TEL AVIV, Israel, Nov. 7, 2019 /PRNewswire/ -- ICL (NYSE: ICL) (TASE: ICL), a leading global specialty minerals and specialty chemicals company, today reported its financial results for the third quarter ended September 30, 2019.
Sales for the third quarter were $1,325 million compared to $1,371 million for the same period in 2018. The decrease resulted mainly from the delay in the signing of potash supply contracts in China and India and negative foreign currency impacts. Operating income of $201 million remained stable and adjusted EBITDA of $307 million increased by 4% over Q3 2018. The resilient performance is attributed to the stable business environment in ICL's specialty businesses, as well as cost controls, which offset the negative impact of exchange rates and the commodity market headwinds. The Company's focus on cash generation also led to strong operating cash flow of $368 million, 88% higher than the comparable quarter in 2018.
ICL's President & CEO, Raviv Zoller, stated, "ICL's diversified portfolio, our strong specialty businesses and the focus we continue to place on containing costs and generating cash, are reflected in our solid third quarter and YTD results. Our performance is highlighted by the challenges we overcame this quarter, including the delay in the signing of potash supply contracts and significant headwinds from the commodity business environment, as well as the negative impact from exchange rates following the devaluation of the euro and the Chinese yuan, which harmed our top line, and the strong Israeli shekel, which impacted our costs."
Mr. Zoller added, "In Q3 we continued to execute our strategy and achieved several important milestones. We signed long-term agreements with bromine customers in Asia, which are expected to contribute about $110 million to our revenues beginning in 2021. In addition, we made a breakthrough in the fast-growing meat alternatives market with the signing of several supply agreements, based on our proprietary Rovitaris® technology. This breakthrough is attributed to ICL's unique capabilities in food specialties, which we will continue to leverage for future growth. According to plan, during the fourth quarter, we will be executing a facility upgrade project at our Dead Sea potash facilities, and while this project is expected to negatively impact our potash production and sales volumes in Q4, it will enable us to benefit from improved production and costs next year and beyond. In China, we are on track with our construction of a new pure phosphoric acid plant that will allow us to shift from commodity phosphates to specialty products. I am confident that ICL is well positioned to overcome the challenges we face in the commodity markets and well prepared to benefit from the opportunities that are emerging in our businesses."
FINANCIAL RESULTS
7-9/2019 | 7-9/2018 | 1-9/2019 | 1-9/2018 | 1-12/2018 | ||||||
$ millions | % of sales | $ millions | % of sales | $ millions | % of sales | $ millions | % of sales | $ millions | % of sales | |
Sales | 1,325 | - | 1,371 | - | 4,165 | - | 4,146 | - | 5,556 | - |
Gross profit | 472 | 36 | 458 | 33 | 1,481 | 36 | 1,347 | 32 | 1,854 | 33 |
Operating income | 201 | 15 | 196 | 14 | 668 | 16 | 1,353 | 33 | 1,519 | 27 |
Adjusted operating income (1) | 201 | 15 | 200 | 15 | 672 | 16 | 539 | 13 | 753 | 14 |
Net income - shareholders of | 130 | 10 | 129 | 9 | 427 | 10 | 1,158 | 28 | 1,240 | 22 |
Adjusted net income - | 130 | 10 | 134 | 10 | 431 | 10 | 353 | 9 | 477 | 9 |
Diluted EPS ($) | 0.10 | - | 0.10 | - | 0.33 | - | 0.91 | - | 0.97 | - |
Diluted adjusted EPS ($) (2) | 0.10 | - | 0.10 | - | 0.34 | - | 0.28 | - | 0.37 | - |
Adjusted EBITDA (2) | 307 | 23 | 295 | 22 | 997 | 24 | 842 | 20 | 1,164 | 21 |
Cash flows from operating | 368 | - | 196 | - | 780 | - | 396 | - | 620 | - |
Purchases of property, plant | 147 | - | 145 | - | 419 | - | 393 | - | 572 | - |
(1) See "Adjustments to Reported Operating and Net Income (Non-GAAP)" in the Appendix. | ||||||||||
(2) See "Calculation of Adjusted EBITDA" and "Calculation of Diluted Adjusted Earnings Per Share" in the Appendix. | ||||||||||
(3) See "Condensed Consolidated Statements of Cash Flows (unaudited)" in the Appendix. | ||||||||||
Results analysis:
Sales | Expenses | Operating | ||
$ millions | ||||
Q3 2018 figures | 1,371 | (1,175) | 196 | |
Total adjustments Q3 2018* | - | 4 | 4 | |
Adjusted Q3 2018 figures | 1,371 | (1,171) | 200 | |
Quantity | (42) | 36 | (6) | |
Price | 18 | - | 18 | |
Exchange rate | (22) | 13 | (9) | |
Raw materials | - | 8 | 8 | |
Energy | - | 8 | 8 | |
Transportation | - | (10) | (10) | |
Operating and other expenses | - | (8) | (8) | |
Adjusted Q3 2019 figures | 1,325 | (1,124) | 201 | |
Total adjustments Q3 2019* | - | - | - | |
Q3 2019 figures | 1,325 | (1,124) | 201 | |
* See "Adjustments to Reported Operating and Net Income (Non-GAAP)" in the |
Revenue: Sales were $1,325 million in Q3 2019, compared to $1,371 million for the comparable quarter in 2018. The decrease was driven primarily by lower sales volumes, mainly of potash and phosphate fertilizers, unfavorable exchange rates fluctuations, mainly the devaluation of the euro and the Chinese yuan against the US dollar, and lower phosphate commodity prices. These were offset by higher prices of bromine, bromine derivatives, phosphorus flame retardants and specialty phosphates, higher sales volumes of bromine-based industrial solutions, mainly clear brine fluids and elemental bromine, as well as by higher sales volumes of green phosphoric acid.
