoric acid to produce phosphate-based specialty products with higher added value, as well as to produce and sell phosphate-based fertilizers.
Phosphate specialties sales of
Sales of phosphate commodities amounted to
Results of operations
|
10-12/2023 |
10-12/2022 |
1-12/2023 |
1-12/2022 |
||||
|
$ millions |
$ millions |
$ millions |
$ millions |
||||
Segment Sales |
544 |
627 |
2,483 |
3,106 |
||||
Sales to external customers |
503 |
574 |
2,274 |
2,851 |
||||
Sales to internal customers |
41 |
53 |
209 |
255 |
||||
Segment Operating Income |
74 |
116 |
329 |
777 |
||||
Depreciation and amortization* |
59 |
49 |
221 |
189 |
||||
Segment EBITDA |
133 |
165 |
550 |
966 |
||||
Phosphate specialties EBITDA |
55 |
79 |
277 |
436 |
||||
Phosphate commodities EBITDA |
78 |
86 |
273 |
530 |
||||
Capital expenditures |
90 |
78 |
272 |
259 |
* |
For Q4 2023, comprised of |
Significant highlights
-
White phosphoric acid (WPA): Sales decreased year-over-year, as higher volumes - mainly in
Europe – only partially offset lower prices. - Industrial specialties: Sales decreased year-over-year, with lower prices in key markets, partially offset by higher volumes globally.
-
Food specialties: Volumes in
Europe increased year-over-year, while global sales declined versus the prior year, due to lower volumes in theAmericas related to a slower than expected recovery in consumer demand. -
A positive pricing effect continued into the fourth quarter of 2023 with prices up to 15% higher when compared to the third quarter average. Negative sentiment was generated early in the quarter due to a reduction of DAP subsidies by
India and a reduction of countervailing duties (CVDs) by the US on OCP, partially offset by lower market liquidity due to China’s decision to limit exports.-
In
India , DAP prices decreased by$7 /t from the previous quarter to$593 /t CFR, due to the government’s decision to reduce the DAP subsidy for the rabi crop, which lowered demand for imports. -
US phosphate imports remained firm in
October 2023 , as distributors continued to restock depleted inventories. DAP FOB Nola prices increased by 7% during the quarter, finishing the year at$623 /t despite decreased volumes in November and December, and theUS Department of Commerce’s decision to decrease OCP’s CVDs from 19.97% to 2.12%. -
In
Brazil , MAP prices were 6% higher in the quarter, reaching$563 /t at the end of December. A lack of prompt availability and poor weather, which created a delayed import window for soy planting, continued to support prices at a time when demand usually begins to wane. -
In
November 2023 , China’s economic planning committee, the NDRC, suspended review of new export applications until year-end, in an effort to lower domestic prices.
-
In
-
Indian phosphoric acid prices are negotiated on a quarterly basis. The fourth quarter price was agreed at
$985 /t P2O5, up$135 from the third quarter price, reflecting a surge in DAP/MAP prices during the fourth quarter. The price for the first quarter of 2024 is still under negotiation. -
Spot sulphur FOB Middle East eased to
$78 /t at the end of December, down from$108 /t at the beginning of the quarter, as concerns over Chinese demand and ample availability weighed on fundamentals.
Additional segment information
Global phosphate commodities market - average prices:
Average prices |
$ per tonne |
10-12/2023 |
10-12/2022 |
VS Q4 2022 |
07-09/2023 |
VS Q3 2023 |
||||||
DAP |
CFR India Bulk Spot |
594 |
734 |
(19)% |
518 |
15% |
||||||
TSP |
CFR Brazil Bulk Spot |
422 |
543 |
(22)% |
394 |
7% |
||||||
SSP |
CPT Brazil inland 18-20% P2O5 Bulk Spot |
278 |
270 |
3% |
275 |
1% |
||||||
Sulphur |
Bulk FOB Adnoc monthly Bulk contract |
102 |
138 |
(26)% |
82 |
24% |
Source: CRU (Fertilizer Week Historical Prices,
Results analysis for the period October –
|
Sales |
Expenses |
Operating
|
|||
|
$ millions |
|||||
Q4 2022 figures |
627 |
(511) |
116 |
|||
Quantity |
(7) |
8 |
1 |
|||
Price |
(81) |
- |
(81) |
|||
Exchange rates |
5 |
1 |
6 |
|||
Raw materials |
- |
24 |
24 |
|||
Energy |
- |
(1) |
(1) |
|||
Transportation |
- |
(3) |
(3) |
|||
Operating and other expenses |
- |
12 |
12 |
|||
Q4 2023 figures |
544 |
(470) |
74 |
- Quantity – The positive impact on operating income was primarily related to higher volumes of phosphate fertilizers and white phosphoric acid (WPA). This was partially offset by lower sales volumes of phosphate-based food additives and MAP used as raw material for energy storage solutions.
