ICL Reports Full Year and Strong Fourth Quarter Results

Improved fourth quarter sales and operating income driven by all four divisions Company issues 2021 guidance range for adjusted EBITDA

February 11, 2021 2:18 AM EST
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TEL AVIV, Israel, Feb. 11, 2021 /PRNewswire/ -- ICL (NYSE: ICL) (TASE: ICL), a leading global specialty minerals and specialty chemicals company, today reported its financial results for the fourth quarter and full year ended December 31, 2020. Consolidated fourth quarter sales of $1.3 billion were up more than $200 million year-over-year. Net income of $65 million was up 35%, and adjusted EBITDA of $268 million in the fourth quarter was up more than 30% year-over-year. Operating income of $139 million was up nearly 60% over the fourth quarter of last year, and all four divisions delivered year-over-year improvement in both sales and operating income in the quarter. Adjusted operating income of $143 million for the fourth quarter was up more than 60%, and operating cash flow of $258 million was up 22%.    

"To be certain, 2020 was a challenging year – for ICL, its employees, its customers and its communities – however, we are coming out of a tough year with a strong finish, and we believe we are well-positioned for 2021," said Raviv Zoller, president and CEO of ICL.  "Not only are commodity prices in our favor going into the new year, we also expect to continue seeing benefits from our innovative products and from the cost efficiencies and strategic initiatives we executed against in 2020."

"In 2020, our focus on innovative specialty products drove record operating income for specialty phosphates and Innovative Ag Solutions division.  We also had a record year at our YPH joint venture in China, our second-best year in Industrial Products, and we broke the annual potash production record at The Dead Sea, with these – and other achievements – driven by innovation and prompt execution.  Other operational successes included launching production trials at our new TBBA plant in Neot Hovav; beginning full operations of the salt harvester at The Dead Sea; the continued ramp up of white phosphoric acid production at our YPH facility; and the completion of excavation for the ramp connecting our Cabanasses mine in Spain with our Suria plant. The final integration in Spain will be completed in the first half of 2021," continued Zoller. 

"We also continued to reposition Innovative Ag Solutions for the future, by focusing on the development of innovative products and growing our business in target markets, including Brazil - one of the world's fastest growing agriculture markets – through our acquisition of Fertiláqua, which was completed during the first week of January 2021. We expect these and other innovative efforts to benefit the Company in 2021," concluded Zoller.

In order to provide better clarity around expectations for 2021, the Company is issuing an adjusted EBITDA guidance range of $1.02 billion to $1.12 billion for the full year, which is based on commodity prices and exchange rates as of the beginning of 2021. (1a)

 

 

Financial Figures and Non-GAAP Financial Measures

10-12/2020

10-12/2019

1-12/2020

1-12/2019

$

millions

% of

sales

$

millions

% of

sales

$

millions

% of

sales

$

millions

% of

sales

Sales

1,317

-

1,106

-

5,043

-

5,271

-

Gross profit

405

31

336

30

1,490

30

1,817

34

Operating income

139

11

88

8

202

4

756

14

Adjusted operating income (1)

143

11

88

8

509

10

760

14

Net income (loss) - shareholders of the Company

65

5

48

4

11

0

475

9

Adjusted net income - shareholders of the Company (1)

68

5

48

4

258

5

479

9

Diluted earnings (loss) per share (in dollars)

0.05

-

0.04

-

0.01

-

0.37

-

Diluted adjusted earnings per share (in dollars) (2)

0.05

-

0.04

-

0.20

-

0.37

-

Adjusted EBITDA (2)

268

20

201

18

990

20

1,198

23

Cash flows from operating activities

258

-

212

-

804

-

992

-

Purchases of property, plant and equipment and intangible assets (3)

183

-

157

-

626

-

576

-

 

(1)  See "Adjustments to reported operating and net income (Non-GAAP)" in the appendix. 

(2)  See "Adjusted EBITDA and Diluted Adjusted Earnings Per Share for the periods of activity" in the appendix.

(3)  See "Condensed consolidated statements of cash flows (unaudited)" in the appendix.