Operating income: The Company reported operating income and adjusted operating income of $201 million in Q3 2019, compared to operating income of $196 million and adjusted operating income of $200 million in Q3 2018. Operating income was positively impacted by higher prices, lower raw material costs (mainly sulphur, partly offset by higher prices of acids acquired from third parties), and lower energy costs (attributed to the new power plant in Sodom). These were offset by higher marine transportation prices and unfavorable exchange rates, mainly due to the appreciation of the shekel against the dollar which increased operational costs in dollar terms. The increase in operating and other expenses is attributed mainly to income related to changes in pension liabilities recorded in Q3 2018 and to higher depreciation expenses.
Financing expenses, net: Net financing expenses in Q3 2019 amounted to $32 million, compared with $23 million in the corresponding quarter last year. This increase derives mainly from the implementation of the new accounting standard for leases, IFRS16, and the impact of exchange rates, mainly the appreciation of the Israeli shekel against the dollar during the quarter.
Tax expenses: Tax expenses in the third quarter of 2019 and 2018 amounted to $ 35 million and $45 million, respectively, reflecting an effective tax rate of about 21% and 26%, respectively. The Company's lower tax rate in Q3 2019 compared to the corresponding quarter last year derives mainly from the change in deferred tax related to prior years.
Cash flow & debt level: In Q3 2019, cash flow provided by operating activities amounted to $368 million, an increase of $172 million from Q3 2018. The increase is attributed to a decrease in operating assets net of operating liabilities (working capital).
In Q3 2019, cash flow used for investing activities amounted to $153 million compared to $149 million in Q3 2018. Cash flow used for investment in property, plant, equipment and intangible assets amounted to $147 million, compared to $145 million in Q3 2018.
ICL's net financial liabilities at the end of the third quarter amounted to $2,390 million, an increase of $178 million compared to December 31, 2018. The increase derives mainly from an increase of $296 million in long and short-term liabilities as a result of the implementation of IFRS16 accounting standard in January 2019 (for further information, see Note 2 to the Company's financial statements). The increase was partly offset by strong cash generation which helped to reduce financial debt balances with financial institutions.
REVIEW OF OPERATING SEGMENTS
Industrial Products
The Industrial Products division sales, operating income and operating margin continued to expand year-over-year in the third quarter, driven mainly by higher prices of bromine, bromine derivatives and phosphorous flame retardants, as well as higher sales volumes of elemental bromine and clear brine fluids. An important strategic milestone was achieved during the quarter, with the signing of long-term agreements with customers in Asia, which are expected to generate additional annual revenues estimated at $110 million, beginning in 2021.
Industrial Products accounted for 25% of the group sales and 44% of adjusted operating income in Q3 2019, compared to 24% of sales and 41.5% of adjusted operating income in Q3 2018.
Significant Highlights and Business Environment
Results of Operations
7-9/2019 | 7-9/2018 | |
$ millions | $ millions | |
Total Sales | 339 | 328 |
Sales to external customers | 337 | 325 |
Sales to internal customers | 2 | 3 |
Segment profit | 88 | 83 |
Depreciation and Amortization | 17 | 16 |
Capital Expenditures | 26 | 14 |
Results analysis
Sales | Expenses | Operating | ||
$ millions | ||||
Q3 2018 figures | 328 | (245) | 83 | |
Quantity | - | 2 | 2 | |
Price | 14 | - | 14 | |
Exchange rate | (3) | 1 | (2) | |
Transportation | - | (1) | (1) | |
Operating and other expenses | - | (8) | (8) | |
Q3 2019 figures | 339 | (251) | 88 |
The increase in the segment's operating income in Q3 2019 is mainly attributed to an increase in the selling prices of bromine?based industrial solutions, bromine-based flame retardants and phosphorus-based flame retardants. Operating income was also positively impacted by higher sales quantities of bromine-based industrial solutions (mainly clear brine fluids and elemental bromine). These were partly offset by a decrease in the sales quantities of bromine and phosphorus-based flame retardants, an income related to changes in pension liabilities recorded in the corresponding quarter last year, the devaluation of the euro against the dollar, which negatively impacted the revenues, and the appreciation of the shekel against the dollar, which increased operational costs in dollar terms.