- Price – The negative impact on operating income was primarily due to lower selling prices of WPA, phosphate fertilizers and salts.
- Exchange rates – The favorable impact on operating income was mainly due to the positive impact on sales resulting from the appreciation of the average exchange rate of the euro against the US dollar which exceeded its negative impact on operational costs, as well as the positive impact on operational costs due to the depreciation of the average exchange rate of the Israeli shekel and the Chinese yuan against the US dollar.
- Raw materials – The positive impact on operating income was mainly due to lower costs of sulphur, potassium hydroxide (KOH) and caustic soda.
- Operating and other expenses – The positive impact on operating income was primarily related to lower maintenance and operational costs.
Growing Solutions
The Growing Solutions segment aims to achieve global leadership in plant nutrition by enhancing its position in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, fertilizers and FertilizerpluS, and by targeting high-growth markets such as
Results of operations
|
10-12/2023 |
10-12/2022 |
1-12/2023 |
1-12/2022 |
||||
|
$ millions |
$ millions |
$ millions |
$ millions |
||||
Segment Sales |
478 |
527 |
2,073 |
2,422 |
||||
Sales to external customers |
475 |
513 |
2,047 |
2,376 |
||||
Sales to internal customers |
3 |
14 |
26 |
46 |
||||
Segment Operating Income |
(5) |
32 |
51 |
378 |
||||
Depreciation and amortization |
20 |
24 |
68 |
70 |
||||
Segment EBITDA |
15 |
56 |
119 |
448 |
||||
Capital expenditures |
36 |
38 |
92 |
101 |
Significant highlights
- Specialty agriculture: Sales slightly decreased year-over-year, due to lower prices, partially offset by an increase in volumes, mainly in micronutrients, controlled released fertilizers and straight fertilizers.
- Turf and ornamental: Sales decreased year-over-year, with turf sales decreasing, while ornamental horticulture sales remained stable.
-
Brazil : Weather-related challenges delayed fourth quarter orders, impacting both quarter and full year results. - ICL Boulby: Production of Polysulphate decreased by 6% year-over-year for the fourth quarter, declining to 238 thousand tonnes. For 2023 production reached 1,009 thousand tonnes, an annual production record.
- FertilizerpluS: sales decreased year-over-year, as higher volumes only partially offset lower prices.
-
Planned maintenance in certain facilities was shifted from the first quarter of 2024 to the fourth quarter of 2023, as a response to application delays in
Europe , mainly due to weather, andIsrael , mainly due to the war. -
In the beginning of 2024, the Company completed the acquisition of Nitro 1000, a manufacturer, developer and provider of biological crop inputs in
Brazil , for a consideration of$30 million . Nitro 1000’s products mainly target soybean, corn and sugar cane crops, and their application replaces or optimizes the use of fertilizers. These products help farmers increase profitability, as well as offer more sustainable options.
Results analysis for the period October –
|
Sales |
Expenses |
Operating
|
|||
|
$ millions |
|||||
Q4 2022 figures |
527 |
(495) |
32 |
|||
Quantity |
98 |
(67) |
31 |
|||
Price |
(165) |
- |
(165) |
|||
Exchange rates |
18 |
(16) |
2 |
|||
Raw materials |
- |
111 |
111 |
|||
Energy |
- |
1 |
1 |
|||
Transportation |
- |
2 |
2 |
|||
Operating and other expenses |
- |
(19) |
(19) |
|||
Q4 2023 figures |
478 |
(483) |
(5) |
- Quantity – The positive impact on operating income was primarily due to higher sales volumes of specialty agriculture and FertilizerpluS products.
- Price – The negative impact on operating income was primarily due to lower selling prices across most product lines, mainly specialty agriculture and FertilizerpluS products.
- Exchange rates – The favorable impact on operating income was primarily due to the positive impact on sales resulting from the appreciation of the average exchange rate of the Brazilian real and the euro against the US dollar, which exceeded their negative impact on operational costs.
- Raw materials – The positive impact on operating income was primarily related to lower costs of commodity fertilizers, potassium hydroxide (KOH) and ammonia.
- Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs, as well as sales commissions.
Financing expenses, net
Net financing expenses in the fourth quarter of 2023 amounted to
Tax expenses
In the fourth quarter of 2023, the Company’s reported tax expenses amounted to
Liquidity and Capital Resources
As of
Outstanding net debt
As of
Credit facilities
Sustainability-linked Revolving Credit Facility (RCF)
In
As of
Securitization
The total amount of the Company's committed securitization facility framework is
Ratings and financial covenants
Fitch Ratings
In
S&P Ratings
In
Financial covenants
As of
Dividend Distribution
In connection with ICL’s fourth quarter 2023 results, the Board of Directors declared a dividend of
About ICL
We disclose in this quarterly report non-IFRS financial measures titled adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share, and adjusted EBITDA. Our management uses adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share, and adjusted EBITDA to facilitate operating performance comparisons from period to period. We calculate our adjusted operating income by adjusting our operating income to add certain items, as set forth in the reconciliation table under “Adjustments to reported operating, and net income (non-GAAP)” below. Certain of these items may recur. We calculate our adjusted net income attributable to the Company’s shareholders by adjusting our net income attributable to the Company’s shareholders to add certain items, as set forth in the reconciliation table under “Adjustments to reported operating, and net income (non-GAAP)” below, excluding the total tax impact of such adjustments. We calculate our diluted adjusted earnings per share by dividing adjusted net income by the weighted-average number of diluted ordinary shares outstanding. Our adjusted EBITDA is calculated as net income before financing expenses, net, taxes on income, share in earnings of equity-accounted investees, depreciation and amortization, and adjust items presented in the reconciliation table under “Consolidated adjusted EBITDA, and diluted adjusted Earnings Per Share for the periods of activity” below, which were adjusted for in calculating the adjusted operating income. Commencing with the year 2022, the Company’s “adjusted EBITDA” calculation is no longer adding back “minority and equity income, net“. While “minority and equity income, net” reflects the share of an equity investor in one of our owned operations, since adjusted EBITDA measures the Company’s overall performance, its operations and its ability to satisfy cash needs, before profit is allocated to the equity investor, management believes that adjusted EBITDA before deduction of such item is more reflective.
You should not view adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share or adjusted EBITDA as a substitute for operating income or net income attributable to the Company’s shareholders determined in accordance with IFRS, and you should note that our definitions of adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share, and adjusted EBITDA may differ from those used by other companies. Additionally, other companies may use other measures to evaluate their performance, which may reduce the usefulness of our non-IFRS financial measures as tools for comparison. However, we believe adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share, and adjusted EBITDA provide useful information to both management, and investors by excluding certain items that management believes are not indicative of our ongoing operations. Our management uses these non-IFRS measures to evaluate the Company's business strategies, and management performance. We believe that these non IFRS measures provide useful information to investors because they improve the comparability of our financial results between periods and provide for greater transparency of key measures used to evaluate our performance.
1The reference to our website is intended to be an inactive textual reference and the information on, or accessible through, our website is not intended to be part of this Form 6-K. |
(1a) The Company only provides guidance on a non-GAAP basis. The Company does not provide a reconciliation of forward-looking adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting, and quantifying certain amounts that are necessary for such reconciliation, in particular, because special items such as restructuring, litigation, and other matters, used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material, and therefore could result in projected GAAP net income (loss) being materially less than projected adjusted EBITDA (non-GAAP). The guidance speaks only as of the date hereof. We undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law. For 2023, Specialties businesses are represented by the Industrial Products, and Growing Solutions segments, and the specialties part of the Phosphate Solutions segment, and we present EBITDA from the phosphate specialties part of the Phosphate Solutions segment as we believe this information is useful to investors in reflecting the specialty portion of our business. Beginning with 2024, we are providing specialties-driven Adjusted EBITDA which will include Industrial Products, Growing Solutions and Phosphate Solutions, as the Phosphate Solutions business is now predominantly specialties-focused and for our Potash business we will be providing sales volumes guidance. The company believes this change provides greater transparency, as these new metrics are less impacted by fertilizer commodity prices, given the extreme volatility in recent years.
We present a discussion in the period-to-period comparisons of the primary drivers of change in the Company’s results of operations. This discussion is based in part on management’s best estimates of the impact of the main trends on our businesses. We have based the following discussion on our financial statements. You should read such discussion together with our financial statements.