 

 

Consolidated Results Analysis

Results analysis for the period October – December 2020

Sales

Expenses

Operating income

$ millions

Q4 2019 figures

1,106

(1,018)

88

Total adjustments Q4 2019*

-

-

-

Adjusted Q4 2019 figures

1,106

(1,018)

88

Quantity

251

(153)

98

Price

(78)

-

(78)

Exchange rates

38

(42)

(4)

Raw materials

-

20

20

Energy

-

(1)

(1)

Transportation

-

5

5

Operating and other expenses

-

15

15

Adjusted Q4 2020 figures

1,317

(1,174)

143

Total adjustments Q4 2020*

-

(4)

(4)

Q4 2020 figures

1,317

(1,178)

139

* See "Adjustments to reported operating and net income (Non-GAAP)" in the appendix.

-  Quantity – Positive:  primarily due to increase in potash sales volumes related to ICL Dead Sea production records – compared with the effect of a three week shutdown for facilities upgrades in the fourth quarter of 2019 – and an increase in sales volumes of bromine- and phosphorous-based flame retardants, acids, and phosphate fertilizers, partially offset by a decrease in clear brine fluids sales volumes related to COVID-19.

-  Price – Negative:  primarily due to a $46 decrease in average realized price per tonne of potash year-over-year and a decrease in the selling prices of phosphate commodities products.

-  Exchange rates – Negative:  primarily due to the following changes in average exchange rates -  appreciation of Israeli shekel against USD, which increased operational costs, partially offset by appreciation of the euro against the USD, which increased revenues more than it increased operational costs, and by devaluation of the Brazilian real, which decreased operational costs.

-  Raw materials Positive:  primarily due to lower prices of sulfur consumed and lower raw material prices used for Innovative Ag Solutions products.

-  Transportation – Positive:  primarily due to decrease in marine and inland transportation costs year-over-year.

-  Operating and other expenses – Positive:   primarily due to operational savings at ICL Dead Sea, related to increased production from fourth quarter 2019 facilities upgrades. 

Financing expenses, net

Net financing expenses in the fourth quarter of 2020 amounted to $46 million, compared to $25 million in the same quarter last year – an increase of $21 million.

The increase relates mainly to revaluation of long-term employee benefits provisions and long-term leases (IFRS 16), which increased by $30 million, due to the appreciation of the Israeli shekel against the U.S. dollar during the fourth quarter of 2020.

The increase was partially offset by income from hedging transactions of $11 million.

Tax expenses

Tax expenses in the fourth quarter of 2020 and 2019 amounted to $24 million and $15 million, respectively, reflecting an effective tax rate of about 26% and 24%, respectively. The Company's higher tax rate in the current quarter is mainly due to an appreciation in the average exchange rate of the Israeli shekel against the USD.

Segment Information

Industrial Products

 

Results of operations

10-12/2020

10-12/2019

1-12/2020

1-12/2019

$ millions

$ millions

$ millions

$ millions

Segment Sales

336

293

1,255

1,318

   Sales to external customers

333

290

1,242

1,307

   Sales to internal customers

3

3

13

11

Segment Profit

80

60

303

338

Depreciation and amortization

23

18

77

67

Capital expenditures*

23

18

84

74

 

Fourth Quarter 2020

  • Sales of $336 million, up $43 million or 15% year-over-year.
  • Operating income of $80 million, up $20 million or 33% year-over-year – a fourth quarter record.
  • Recovery progressing in most end markets, excluding automotive – showing signs of recovery – and oil and gas - clear brine fluids not likely to recover in 2021.
  • Strategic shift to long-term contracts continued, with the trend expected to progress in 2021.
  • Commenced first production trials of new TBBA plant at Neot Hovav site.

Significant highlights and business environment

  • Elemental bromine:  Sales up both sequentially and year-over-year, primarily due to lower volumes related to the shut-down for Dead Sea facilities upgrade toward the end of 2019.- Market prices in China increased to a 12-month USD high, due to tax regulations, combined with favorable RMB/USD exchange rate.
  • Bromine-based flame retardants:  Sales up year-over-year, with higher demand from most end markets, while automotive showing first signs of recovery.
  • Clear brine fluids (CBF):  Sales down year-over-year, primarily due to a sharp decline in demand for oil and gas caused by a COVID-19-related decline in drilling activities.
  • Phosphorus-based flame retardants:  Sales up year-over-year, primarily due to declines in Chinese production related to government regulations.
  • Specialty minerals:  Sales up year-over-year, due to higher sales of magnesia- and calcium-based products related to continued strong demand from the food supplements and pharmaceutical end-markets.  Growth partially offset by a decrease in pre-season sales of MgCl for deicing, due to excess 2019 inventory.