Potash
The Potash division's sales decreased by 8%, while operating income increased by 6% compared to the corresponding quarter last year. A 10% decrease in potash sales volumes, attributed to the delay in the signing of supply contracts in China and India, and a $3/tonne year-over-year decline in the average realized price of potash, which derived mainly from the devaluation of the euro against the dollar, were more than offset by lower operating costs, mainly lower costs in the Polysulphate® operations at ICL Boulby and lower energy costs attributed mainly to the new power plant in Sodom.
Potash accounted for 25% of ICL's sales and 41% of adjusted operating income in Q3 2019, compared to 27% of sales and 39% of adjusted operating income in Q3 2018.
Significant Highlights and Business Environment
Regarding the petition filed in the US requesting to impose antidumping and countervailing duties on imports of magnesium from Israel, see Note 6 to the Company's financial statements.
Results of Operations
7-9/2019 | 7-9/2018 | |
$ millions | $ millions | |
Total sales | 376 | 409 |
Potash sales to external customers | 280 | 321 |
Potash sales to internal customers | 26 | 23 |
Other and eliminations* | 70 | 65 |
Gross profit | 176 | 171 |
Segment profit | 83 | 78 |
Depreciation and Amortization | 37 | 32 |
Capital Expenditures | 93 | 72 |
Average realized price - potash (in $)*** | 284 | 287 |
* Includes mainly salt produced in underground mines in UK and Spain, Polysulphate® and Polysulphate®-based products, magnesium-based products and sales of electricity produced in Israel.
** Potash average realized price (dollar per tonne) is calculated by dividing total potash revenue by total sales quantities. The difference between FOB price and average realized price is mainly marine transportation costs.
Potash ? Production and Sales
Thousands of tonnes | 7-9/2019 | 7-9/2018 |
Production | 1,050 | 1,151 |
Total sales (including internal sales) | 1,079 | 1,200 |
Closing inventory | 355 | 655 |
Potash production challenges during Q3 2019, including some mechanical failures in equipment, resulted in lower production rate. The planned shutdown for facility upgrade purposes, which will take place during the fourth quarter at ICL Dead Sea, will provide long-term maintenance solutions to such mechanical failures. Sales quantities decreased mainly due to a decrease in potash sales to Brazil and China.
Results analysis
Sales | Expenses | Operating | ||
$ millions | ||||
Q3 2018 figures | 409 | (331) | 78 | |
Quantity | (32) | 24 | (8) | |
Price | 3 | - | 3 | |
Exchange rate | (4) | 3 | (1) | |
Energy | - | 10 | 10 | |
Transportation | - | (8) | (8) | |
Operating and other expenses | - | 9 | 9 | |
Q3 2019 figures | 376 | (293) | 83 |
Operating income was positively impacted by a decrease in energy costs, due to the activation of the new power plant in Sodom during the second half of 2018 and a decrease in electricity prices in Europe, a decrease in operating expenses and lower production costs, mainly due to the shift to Polysulphate® in the UK. A minor positive impact on the segment's operating income derived from an increase in magnesium and Polysulphate® selling prices. These were partly offset by higher marine transportation costs, a decrease in potash sales volumes and a slight decrease in the potash average realized price, mainly due to the devaluation of the euro against the dollar.
Phosphate Solutions
The results of ICL's Phosphate Solutions division demonstrated resilience of its specialty phosphates business. In addition, the YPH JV in China continued to deliver improved results, driven by operational efficiencies, as well as lower rock and Sulphur costs.
Phosphate Specialties sales of $290 million were approximately 4% lower than the third quarter of 2018, mainly due to lower customer demand for Dairy Proteins in China, together with the devaluation of the euro and the Chinese yuan against the US dollar. Adjusting for foreign exchange impacts, revenues of the division's phosphate salts and phosphoric acids were marginally higher compared to Q3 2018, as a slight decrease of approximately 1% in sales volumes was offset by higher prices.
Phosphate Commodity sales amounted to $218 million, 4% lower than the third quarter of 2018. The decrease derived from lower sales of phosphate fertilizers, partly offset by higher sales of green phosphoric acid and phosphate rock. The weak market conditions in phosphate commodities led to a decrease of 11% in phosphate fertilizers sales volumes to 543 thousand tonnes.
Phosphate Solutions accounted for 37% of ICL's sales and 16% of adjusted operating income in Q3 2019, compared to 37% of sales and 20% of adjusted operating income in Q3 2018.