Adjustments to Reported Operating and Net income (non-GAAP)
|
10-12/2023 |
10-12/2022 |
1-12/2023 |
1-12/2022 |
||||
|
$ millions |
$ millions |
$ millions |
$ millions |
||||
Operating income |
149 |
540 |
1,141 |
3,516 |
||||
Provision for early retirement (1) |
16 |
- |
16 |
- |
||||
Write-off of assets and provision for site closure (2) |
34 |
- |
49 |
- |
||||
Legal proceedings, dispute and other settlement expenses (3) |
(2) |
22 |
(2) |
22 |
||||
Charges related to the security situation in |
14 |
- |
14 |
- |
||||
Divestment related items and transaction costs (5) |
- |
- |
- |
(29) |
||||
Total adjustments to operating income |
62 |
22 |
77 |
(7) |
||||
Adjusted operating income |
211 |
562 |
1,218 |
3,509 |
||||
Net income attributable to the shareholders of the Company |
67 |
331 |
647 |
2,159 |
||||
Total adjustments to operating income |
62 |
22 |
77 |
(7) |
||||
Total tax adjustments (6) |
(6) |
5 |
(9) |
198 |
||||
Total adjusted net income - shareholders of the Company |
123 |
358 |
715 |
2,350 |
(1) |
For 2023, reflects provisions for early retirement, due to restructuring at certain sites, as part of the Company’s global efficiency plan. |
|
(2) |
For 2023, reflects mainly a write-off of assets related to restructuring at certain sites, including site closures and facility modifications, as part of the Company’s global efficiency plan. |
|
(3) |
For 2023, reflects a reversal of a legal provision. For 2022, reflects mainly the costs of a mediation settlement regarding the claims related to the Ashalim Stream incident. |
|
(4) |
For 2023, reflects charges relating to the security situation in |
|
(5) |
For 2022, reflects a capital gain related to the sale of an asset in |
|
(6) |
For 2023, reflects the tax impact of adjustments made to operating income. For 2022, reflects tax expenses in respect of prior years following a settlement with Israel’s Tax Authority regarding |
Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share for the periods of activity
Calculation of adjusted EBITDA was made as follows:
|
10-12/2023 |
10-12/2022 |
1-12/2023 |
1-12/2022 |
||||
|
$ millions |
$ millions |
$ millions |
$ millions |
||||
Net income |
84 |
342 |
687 |
2,219 |
||||
Financing expenses, net |
33 |
41 |
168 |
113 |
||||
Taxes on income |
33 |
158 |
287 |
1,185 |
||||
Less: Share in earnings of equity-accounted investees |
(1) |
(1) |
(1) |
(1) |
||||
Operating income |
149 |
540 |
1,141 |
3,516 |
||||
Depreciation and amortization |
146 |
136 |
536 |
498 |
||||
Adjustments (1) |
62 |
22 |
77 |
(7) |
||||
Total adjusted EBITDA (2) |
357 |
698 |
1,754 |
4,007 |
(1) |
See "Adjustments to Reported Operating and Net income (non-GAAP)" above. |
|
(2) |
Commencing 2022, the Company’s adjusted EBITDA definition was updated, see the disclaimer above. |
Calculation of diluted adjusted earnings per share was made as follows:
|
10-12/2023 |
10-12/2022 |
1-12/2023 |
1-12/2022 |
||||
|
$ millions |
$ millions |
$ millions |
$ millions |
||||
Net income attributable to the Company's shareholders |
67 |
331 |
647 |
2,159 |
||||
Adjustments (1) |
62 |
22 |
77 |
(7) |
||||
Total tax adjustments |
(6) |
5 |
(9) |
198 |
||||
Adjusted net income - shareholders of the Company |
123 |
358 |
715 |
2,350 |
||||
Weighted-average number of diluted ordinary shares outstanding (in thousands) |
1,290,575 |
1,291,299 |
1,290,668 |
1,289,947 |
||||
Diluted adjusted earnings per share (in dollars) (2) |
0.10 |
0.28 |
0.55 |
1.82 |
(1) |
See "Adjustments to Reported Operating and Net income (non-GAAP)" above. |
|
(2) |
The diluted adjusted earnings per share is calculated by dividing the adjusted net income‑shareholders of the Company by the weighted-average number of diluted ordinary shares outstanding (in thousands). |
ConsolidatedResults Analysis
Results analysis for the period October –
|
Sales |
Expenses |
Operating income |
|||
|
$ millions |
|||||
Q4 2022 figures |
2,091 |
(1,551) |
540 |
|||
Total adjustments Q4 2022* |
- |
22 |
22 |
|||
Adjusted Q4 2022 figures |
2,091 |
(1,529) |
562 |
|||
Quantity |
170 |
(84) |
86 |
|||
Price |
(601) |
- |
(601) |
|||
Exchange rates |
30 |
(2) |
28 |
|||
Raw materials |
- |
105 |
105 |
|||
Energy |
- |
10 |
10 |
|||
Transportation |
- |
5 |
5 |
|||
Operating and other expenses |
- |
16 |
16 |
|||
Adjusted Q4 2023 figures |
1,690 |
(1,479) |
211 |
|||
Total adjustments Q4 2023* |
- |
(62) |
(62) |
|||
Q4 2023 figures |
1,690 |
(1,541) |
149 |
* See "Adjustments to reported Operating and Net income (non-GAAP)" above.