Potash

 

Results of operations

10-12/2020

10-12/2019

1-12/2020

1-12/2019

$ millions

$ millions

$ millions

$ millions

Segment Sales

379

302

1,346

1,494

   Potash sales to external customers

276

192

979

1,081

   Potash sales to internal customers

28

23

95

100

   Other and eliminations*

75

87

272

313

Gross Profit

138

99

472

643

Segment Profit

40

22

120

289

Depreciation and amortization

43

38

166

149

Capital expenditures

104

137

296

478

Average realized price (in $)**

228

274

230

286

 

*     Primarily includes salt produced in underground mines in the UK and Spain, Polysulphate® and Polysulphate®-based products, magnesium-based products and sales of excess electricity produced by ICL power plants 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 primarily due to marine transportation costs.

Fourth Quarter 2020

  • Sales of $379 million, up $77 million or 25% year-over-year.
  • Operating income of $40 million, up $18 million or more than 80% year-over-year.
  • Grain Price Index increased, including all grain prices: soybeans up 21.6%, corn up 19.7%, wheat up 19.8%, and rice up 1.0%.- Increase in grain prices, especially for soybeans and corn, supported higher potash prices, especially in the U.S. and Southeast Asia. For additional information on potash prices and imports in key markets, see 'Global potash market - average prices and imports' in the appendix. - Average potash realized price per tonne of $228 was 4% higher sequentially but 17% lower year-over-year.

Significant highlights and business environment

  • ICL Dead Sea- Achieved record production for the fourth quarter and full year 2020, following facilities upgrades in the fourth quarter 2019.- Commenced operations of the salt harvesting dredger at The Dead Sea in December 2020.- The P-9 pumping station is expected to start commissioning in February of 2021 and will be fully commissioned by the middle of 2021.
  • ICL Iberia- The excavation of the ramp connecting the Cabanasses mine with the Suria plant was completed in December, following a delay related to COVID-19.  Operations are expected to commence in the first half of 2021.- The project is expected to increase the mine's capacity – expected annual run rate to reach approximately 1 million tonnes by the end of 2021, while lowering the cost per tonne.
  • ICL Boulby - Polysulphate production was down 17% to ~158,000 tonnes year-over-year, due to a power outage in November, however, for the full year, production was up 12% year-over-year to ~709,000 tonnes – despite the negative impact of COVID-19.- Polysulphate sales volumes remained relatively stable quarter-over-quarter and increased by 13% year-over-year to ~163,000 tonnes in the fourth quarter.
  • Magnesium- Global end market demand for magnesium showing first signs of recovery, following the negative impact of COVID-19 in previous quarters.

 

 

Potash – Production and Sales

Thousands of tonnes

10-12/2020

10-12/2019

1-12/2020

1-12/2019

Production

1,208

844

4,527

4,159

Total sales (including internal sales)

1,333

785

4,666

4,130

Closing inventory

275

414

275

414

 

Fourth quarter 2020

  • Production – Potash fourth quarter 2020 production was ~364,000 tonnes higher year-over-year, due to increased production at ICL Dead Sea   - following the three-week closure in the fourth quarter of the prior year – for facilities upgrades –  and thanks to operating excellence initiatives, somewhat offset by lower production at ICL Iberia, mainly due to the Sallent site closure, which reduced potash production quantities by about ~80,000 tonnes. 
  • Sales – Quantity of potash sold was ~548,000 tonnes higher year-over-year, primarily due to the increase in potash production and realized by sales mainly to China, Brazil, India and US.