Significant Highlights and Business Environment
Results of Operations
7-9/2019 | 7-9/2018 | |
$ millions | $ millions | |
Total Sales | 508 | 530 |
Sales to external customers | 491 | 513 |
Sales to internal customers | 17 | 17 |
Segment profit (After allocation of G&A) | 32 | 40 |
Depreciation and Amortization | 44 | 39 |
Capital Expenditures | 51 | 42 |
Results Analysis
Sales | Expenses | Operating | |||
$ millions | |||||
Q3 2018 figures | 530 | (490) | 40 | ||
Quantity | (12) | 12 | - | ||
Price | 2 | - | 2 | ||
Exchange rate | (12) | 7 | (5) | ||
Raw materials | - | 6 | 6 | ||
Energy | - | (2) | (2) | ||
Transportation | - | (1) | (1) | ||
Operating and other expenses | - | (8) | (8) | ||
Q3 2019 figures | 508 | (476) | 32 | ||
The division's operating income was not impacted by lower sales volumes due to an improved sales-mix, reflected in higher sales volumes of green phosphoric acid, relatively stable sales volumes of phosphate specialties and a decrease in the sales volumes of lower margin products such as phosphate fertilizers and dairy proteins. The division also benefited from a positive price impact throughout most of the phosphate specialties products, partly offset by a decrease in the selling prices of phosphate fertilizers and green phosphoric acid. The contribution of low raw material costs is attributed to lower prices of sulphur consumed during the quarter and lower rock costs in China, partly offset by higher costs of acids acquired from third parties. The negative impact of exchange rates is attributed mainly to the devaluation of the euro and the Chinese yuan against the dollar and the appreciation of the shekel against the dollar, which increased operational costs in dollar terms. The Operating income was also negatively impacted by higher operating costs in Israel (resulting from lower production and higher depreciation expenses).
Innovative Ag Solutions
The IAS division's sales remained stable compared to Q3 2018, despite a decrease in the sales volume of low-margin third-party products. Year-over-year results were negatively impacted mainly by higher raw material costs and unfavorable exchange rates, partially offset by continued growth in emerging markets. The division continues to focus its efforts on higher value innovative products and solutions.
ICL's Innovative Ag Solutions ("IAS") division accounted for 12% of the Company's sales in Q3 2019, compared to 11% of sales in Q3 2018.
Significant Highlights and Business Environment
Results of Operations
7-9/2019 | 7-9/2018 | |
$ millions | $ millions | |
Total Sales | 160 | 161 |
Sales to external customers | 156 | 157 |
Sales to internal customers | 4 | 4 |
Segment profit (After allocation of G&A) | (2) | (1) |
Depreciation and Amortization | 5 | 5 |
Capital Expenditures | 5 | 3 |
Results analysis
Sales | Expenses | Operating | ||
$ millions | ||||
Q3 2018 figures | 161 | (162) | (1) | |
Quantity | 1 | (1) | - | |
Price | 1 | - | 1 | |
Exchange rate | (3) | 2 | (1) | |
Raw materials | - | (1) | (1) | |
Energy | - | (1) | (1) | |
Operating and other expenses | - | 1 | 1 | |
Q3 2019 figures | 160 | (162) | (2) |
Operating income was positively impacted by an increase in the selling prices of liquid fertilizers, as well as higher sales volumes in Brazil, India and Israel. These were more than offset by higher raw material costs in ICL, mainly attributed to lower production rates of potash, commodity phosphates and pure phosphoric acid. In addition, operating income was negatively impacted by the devaluation of the euro against the dollar, which negatively impacted revenues, as well as from the appreciation of the shekel which increased operating costs in dollar terms.
DIVIDEND DISTRIBUTION
In respect of ICL's third quarter 2019 results, the Board of Directors declared a dividend totaling 5.0 cents per share or about $65 million. The dividend will be paid on December 18, 2019, The record date is December 4, 2019.
About ICL
ICL is a global specialty minerals and chemicals company operating bromine, potash, and phosphate mineral value chains in a unique, integrated business model. ICL extracts raw materials from well-positioned mineral assets and utilizes technology and industrial know-how to add value for customers in key agricultural and industrial markets worldwide. ICL focuses on strengthening leadership positions in all of its core value chains. It also plans to strengthen and diversify its offerings of innovative agro solutions by leveraging ICL's existing capabilities and agronomic know-how, as well as the Israeli technological ecosystem. ICL shares are dually listed on the New York Stock Exchange and the Tel Aviv Stock Exchange (NYSE and TASE: ICL). The company employs more than 11,000 people worldwide, and its sales in 2018 totaled approximately $5.6 billion. For more information, visit the Company's website at www.icl-group.com.