- Quantity – The positive impact on operating income was primarily due to higher sales volumes of potash, bromine-based flame retardant, elemental bromine, specialty agriculture and FertilizerpluS products, as well as phosphate fertilizers and white phosphoric acid (WPA). These were partially offset by lower sales volumes of phosphate-based food additives and magnesium.
-
Price – The negative impact on operating income was primarily related to a decrease of
$249 in the potash price (CIF) per tonne year-over-year, as well as lower selling prices of specialty agriculture and FertilizerpluS products, bromine-based flame retardants, bromine-based industrial solutions, white phosphoric acid (WPA) and phosphate fertilizers. - Exchange rates – The favorable impact on operating income was mainly due to a positive impact on sales resulting from the appreciation of the average exchange rate of the euro and the Brazilian Real against the US dollar, which was partially offset by a negative impact on operational costs resulting from the above-mentioned appreciation, together with a positive impact due to the depreciation of the average exchange rate of the Israeli shekel against the US dollar.
- Raw materials – The positive impact on operating income was due to lower costs of sulphur, commodity fertilizers, potassium hydroxide (KOH), raw materials used in the production of industrial solutions products, and caustic soda.
- Energy – The positive impact on operating income was due to lower gas and electricity prices.
- Transportation – The positive impact on operating income resulted from decreased marine transportation costs.
- Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs and sales commissions.
The following table sets forth sales by geographical regions based on the location of the customers:
|
10-12/2023 |
10-12/2022 |
||||||
|
$ millions |
% of Sales |
$ millions |
% of Sales |
||||
|
464 |
27 |
608 |
29 |
||||
|
440 |
26 |
592 |
28 |
||||
|
364 |
22 |
396 |
19 |
||||
|
318 |
19 |
358 |
17 |
||||
Rest of the world |
104 |
6 |
137 |
7 |
||||
Total |
1,690 |
100 |
2,091 |
100 |
-
Europe – The decrease in sales was primarily due to lower selling prices of potash, phosphate fertilizers, FertilizerpluS and specialty agriculture products and WPA, as well as lower sales volumes and selling prices of bromine-based flame retardants and salts, together with lower volumes of bromine-based industrial solutions. The decrease was partially offset by higher sales volumes of potash, phosphate fertilizers, FertilizerpluS and specialty agriculture products and WPA, together with a positive impact on sales resulting from the appreciation of the average exchange rate of the euro against the US dollar. -
Asia – The decrease in sales was primarily due to lower selling prices and sales volumes of potash and MAP used as raw material for energy storage solutions, as well as lower selling prices of bromine-based flame retardants, bromine-based industrial solutions, specialty agriculture products, together with lower volumes of clear brine fluids and phosphate fertilizers. The decrease was partially offset by higher sales volumes of bromine-based flame retardants, bromine-based industrial solutions, specialty agriculture products and WPA. -
South America – The decrease in sales was primarily due to lower selling prices of potash and specialty agriculture products, partially offset by higher sales volumes of the above-mentioned products. -
North America – The decrease in sales was primarily due to lower selling prices and sales volumes of potash, magnesium and phosphate-based flame retardants, as well as lower sales volumes of phosphate-based food additives. This was partially offset by higher sales volumes of phosphate fertilizers and specialty agriculture products, together with higher prices of phosphate-based food additives. - Rest of the world – The decrease in sales was primarily due to lower sales volumes and selling prices of potash and phosphate fertilizers, as well as lower volumes of FertilizerpluS products, together with lower selling prices of specialty agriculture products and bromine-based industrial solutions, partially offset by higher sales volumes of bromine-based industrial solutions and specialty agriculture products.