Phosphate Solutions

 

Results of operations

10-12/2020

10-12/2019

1-12/2020

1-12/2019

$ millions

$ millions

$ millions

$ millions

Segment Sales

501

417

1,948

1,980

   Sales to external customers

479

400

1,871

1,901

   Sales to internal customers

22

17

77

79

Segment Profit

21

1

66

100

Depreciation and amortization

54

44

210

177

Capital expenditures

95

71

275

326

 

Fourth Quarter 2020

  • Sales of $501 million, up $84 million or 20% year-over-year.- Phosphate specialties:  Sales of $291 million, up $29 million or 11%, despite the Hagesud divestment.- Phosphate commodities:  Sales of $210 million, up $55 million or 35%.
  • Operating income of $21 million, up $20 million year-over-year – a significant increase.- Phosphate specialties:  Operating income of $24 million, up $2 million or 10%. - Phosphate commodities:  Operating loss of $3 million – an improvement versus a loss of $21 million in the prior year.
  • YPH continued to gradually shift from commodities to specialties and saw a year-over-year improvement in sales and operating income– due, in part, to cost reduction efforts.
  • Commodity price improvement continued in the fourth quarter and in the beginning of 2021.

 

Significant highlights and business environment

  • Phosphate salts:  Sales up year-over-year, with an improvement in sales of food grade phosphates and stable industrial salts sales. -  Food grade phosphates:  Strong volumes in Europe, North America and emerging markets were primarily due to a COVID-19-related sales shift from food service to the retail sector. -  Industrial salts:  Slightly higher sales in South America and China offset lower demand in Europe and North America, which was primarily driven by continued COVID-19 related weakness in certain industries.
  • White phosphoric acid (WPA):  Sales up year-over-year, driven by increased volume in China, Europe and South America, while North American sales remained stable.-  WPA plant in China continued to ramp up and is scheduled to produce commercial food-grade acid by the end of first quarter 2021.
  • Dairy protein:  Sales significantly higher year-over-year, primarily due to continued focus on expanding the company's global leadership position in organic cow and goat ingredients market.
  • Phosphate fertilizers:  Sales up year-over-year, due to higher sales volumes.-  Prices continued to recover across most markets during the fourth quarter of 2020, primarily in the Americas and Europe, despite seasonally low demand. For additional information on phosphate prices, see 'Global phosphate commodities market - average prices' in the appendix.
  • Prices of consumed raw material, mainly of sulfur, also increased compared to the third quarter of 2020, but were still lower year-over-year.

 

Innovative Ag Solutions

 

Results of operations

10-12/2020

10-12/2019

1-12/2020

1-12/2019

1-12/2018

$ millions

$ millions

$ millions

$ millions

$ millions

Segment Sales

163

150

731

717

741

   Sales to external customers

158

145

715

699

719

   Sales to internal customers

5

5

16

18

22

Segment Profit

5

(2)

40

21

29

Depreciation and amortization

6

6

25

21

19

Capital expenditures

9

8

20

30

15

 

Fourth Quarter 2020

  • Sales of $163 million, up $13 million or 9% year-over-year.
  • Operating income of $5 million, up $7 million year-over-year – a significant increase, due to cost efficiencies implemented in 2020, lower cost of raw materials, higher sales volumes and favorable exchange rates.
  • Turf and Ornamental (T&O) business delivered record quarterly sales.

Significant highlights and business environment

  • Specialty agriculture:  Sales of straight fertilizers and controlled release fertilizers (CRF) continued to improve, due to strong demand in all regions. -  Continued increase in sales to fast -growing emerging markets, such as India and Turkey.
  • T&O:  Sales up 7% year-over-year, due to growth in Europe, North America, Australia and New Zealand, and in both Turf and Landscape and Ornamental Horticulture. -  Strong demand across most products, as buyers secured stocks in advance of any potential additional COVID-19 lockdowns.
  • On January 7, 2021, the Company announced it completed the acquisition of Fertiláqua, one of Brazil's leading specialty plant nutrition companies, for $122 million. ICL expects to leverage Fertiláqua's strong market presence and distribution capabilities to increase the sales of its organic fertilizers, controlled-released fertilizers and other specialty plant nutrition products to the Brazilian market.