Forward Looking Statement
This press release 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" and "potential" among others. Forward-looking statements include, but are not limited to assessments and judgments regarding macro-economic conditions and ICL's markets, operations and financial results. Forward-looking assessments and judgments are based on our management's current beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, market fluctuations, especially in ICL's manufacturing locations and target markets ;the difference between actual resources and our resources estimates ;changes in the demand and price environment for ICL's products as well as the cost of shipping and energy, whether caused by actions of governments, manufacturers or consumers ;changes in the capital markets, including fluctuations in currency exchange rates, credit availability, interest rates;changes in the competition structure in the market;and the factors in "Item 3. Key Information?D. Risk Factors" in the Company's annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on February 27, 2019. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update or revise them or any other information contained in this press release, whether as a result of new information, future developments or otherwise.
(Financial tables follow and are also available in Excel format on our website located at www.icl-group.com)
Appendix:
We disclose in this Quarterly press release non-IFRS financial measures titled adjusted operating income, adjusted net income and diluted adjusted EPS attributable to the Company's shareholders, adjusted EBITDA and segment EBITDA. Our management uses these measures 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 "Adjustments to reported operating and net income" below. Certain of these items may recur. We calculate our adjusted net income attributable to the Company's by adjusting our net income attributable to the Company's shareholders to add certain items, as set forth in the reconciliation table "Adjustments to reported operating and net income" below, excluding the total tax impact of such adjustments and adjustments attributable to the non-controlling interests. We calculate our diluted adjusted earnings per share by dividing adjusted net income by the weighted-average number of diluted ordinary shares outstanding. We calculate our adjusted EBITDA by adding back to the net income attributable to the Company's shareholders the depreciation and amortization, financing expenses, net, taxes on income and the items presented in the reconciliation table "Adjusted EBITDA for the periods of activity" below which were adjusted for in calculating the adjusted operating income and adjusted net income attributable to the Company's shareholders. We calculate our segment EBITDA by adding back to segment profit (after allocation of G&A) depreciation and amortization attributable to each segment.
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. However, we believe adjusted operating income, adjusted net income attributable to the Company's shareholder, diluted adjusted earnings per share and adjusted EBITDA provide useful information to both management and investors by excluding certain expenses 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's performance. We believe that these non-IFRS measures provide useful information to investors because they improve the comparability of the financial results between periods and provide for greater transparency of key measures used to evaluate our performance.
We present a discussion in the period-to-period comparisons of the primary drivers of changes 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 in its businesses. We have based the following discussion on our financial statements. You should read the following discussion together with our financial statements.
Condensed Consolidated Statements of Income (Unaudited) | |||||
(In millions, except per share data) | |||||
For the three-month period ended | For the nine-month period ended | For the year | |||
September | September | September | September | December | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Sales | 1,325 | 1,371 | 4,165 | 4,146 | 5,556 |
Cost of sales | 853 | 913 | 2,684 | 2,799 | 3,702 |
Gross profit | 472 | 458 | 1,481 | 1,347 | 1,854 |
Selling, transport and marketing | 199 | 191 | 590 | 588 | 798 |
General and administrative expenses | 62 | 63 | 190 | 195 | 257 |
Research and development expenses | 13 | 13 | 38 | 42 | 55 |
Other expenses | 2 | 14 | 23 | 38 | 84 |
Other income | (5) | (19) | (28) | (869) | (859) |
Operating income | 201 | 196 | 668 | 1,353 | 1,519 |
Finance expenses | 67 | 42 | 195 | 125 | 214 |
Finance income | (35) | (19) | (91) | (33) | (56) |
Finance expenses, net | 32 | 23 | 104 | 92 | 158 |
Share in earnings (losses) of equity- | - | (1) | 1 | - | 3 |
Income before income taxes | 169 | 172 | 565 | 1,261 | 1,364 |
Provision for income taxes | 35 | 45 | 132 | 110 | 129 |
Net income | 134 | 127 | 433 | 1,151 | 1,235 |
Net gain (loss) attributable to the non- | 4 | (2) | 6 | (7) | (5) |
Net income attributable to the | 130 | 129 | 427 | 1,158 | 1,240 |
Earnings per share attributable to the | |||||
Basic earnings per share (in dollars) | 0.10 | 0.10 | 0.33 | 0.91 | 0.97 |
Diluted earnings per share (in dollars) | 0.10 | 0.10 | 0.33 | 0.91 | 0.97 |
Weighted-average number of | |||||
Basic (in thousands) | 1,280,586 | 1,275,721 | 1,279,146 | 1,275,052 | 1,277,209 |
Diluted (in thousands) | 1,283,675 | 1,278,780 | 1,283,401 | 1,276,564 | 1,279,781 |
Condensed Consolidated Statements of Financial Position (Unaudited) | |||