Forward-looking Statements
This announcement contains statements that constitute “forward‑looking statements”, many of which can be identified by the use of forward‑looking words such as “anticipate”, “believe”, “could”, “expect”, “should”, “plan”, “intend”, “estimate”, “strive”, “forecast”, “targets” and “potential”, among others.
Forward‑looking statements appear in a number of places in this announcement and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward‑looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward‑looking statements due to various factors, including, but not limited to :
Changes in exchange rates or prices compared to those we are currently experiencing; loss or impairment of business licenses or mineral extractions permits or concessions; volatility of supply and demand and the impact of competition; the difference between actual reserves and our reserve estimates; natural disasters and cost of compliance with environmental regulatory legislative and licensing restrictions including laws and regulation related to, and physical impacts of climate change and greenhouse gas emissions; failure to "harvest" salt which could lead to accumulation of salt at the bottom of the evaporation Pond 5 in the
Forward looking statements speak only as at the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
This report for the fourth quarter of 2023 (the “Quarterly Report”) should be read in conjunction with the Annual Report and the report for the first, second and third quarter of 2023 published by the Company (the “prior quarterly report”), including the description of the events occurring subsequent to the date of the statement of financial position, as filed with the
Appendix:
C ondensed Consolidated Statements of Financial Position as of (Unaudited) |
||||
|
|
|
||
|
$ millions |
$ millions |
||
Current assets |
|
|
||
Cash and cash equivalents |
420 |
417 |
||
Short-term investments and deposits |
172 |
91 |
||
Trade receivables |
1,376 |
1,583 |
||
Inventories |
1,703 |
2,134 |
||
Prepaid expenses and other receivables |
363 |
323 |
||
Total current assets |
4,034 |
4,548 |
||
|
|
|
||
Non-current assets |
|
|
||
Deferred tax assets |
152 |
150 |
||
Property, plant and equipment |
6,329 |
5,969 |
||
Intangible assets |
873 |
852 |
||
Other non-current assets |
239 |
231 |
||
Total non-current assets |
7,593 |
7,202 |
||
|
|
|
||
Total assets |
11,627 |
11,750 |
||
|
|
|
||
Current liabilities |
|
|
||
Short-term debt |
858 |
512 |
||
Trade payables |
912 |
1,006 |
||
Provisions |
85 |
81 |
||
Other payables |
783 |
1,007 |
||
Total current liabilities |
2,638 |
2,606 |
||
|
|
|
||
Non-current liabilities |
|
|
||
Long-term debt and debentures |
1,829 |
2,312 |
||
Deferred tax liabilities |
489 |
423 |
||
Long-term employee liabilities |
354 |
402 |
||
Long-term provisions and accruals |
224 |
234 |
||
Other |
56 |
60 |
||
Total non-current liabilities |
2,952 |
3,431 |
||
|
|
|
||
Total liabilities |
5,590 |
6,037 |
||
|
|
|
||
Equity |
|
|
||
Total shareholders’ equity |
5,768 |
5,464 |
||
Non-controlling interests |
269 |
249 |
||
Total equity |
6,037 |
5,713 |
||
|
|
|
||
Total liabilities and equity |
11,627 |
11,750 |
Condensed Consolidated Statements of Income (Unaudited) (In millions except per share data) |
||||||||
|
For the three-month period ended |
For the year ended |
||||||
|
2023 |
2022 |
2023 |
2022 |
||||
|
$ millions |
$ millions |
$ millions |
$ millions |
||||
Sales |
1,690 |
2,091 |
7,536 |
10,015 |
||||
Cost of sales |
1,130 |
1,158 |
4,865 |
4,983 |
||||
|
|
|
|
|
||||
Gross profit |
560 |
933 |
2,671 |
5,032 |
||||
|
|
|
|
|
||||