Liquidity and Capital Resources

As of December 31, 2020, the Company retained high levels of cash, cash equivalents, short-term investments and deposits in the amount of $314 million compared to $191 million as of December 31, 2019. In addition, the Company had more than $1 billion of unused credit facilities as of December 31,2020. The higher liquidity was part of the Company's strategy to enhance its financial flexibility, as well as to fund the Fertiláqua acquisition, which closed in early January 2021.

Outstanding net debt

As of December 31, 2020, ICL's net financial liabilities amounted to $2,463 million, an increase of $53 million compared to December 31, 2019.

Dividend Distribution

In connection with ICL's fourth quarter 2020 results, the Board of Directors declared a dividend of 2.65 cents per share, or approximately $34 million in the aggregate. The dividend will be paid on March 16, 2021. The record date is March 3, 2021.

About ICL

ICL Group Ltd. is a leading global specialty minerals and chemicals Company that creates impactful solutions for humanity's sustainability challenges in global food, agriculture, and industrial markets. ICL leverages its unique bromine, potash and phosphate resources, its passionate team of talented employees, and its strong focus on R&D and technological innovation to drive growth across its end markets. ICL shares are dually listed on the New York Stock Exchange and the Tel Aviv Stock Exchange (NYSE and TASE: ICL). The Company employs over 11,000 people worldwide, and its 2020 revenues totaled approximately $5 billion. For more information, visit the Company's website at  www.icl-group.com.

IMPACT OF COVID-19

In order to manage rapidly evolving conditions related to the COVID-19 pandemic and to enable an immediate response to new and frequently changing health and safety requirements, a special COVID-19 response team was established in early 2020. Directed by the senior management, the team is responsible for the constant monitoring of new guidelines and instructions issued by global and local health organizations, daily monitoring of operations across facilities, quick implementation of necessary adjustments to operations, management of internal communications to inform our employees on a regular basis, and for supporting our employees to adapt to this challenging environment.

During 2020, most of the Company's manufacturing facilities continued to operate undisturbed and have been deemed to be essential businesses by most of the relevant local government authorities. ICL Dead Sea achieved a record level of potash production despite operational challenges presented by COVID-19.

The emergence of the COVID-19 pandemic had a negative impact on our business performance in 2020, as revenues decreased, primarily due to lower demand for some of our Industrial Products segment products such as clear brine fluids, as a result of a significant decline in oil prices and demand, and certain flame retardants, due to lower activity in the automotive and electronics industries. In addition, operating results were negatively impacted, primarily due to lower production in Europe and other operational costs related to COVID-19. Nevertheless, these were partially mitigated by efficiency initiatives and measures implemented by the Company.

As the ultimate impact of the pandemic on the global economy still remains unclear, the Company anticipates COVID-19 may have a continuing impact on results for the next few quarters, including but not limited to, affecting revenues and operating income - due to the decline in global demand in the end markets for some of our products - as well as health and safety restrictions and measures affecting our operations and, in particular, any new lockdowns. 

As a result of uncertain environment brought about by COVID-19, the Company has taken actions to further enhance its financial profile and flexibility. As of December 31, 2020, the Company had more than $1 billion in cash and equivalents, deposits, and unutilized credit facilities.

At this stage, the Company continues to respond to the evolving business environment, to adjust to the changing economy and to take the appropriate measures to further enhance operational efficiency, including implementing cross–segment cost saving initiatives and maximizing its integrated business model, versatile production capabilities and worldwide logistics and marketing arrays. The Company is unable to accurately assess the full future impact of COVID–19 on its operations, due to, among other factors, the heightened volatility in global markets, the uncertainty regarding the duration of the pandemic, the extent of its impact on the markets in which the Company operates, and additional countermeasures that governments and central banks may take.

COVID-19 segment details for fourth quarter 2020

  • Industrial Products:  The negative impact continued to decline on a quarter-over-quarter basis, however, reduced demand for clear brine fluids is expected to continue into 2021.
  • Potash:  The negative impact in the fourth quarter of $12 million was due to lower production caused by the delay in the construction of the new ramp in Spain.
  • Phosphate Solutions:  Global phosphate specialties and commodities markets were not significantly disrupted, and the Company does not expect a significant impact on first quarter 2021 results.
  • IAS:  Turf and Ornamental sales were higher year-over-year, due to pre-buying related to uncertainty around the potential for additional lockdowns in Europe.