September 30, 2019 | September 30, 2018 | December 31, 2018 | |
$ millions | $ millions | $ millions | |
Current assets | |||
Cash and cash equivalents | 96 | 102 | 121 |
Short-term investments and deposits | 91 | 85 | 92 |
Trade receivables | 979 | 1,000 | 990 |
Inventories | 1,205 | 1,225 | 1,290 |
Other receivables | 324 | 269 | 295 |
Total current assets | 2,695 | 2,681 | 2,788 |
Non-current assets | |||
Investments in equity-accounted | 29 | 28 | 30 |
Investments at fair value through other | 144 | 149 | 145 |
Deferred tax assets | 97 | 112 | 122 |
Property, plant and equipment | 5,068 | 4,580 | 4,663 |
Intangible assets | 641 | 672 | 671 |
Other non-current assets | 439 | 421 | 357 |
Total non-current assets | 6,418 | 5,962 | 5,988 |
Total assets | 9,113 | 8,643 | 8,776 |
Current liabilities | |||
Short-term credit | 476 | 671 | 610 |
Trade payables | 691 | 686 | 715 |
Provisions | 34 | 50 | 37 |
Other current liabilities | 578 | 587 | 647 |
Total current liabilities | 1,779 | 1,994 | 2,009 |
Non-current liabilities | |||
Long-term debt and debentures | 2,101 | 1,721 | 1,815 |
Deferred tax liabilities | 357 | 274 | 297 |
Long-term employee liabilities | 576 | 542 | 501 |
Provisions | 221 | 199 | 229 |
Other non-current liabilities | 45 | 4 | 10 |
Total non-current liabilities | 3,300 | 2,740 | 2,852 |
Total liabilities | 5,079 | 4,734 | 4,861 |
Equity | |||
Total shareholders' equity | 3,901 | 3,775 | 3,781 |
Non-controlling interests | 133 | 134 | 134 |
Total equity | 4,034 | 3,909 | 3,915 |
Total liabilities and equity | 9,113 | 8,643 | 8,776 |
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||
For the three-month | For the nine-month | For the | |||
September | September | September | September | December | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Cash flows from operating activities | |||||
Net income | 134 | 127 | 433 | 1,151 | 1,235 |
Adjustments for: | |||||
Depreciation and amortization | 110 | 94 | 330 | 296 | 403 |
(Reversal of) impairment losses on fixed assets | - | 3 | (10) | 17 | 17 |
Exchange rate and interest expenses, net* | 68 | 35 | 146 | 73 | 81 |
Share in earnings (losses) of equity-accounted | - | 1 | (1) | - | (3) |
Gain from divestiture of businesses | - | - | - | (841) | (841) |
Capital gain | - | - | (12) | - | - |
Share-based compensation | 3 | 4 | 9 | 17 | 19 |
Deferred tax expenses | 14 | 37 | 90 | 64 | 76 |
195 | 174 | 552 | (374) | (248) | |
Change in inventories | (26) | (17) | - | (59) | (115) |
Change in trade receivables | 70 | 67 | (11) | (105) | (101) |
Change in trade payables | 27 | (66) | (9) | (47) | (34) |
Change in other receivables* | (15) | (29) | (4) | (11) | (3) |
Change in other payables* | (19) | (39) | (184) | (87) | (48) |
Change in provisions and employee benefits | 2 | (21) | 3 | (72) | (66) |
Net change in operating assets and liabilities | 39 | (105) | (205) | (381) | (367) |
Net cash provided by operating activities | 368 | 196 | 780 | 396 | 620 |
Cash flows from investing activities | |||||
Proceeds from deposits, net | (7) | (3) | 4 | 7 | (3) |
Purchases of property, plant and equipment | (147) | (145) | (419) | (393) | (572) |
Proceeds from divestiture of businesses net of | - | (1) | - | 906 | 902 |
Dividends from equity-accounted investees | - | - | 1 | - | 2 |
Proceeds from sale of property, plant and | 1 | - | 36 | 2 | 2 |
Net cash provided by (used in) investing | (153) | (149) | (378) | 522 | 331 |
Cash flows from financing activities | |||||
Dividends paid to the Company's | (73) | (56) | (209) | (176) | (241) |
Receipt of long-term debt | 50 | 140 | 457 | 1,476 | 1,746 |
Repayment of long-term debt | (138) | (241) | (550) | (1,989) | (2,115) |
Short-term credit from banks and others, net | (90) | 64 | (120) | (193) | (283) |
Other | (2) | - | (2) | - | (1) |
Net cash used in financing activities | (253) | (93) | (424) | (882) | (894) |
Net change in cash and cash equivalents | (38) | (46) | (22) | 36 | 57 |
Cash and cash equivalents as at the | 137 | 155 | 121 | 88 | 83 |
Net effect of currency translation on cash and | (3) | (7) | (3) | (22) | (24) |
Cash and cash equivalents included as part of | - | - | - | - | 5 |
Cash and cash equivalents as at the end of | 96 | 102 | 96 | 102 | 121 |
*Immaterial adjustment of comparable data. |
Additional Information | |||||
For the three-month period | For the nine-month period | For the year | |||
September | September | September | September | December | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Income taxes paid, net of refunds | 20 | 17 | 78 | 35 | 56 |
Interest paid | 17 | 21 | 77 | 72 | 103 |
Adjustments to Reported Operating and Net Income | |||||
7-9/2019 | 7-9/2018 | 1-9/2019 | 1-9/2018 | 1-12/2018 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Operating income | 201 | 196 | 668 | 1,353 | 1,519 |
Capital gain (1) | - | - | - | (841) | (841) |
(Reversal of) impairment losses on fixed | - | 3 | (10) | 19 | 19 |
Provision for early retirement and | - | - | - | 7 | 7 |
Provision for legal proceedings (4) | - | 1 | 14 | 1 | 31 |
Provision for site closure costs (5) | - | - | - | - | 18 |
Total adjustments to operating income | - | 4 | 4 | (814) | (766) |
Adjusted operating income | 201 | 200 | 672 | 539 | 753 |
Net income attributable to the | 130 | 129 | 427 | 1,158 | 1,240 |
Total adjustments to operating income | - | 4 | 4 | (814) | (766) |
Adjustments to finance expenses (6) | - | 3 | - | 3 | 10 |
Total tax impact of the above operating | - | (2) | - | 6 | (7) |
Total adjusted net income - shareholders | 130 | 134 | 431 | 353 | 477 |
(1) A capital gain from the sale of the Fire Safety and Oil Additives (P2S5) businesses in 2018.