Selling, transport and marketing expenses |
286 |
281 |
1,093 |
1,181 |
||||
General and administrative expenses |
71 |
78 |
260 |
291 |
||||
Research and development expenses |
17 |
15 |
71 |
68 |
||||
Other expenses |
44 |
24 |
128 |
30 |
||||
Other income |
(7) |
(5) |
(22) |
(54) |
||||
|
|
|
|
|
||||
Operating income |
149 |
540 |
1,141 |
3,516 |
||||
|
|
|
|
|
||||
Finance expenses |
4 |
65 |
259 |
327 |
||||
Finance income |
29 |
(24) |
(91) |
(214) |
||||
|
|
|
|
|
||||
Finance expenses, net |
33 |
41 |
168 |
113 |
||||
|
|
|
|
|
||||
Share in earnings of equity-accounted investees |
1 |
1 |
1 |
1 |
||||
|
|
|
|
|
||||
Income before taxes on income |
117 |
500 |
974 |
3,404 |
||||
|
|
|
|
|
||||
Taxes on income |
33 |
158 |
287 |
1,185 |
||||
|
|
|
|
|
||||
Net income |
84 |
342 |
687 |
2,219 |
||||
|
|
|
|
|
||||
Net income attributable to the non-controlling interests |
17 |
11 |
40 |
60 |
||||
|
|
|
|
|
||||
Net income attributable to the shareholders of the Company |
67 |
331 |
647 |
2,159 |
||||
|
|
|
|
|
||||
Earnings per share attributable to the shareholders of the Company: |
|
|
|
|
||||
|
|
|
|
|
||||
Basic earnings per share (in dollars) |
0.05 |
0.26 |
0.50 |
1.68 |
||||
|
|
|
|
|
||||
Diluted earnings per share (in dollars) |
0.05 |
0.25 |
0.50 |
1.67 |
||||
|
|
|
|
|
||||
Weighted-average number of ordinary shares outstanding: |
|
|
|
|
||||
|
|
|
|
|
||||
Basic (in thousands) |
1,289,449 |
1,289,100 |
1,289,361 |
1,287,304 |
||||
|
|
|
|
|
||||
Diluted (in thousands) |
1,290,575 |
1,291,299 |
1,290,668 |
1,289,947 |
Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||||
|
For the three-month period ended |
For the year ended |
||||||
|
2023 |
2022 |
2023 |
2022 |
||||
|
$ millions |
$ millions |
$ millions |
$ millions |
||||
Cash flows from operating activities |
|
|
|
|
||||
Net income |
84 |
342 |
687 |
2,219 |
||||
Adjustments for: |
|
|
|
|
||||
Depreciation and amortization |
146 |
136 |
536 |
498 |
||||
Exchange rate, interest and derivative, net |
(51) |
(4) |
24 |
157 |
||||
Tax expenses |
33 |
158 |
287 |
1,185 |
||||
Change in provisions |
9 |
(8) |
(32) |
(83) |
||||
Other |
22 |
4 |
29 |
(15) |
||||
|
159 |
286 |
844 |
1,742 |
||||
|
|
|
|
|
||||
Change in inventories |
50 |
(72) |
465 |
(527) |
||||
Change in trade receivables |
47 |
149 |
252 |
(215) |
||||
Change in trade payables |
66 |
(100) |
(101) |
(42) |
||||
Change in other receivables |
37 |
12 |
26 |
(46) |
||||
Change in other payables |
16 |
48 |
(210) |
107 |
||||
Net change in operating assets and liabilities |
216 |
37 |
432 |
(723) |
||||
|
|
|
|
|
||||
Interest paid, net |
(37) |
(38) |
(115) |
(106) |
||||
Income taxes paid, net of refund |
(7) |
(160) |
(253) |
(1,107) |
||||
|
|
|
|
|
||||
Net cash provided by operating activities |
415 |
467 |
1,595 |
2,025 |
||||
|
|
|
|
|
||||
Cash flows from investing activities |
|
|
|
|
||||
Proceeds (payments) from deposits, net |
(10) |
1 |
(88) |
(36) |
||||
Purchases of property, plant and equipment and intangible assets |
(255) |
(212) |
(780) |
(747) |
||||
Proceeds from divestiture of assets and businesses, net of transaction expenses |
- |
4 |
4 |
33 |
||||
Business combinations |
- |
- |
- |
(18) |
||||
Other |
- |
- |
1 |
14 |
||||
Net cash used in investing activities |
(265) |
(207) |
(863) |
(754) |
||||
|
|
|
|
|
||||
Cash flows from financing activities |
|
|
|
|
||||
Dividends paid to the Company's shareholders |
(68) |
(314) |
(474) |
(1,166) |
||||
Receipt of long-term debt |
149 |
311 |
633 |
1,045 |
||||
Repayments of long-term debt |
(183) |
(383) |
(836) |
(1,181) |
||||
Receipts (repayments) of short-term debt |
64 |
30 |