 

Appendix:

 

Condensed Consolidated Statements of Income (Unaudited)

(In millions except per share data)

For the three-month

period ended

For the year ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

$ millions

$ millions

$ millions

$ millions

Sales

1,317

1,106

5,043

5,271

Cost of sales

912

770

3,553

3,454

Gross profit

405

336

1,490

1,817

Selling, transport and marketing expenses

204

177

766

767

General and administrative expenses

57

64

232

254

Research and development expenses

17

12

54

50

Other expenses

4

7

256

30

Other income

(16)

(12)

(20)

(40)

Operating income

139

88

202

756

Finance expenses

123

25

219

220

Finance income

(77)

-

(61)

(91)

Finance expenses, net

46

25

158

129

Share in earnings of equity-accounted investees

1

-

5

1

Income before income taxes

94

63

49

628

Provision for income taxes

24

15

25

147

Net income

70

48

24

481

Net income (loss) attributable to the non-controlling interests

5

-

13

6

Net income attributable to the shareholders of the Company

65

48

11

475

Earnings per share attributable to the shareholders of the Company:

Basic earnings per share (in dollars)

0.05

0.04

0.01

0.37

Diluted earnings per share (in dollars)

0.05

0.04

0.01

0.37

Weighted-average number of ordinary shares outstanding:

Basic (in thousands)

1,280,182

1,280,160

1,280,026

1,278,950

Diluted (in thousands)

1,280,605

1,283,232

1,280,273

1,282,056

 

 

Condensed Consolidated Statements of Financial Position as of (Unaudited)

December 31, 2020

December 31, 2019

$ millions

$ millions

Current assets

Cash and cash equivalents

214

95

Short-term investments and deposits

100

96

Trade receivables

883

778

Inventories

1,250

1,312

Other receivables

394

403

Total current assets

2,841

2,684

Non-current assets

Investments at fair value through other comprehensive income

83

111

Deferred tax assets

127

109

Property, plant and equipment

5,550

5,331

Intangible assets

670

652

Other non-current assets

393

286

Total non-current assets

6,823

6,489

Total assets

9,664

9,173

Current liabilities

Short-term credit

684

420

Trade payables

735

712

Provisions

54

42

Other payables

704

587

Total current liabilities

2,177

1,761

Non-current liabilities

Long-term debt and debentures

2,093

2,181

Deferred tax liabilities

326

341

Long-term employee liabilities

655

575

Provisions

267

202

Other

58

52

Total non-current liabilities

3,399

3,351

Total liabilities

5,576

5,112

Equity

Total shareholders' equity

3,930

3,925

Non-controlling interests

158

136

Total equity

4,088

4,061

Total liabilities and equity

9,664

9,173

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the three-month period ended

For the year ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

$ millions

$ millions

$ millions

$ millions

Cash flows from operating activities

Net income

70

48

24

481

Adjustments for:

Depreciation and amortization

129

113

489

443

(Reversal of) Impairment of fixed assets

-

-

90

(10)

Exchange rate, interest and derivative, net

(3)

16

90

110

Loss from divestiture of businesses

-

-

4

-

Tax expenses

24

15

25

147

Change in provisions

(12)

(24)

113

(21)

Other

(3)

3

1

(1)

135

123

812

668

Change in inventories

2

(72)

54

(72)

Change in trade receivables

(47)

210

(89)

199

Change in trade payables

72

(49)

84

(58)

Change in other receivables

(9)

9

5

5

Change in other payables

89

23

54

4

Net change in operating assets and liabilities

107

121

108

78

 Interests paid

(34)

(38)

(109)

(115)

 Income taxes paid, net of refund

(20)

(42)

(31)

(120)

Net cash provided by operating activities

258

212

804

992

Cash flows from investing activities

Proceeds (investments) in deposits, net

6

(6)

34

(2)

Business combinations, net of cash acquired

-

-

(27)

-

Purchases of property, plant and equipment and intangible assets

(183)

(157)

(626)

(576)

Proceeds from divestiture of businesses net of transaction expenses

9

-

26

-

Dividends from equity-accounted investees

4

2

7

3

Proceeds from sale of property, plant and equipment

1

14

3

50

Net cash used in investing activities

(163)