(2) In 2019, an impairment due to an agreement for the sale of assets and a partial reversal of impairment loss related to assets in Germany which was incurred in 2015 (see note 6 to the financial statements). In 2018, a write?off of Rovita's assets following its divestment and a write-off of an intangible asset regarding a specific R&D project related to ICL's phosphate-based products.
(3) In 2018, a provision relating to the transition of the Company's facility in the UK (ICL Boulby) to the exclusive production of Polysulphate®.
(4) In 2019 and 2018, an increase of the provision in connection with the finalization of the royalties' arbitration in Israel relating to prior periods (see note 6 to the financial statements), which in 2018 was partly offset by a VAT refund relating to prior periods (2002?2015) in Brazil.
(5) In 2018, an increase of the restoration plan provision relating to the closure cost of the Sallent site in Spain.
(6) Interest and linkage expenses resulting from an increase of the provision related to the royalties' arbitration in Israel in 2018 (see item 4 above).
Calculation of Adjusted EBITDA: | |||||
7-9/2019 | 7-9/2018 | 1-9/2019 | 1-9/2018 | 1-12/2018 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Net income attributable to the | 130 | 129 | 427 | 1,158 | 1,240 |
Depreciation and Amortization | 110 | 94 | 330 | 296 | 403 |
Financing expenses, net | 32 | 23 | 104 | 92 | 158 |
Taxes on income | 35 | 45 | 132 | 110 | 129 |
Adjustments* | - | 4 | 4 | (814) | (766) |
Total adjusted EBITDA** | 307 | 295 | 997 | 842 | 1,164 |
* See "Adjustments to Reported Operating and Net Income (Non-GAAP)" above. | |||||
** The total adjusted EBITDA for the third quarter and the first nine months of 2019 was | |||||
Calculation of Diluted Adjusted Earnings per Share: | |||||
7-9/2019 | 7-9/2018 | 1-9/2019 | 1-9/2018 | 1-12/2018 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Net income - shareholders of the | 130 | 129 | 427 | 1,158 | 1,240 |
Adjustments* | - | 4 | 4 | (814) | (766) |
Adjusted net income - shareholders of | 130 | 134 | 431 | 353 | 477 |
Weighted-average number of diluted | 1,283,675 | 1,278,780 | 1,283,401 | 1,276,564 | 1,279,781 |
Diluted adjusted earnings per share (in | 0.10 | 0.10 | 0.34 | 0.28 | 0.37 |
* See "Adjustments to Reported Operating and Net Income (Non-GAAP)" above. | |||||
** The diluted adjusted earnings per share is calculated as follows: dividing the adjusted |
Sales by Main Countries: | ||||
7-9/2019 | 7-9/2018 | |||
$ millions | % of sales | $ millions | % of sales | |
USA | 228 | 17 | 245 | 18 |
China | 207 | 16 | 226 | 16 |
Brazil | 161 | 12 | 189 | 14 |
United Kingdom | 80 | 6 | 86 | 6 |
Germany | 78 | 6 | 80 | 6 |
France | 77 | 6 | 71 | 5 |
Spain | 58 | 4 | 60 | 4 |
Israel | 55 | 4 | 56 | 4 |
Australia | 27 | 2 | 40 | 3 |
Italy | 27 | 2 | 31 | 2 |
All other | 327 | 25 | 287 | 22 |
Total | 1,325 | 100 | 1,371 | 100 |
Sales by Geographical Regions: | ||||
7-9/2019 | 7-9/2018 | |||
$ millions | % of Sales | $ millions | % of Sales | |
Europe | 447 | 34 | 446 | 33 |
Asia | 354 | 27 | 352 | 26 |
North America | 245 | 18 | 262 | 19 |
South America | 191 | 14 | 204 | 15 |
Rest of the world | 88 | 7 | 107 | 7 |
Total | 1,325 | 100 | 1,371 | 100 |
- Europe ? sales remained stable as higher sales quantities of acids were mostly offset by lower sales quantities of specialty agriculture products, bromine-based flame retardants and phosphorus-based flame retardants, together with the negative impact of the devaluation of the euro against the dollar.