(25) |
(21) |
||||
Receipts (repayments) from transactions in derivatives |
(1) |
1 |
5 |
20 |
||||
Dividend paid to the non-controlling interests |
- |
- |
(15) |
- |
||||
Net cash used in financing activities |
(39) |
(355) |
(712) |
(1,303) |
||||
|
|
|
|
|
||||
Net change in cash and cash equivalents |
111 |
(95) |
20 |
(32) |
||||
Cash and cash equivalents as of the beginning of the period |
307 |
498 |
417 |
473 |
||||
Net effect of currency translation on cash and cash equivalents |
2 |
14 |
(17) |
(24) |
||||
Cash and cash equivalents as of the end of the period |
420 |
417 |
420 |
417 |
Operating segment data
|
||||||||||||||
|
Industrial Products |
Potash |
Phosphate Solutions |
Growing Solutions |
Other Activities |
Reconciliations |
Consolidated |
|||||||
|
$ millions |
|||||||||||||
For the three-month period ended |
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Sales to external parties |
294 |
408 |
503 |
475 |
10 |
- |
1,690 |
|||||||
Inter-segment sales |
5 |
66 |
41 |
3 |
(1) |
(114) |
- |
|||||||
Total sales |
299 |
474 |
544 |
478 |
9 |
(114) |
1,690 |
|||||||
|
|
|
|
|
|
|
|
|||||||
Segment operating income (loss) |
39 |
122 |
74 |
(5) |
(1) |
(18) |
211 |
|||||||
Other expenses not allocated to the segments |
|
|
|
|
|
|
(62) |
|||||||
Operating income |
|
|
|
|
|
|
149 |
|||||||
|
|
|
|
|
|
|
|
|||||||
Financing expenses, net |
|
|
|
|
|
|
(33) |
|||||||
Share in earnings of equity-accounted investees |
|
|
|
|
|
|
1 |
|||||||
Income before income taxes |
|
|
|
|
|
|
117 |
|||||||
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization |
17 |
46 |
59 |
20 |
1 |
3 |
146 |
|||||||
|
|
|
|
|
|
|
|
|||||||
Capital expenditures |
29 |
132 |
90 |
36 |
5 |
12 |
304 |
Operating segment data (cont'd) |
||||||||||||||
|
|
Industrial Products |
|
Potash |
|
Phosphate Solutions |
|
Growing Solutions |
|
Other Activities |
|
Reconciliations |
|
Consolidated |
|
$ millions |
|||||||||||||
For the three-month period ended |
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Sales to external parties |
343 |
656 |
574 |
|
513 |
5 |
- |
2,091 |
||||||
Inter-segment sales |
6 |
57 |
53 |
|
14 |
1 |
(131) |
- |
||||||
Total sales |
349 |
713 |
627 |
|
527 |
6 |
(131) |
2,091 |
||||||
|
|
|
|
|
|
|
|
|
||||||
Segment operating income (loss) |
95 |
340 |
116 |
|
32 |
(2) |
(19) |
562 |
||||||
Other expenses not allocated to the segments |
|
|
|
|
|
|
|
(22) |
||||||
Operating income |
|
|
|
|
|
|
|
540 |
||||||
|
|
|
|
|
|
|
|
|
||||||
Financing expenses, net |
|
|
|
|
|
|
|
(41) |
||||||
Share in earnings of equity-accounted investees |
|
|
|
|
|
|
|
1 |
||||||
Income before income taxes |
|
|
|
|
|
|
|
500 |
||||||
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
15 |
45 |
49 |
|
24 |
1 |
2 |
136 |
||||||
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures |
27 |
92 |
78 |
|
38 |
2 |
7 |
244 |
Information based on geographical location
The following table presents the distribution of the operating segments sales by geographical location of the customer: |
||||||||
|
10-12/2023 |
10-12/2022 |
||||||
|
$ millions |
% of sales |
|
$ millions |
% of sales |
|||
|
|
|
|
|
||||
|
347 |
21 |
359 |
17 |
||||
|
295 |
17 |
333 |
16 |
||||
|
284 |
17 |
283 |
14 |
||||
|
77 |
5 |
80 |
4 |
||||
|
74 |
4 |
108 |
5 |
||||
|
72 |
4 |
76 |
4 |
||||
|
68 |
4 |
94 |
4 |
||||
|
63 |
4 |
66 |
3 |
||||
|
29 |
2 |
153 |
7 |
||||
|
28 |
2 |
38 |
2 |
||||
All other |
353 |
20 |
501 |
24 |
||||
Total |
1,690 |
100 |
2,091 |
100 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240227509674/en/
Investor and Press Contact – Global
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