(147)

(583)

(525)

Cash flows from financing activities

Dividends paid to the Company's shareholders

(30)

(64)

(118)

(273)

Receipt from transactions in derivatives used for hedging

28

-

24

-

Receipt of long-term debt

116

200

1,175

657

Payments of long-term debt

(207)

(139)

(1,133)

(689)

Payments of short-term credit from banks and others, net

(5)

(63)

(52)

(183)

Other

(1)

-

(1)

(2)

Net cash used in financing activities

(99)

(66)

(105)

(490)

Net change in cash and cash equivalents

(4)

(1)

116

(23)

Cash and cash equivalents as at the beginning of the period

216

96

95

121

Net effect of currency translation on cash and cash equivalents

2

-

3

(3)

Cash and cash equivalents as at the end of the period

214

95

214

95

 

 

Segment fourth quarter results analysis

INDUSTRIAL PRODUCTS

 

Results analysis for the period October - December 2020

Sales

Expenses

Operating income

$ millions

Q4 2019 figures

293

(233)

60

Quantity

39

(19)

20

Price

(1)

-

(1)

Exchange rates

5

(5)

-

Raw materials

-

(1)

(1)

Energy

-

-

-

Transportation

-

(1)

(1)

Operating and other expenses

-

3

3

Q4 2020 figures

336

(256)

80

 

Quantity – Positive: primarily due to increase in the quantities of bromine- and phosphorous-based flame retardants, and elemental bromine sold, partially offset by decrease in clear brine fluids sales volumes related to COVID–19.

Price – Negative:  primarily due to minor price adjustments in bromine-based flame retardants selling prices.

Exchange rates – Offset: due to the following changes in average exchange rates -appreciation of euro against USD contributed to revenue more than it increased operational costs and was offset by appreciation of the Israeli shekel against USD, which increased operational costs.

 

POTASH

 

Results analysis for the period October – December 2020

Sales

Expenses

Operating income

$ millions

Q4 2019 figures

302

(280)

22

Quantity

136

(63)

73

Price

(64)

-

(64)

Exchange rates

5

(9)

(4)

Energy

-

(2)

(2)

Transportation

-

3

3

Operating and other expenses

-

12

12

Q4 2020 figures

379

(339)

40

  • Quantity – Positive:  primarily due to ICL Dead Sea production record and three-week shut down for a facility upgrade in the fourth quarter of 2019.
  • Price – Negative:  primarily due to decrease of $46 in average realized price per tonne of potash year-over-year.
  • Exchange rates – Negative: primarily due to the following changes in average exchange rates - appreciation of Israeli shekel and British pound against USD, which increased operational costs. This was partially offset by appreciation of euro against USD, which contributed to revenue more than it increased operational costs.
  • Operating and other expenses – Positive:   primarily due to operational savings at ICL Dead Sea related to increased production from fourth quarter 2019 facility upgrade.

 

PHOSPHATE SOLUTIONS

 

Results analysis for the period October - December 2020

Sales

Expenses

Operating income

$ millions

Q4 2019 figures

417

(416)

1

Quantity

72

(66)

6

Price

(7)

-

(7)

Exchange rates

19

(18)

1

Raw materials

-

11

11

Energy

-

1

1

Transportation

-

4

4

Operating and other expenses

-

4

4

Q4 2020 figures

501

(480)

21

  • Quantity – Positive: primarily due to higher sales volumes of phosphate fertilizers, acids and dairy proteins, partially offset by the Hagesud divestiture in second quarter of 2020.
  • Price – Negative:   primarily due to decrease in acids and phosphate fertilizers selling prices.
  • Exchange rates – Positive:  primarily related to the following changes in average exchange rates - devaluation of Brazilian real against USD, which decreased operational costs. Additionally, appreciation of euro and Chinese yuan against USD contributed to revenue more than it increased operational costs. This trend was partially offset by appreciation of Israeli shekel, which increased operational costs.   
  • Raw materials – Positive: primarily due to lower prices of sulfur consumed during the quarter.