- Asia ? the minor increase derives mainly from an increase in the sales quantities of elemental bromine and phosphate rock. The increase was partly offset by a decrease in the sales quantities of phosphate fertilizers and the negative impact of the devaluation in the average exchange rate of the Chinese yuan against the dollar.
- North America ? the decrease derives mainly from a decrease in the selling prices and sales quantities of phosphate fertilizers together with lower sales quantities of potash.
- South America ? the decrease derives mainly from a decrease in the sales quantities of potash and phosphate fertilizers, partly offset by increased sales volumes of clear brine fluids.
- Rest of the world ? the decrease derives mainly from a decrease in the sales quantities of dairy proteins, partly offset by increased sales volumes of electricity surplus from the new power station in Sodom.
Operating Segment Data:
Industrial | Potash | Phosphate | Innovative Ag | Other | Reconciliation | Consolidated | |
$ millions | |||||||
For the three-month period ended | |||||||
Sales to external parties | 337 | 333 | 491 | 156 | 8 | - | 1,325 |
Inter-segment sales | 2 | 43 | 17 | 4 | 2 | (68) | - |
Total sales | 339 | 376 | 508 | 160 | 10 | (68) | 1,325 |
Segment profit (After allocation of | 88 | 83 | 32 | (2) | 5 | (5) | 201 |
Other income not allocated to the | - | ||||||
Operating income | 201 | ||||||
Financing expenses, net | (32) | ||||||
Share in earnings of equity-accounted | - | ||||||
Income before income taxes | 169 | ||||||
Implementation of IFRS 16 | - | - | - | - | 5 | 1 | 6 |
Capital expenditures | 26 | 93 | 51 | 5 | 1 | 2 | 178 |
Depreciation, amortization and | 17 | 37 | 44 | 5 | 4 | 3 | 110 |
Industrial | Potash | Phosphate | Innovative Ag | Other Activities | Reconciliation | Consolidated | |
$ millions | |||||||
For the three-month period ended | |||||||
Sales to external parties | 325 | 368 | 513 | 157 | 8 | - | 1,371 |
Inter-segment sales | 3 | 41 | 17 | 4 | 1 | (66) | - |
Total sales | 328 | 409 | 530 | 161 | 9 | (66) | 1,371 |
Segment profit (After allocation of | 83 | 78 | 40 | (1) | 1 | (1) | 200 |
Other expenses not allocated to the | (4) | ||||||
Operating income | 196 | ||||||
Financing expenses, net | (23) | ||||||
Share in losses of equity-accounted | (1) | ||||||
Income before taxes on income | 172 | ||||||
Capital expenditures | 14 | 72 | 42 | 3 | (1) | - | 130 |
Depreciation, amortization and | 16 | 32 | 39 | 5 | 1 | 4 | 97 |
Operating Segments Sales by Geographical Location of the Customer:
Industrial | Potash | Phosphate | Innovative Ag | Other Activities | Reconciliation | Consolidated | |
$ millions | |||||||
For the three-month period ended | |||||||
Europe | 112 | 95 | 190 | 65 | 8 | (23) | 447 |
Asia | 104 | 109 | 113 | 29 | 1 | (2) | 354 |
North America | 105 | 19 | 101 | 20 | - | - | 245 |
South America | 18 | 107 | 55 | 7 | - | 4 | 191 |
Rest of the world | - | 46 | 49 | 39 | 1 | (47) | 88 |
Total | 339 | 376 | 508 | 160 | 10 | (68) | 1,325 |
Industrial | Potash | Phosphate | Innovative Ag | Other Activities | Reconciliation | Consolidated | |
$ millions | |||||||
For the three-month period ended | |||||||
Europe | 113 | 104 | 174 | 74 | 8 | (27) | 446 |
Asia | 102 | 117 | 111 | 26 | - | (4) | 352 |
North America | 92 | 28 | 122 | 20 | - | - | 262 |
South America | 6 | 129 | 65 | 7 | - | (3) | 204 |
Rest of the world | 15 | 31 | 58 | 34 | 1 | (32) | 107 |
Total | 328 | 409 | 530 | 161 | 9 | (66) | 1,371 |
INVESTOR RELATIONS CONTACT
Limor Gruber
Head of Investor Relations
+972-3-684-4471
[email protected]
PRESS CONTACT
Maya Avishai
Head of Global External Communications
+972-3-684-4477
[email protected]
SOURCE ICL
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