INNOVATIVE AG SOLUTIONS

 

Results analysis for the period October – December 2020

Sales

Expenses

Operating income

$ millions

Q4 2019 figures

150

(152)

(2)

Quantity

6

(4)

2

Price

(2)

-

(2)

Exchange rates

9

(8)

1

Raw materials

-

7

7

Energy

-

-

-

Transportation

-

(1)

(1)

Operating and other expenses

-

-

-

Q4 2020 figures

163

(158)

5

  • Quantity – Positive: primarily due to increase in sales volumes of both specialty agriculture and turf and ornamental products, mainly in Europe and North America.
  • Price – Negative: primarily related to decrease in selling prices of specialty agriculture products, mainly liquid fertilizers.
  • Exchange rates –Positive:  primarily due to the following change in average exchange rates - appreciation of euro against USD, which contributed to revenue more than it increased operational costs.
  • Raw materials – Positive:  primarily due to lower costs of commodities fertilizers.

 

Additional segment information

Global potash market - average prices and imports:

Average prices

Q4 2020

Q4 2019

VSQ4 2019

2020

2019

VS2019

Granular potash - Brazil

CFR spot

($ per tonne)

248

293

(15%)

238

330

(28%)

Granular potash - Northwest Europe

CIF spot/contract

(€ per tonne)

234

273

(14%)

244

285

(14%)

Standard potash -Southeast Asia

CFR spot

($ per tonne)

240

240

(14%)

245

294

(17%)

Potash imports

To Brazil

million tonnes

2.9

2.2

32%

11.0

10.2

8%

To China

million tonnes

2.0

1.4

43%

8.7

9.1

(4%)

To India

million tonnes

1.1

1.5

(27%)

4.1

4.1

0%

Sources: CRU (Fertilizer Week Historical Price: January 2021), FAI, Brazil and Chinese customs data.

 

Global phosphate commodities market - average prices:

$ per tonne

Q4 2020

Q4 2019

VS

Q4 2019

2020

2019

VS

2019

DAP

CFR India Spot

369

318

16%

331

361

(8%)

TSP

CFR Brazil Spot

262

270

(3%)

251

311

(19%)

SSP

CPT Brazil inland 18-20% P2O5 Spot

179

206

(13%)

177

224

(21%)

Sulphur

Bulk FOB Adnoc monthly contract

74

46

61%

60

88

(32%)

Source: CRU (Fertilizer Week Historical Prices, January 2021).

 

(1a) The company only provides guidance on a non-GAAP basis. We do 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). Our 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.

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 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 under "Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share for the periods of activity (non-GAAP)" below which were adjusted for in calculating the adjusted operating income and adjusted net income attributable to the Company's shareholders. Other companies may calculate similarly titled non–IFRS financial measures differently than the Company. 

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's 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.

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 its 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)

 

10-12/2020

10-12/2019

1-12/2020

1-12/2019

$ millions

$ millions

$ millions

$ millions

Operating income (loss)

139

88

202

756

Capital gain

-

-

-

-

Impairment of assets, provision for site closure and restoration costs (1)

4

7

229

(3)

Provision for early retirement (2)

-

-

78

-

Provision for legal proceedings (3)

-

(7)

-

7

Total adjustments to operating income

4

-

307

4

Adjusted operating income

143

88

509

760

Net income (loss) attributable to the shareholders of the Company

65

48

11

475

Total adjustments to operating income

4

-

307

4

Adjustments to finance expenses

-

-

-

-

Total tax impact of the above operating income

(1)

-

(60)

-

Total adjusted net income - shareholders of the Company

68

48

258

479

 

(1)  For 2020, this reflects an impairment and write-off of certain assets in Israel (Rotem Amfert Israel), related to continued low phosphate prices and the Company's plan to discontinue unprofitable phosphate rock production and sale, which also resulted in an increase in the provision for assets retirement obligation (ARO) as well as an increase in facilities restoration costs. Also reflects an impairment of assets and an increase in the Sallent site (Vilafruns) closure costs in Spain (ICL Iberia). For 2019, this represents a partial reversal of an impairment loss related to assets in Germany - due to an agreement for the sale of assets - which was incurred in 2015, partly offset by an increase in the provision for the Sallent site closure costs, together with an increase in the provision for the removal of prior periods waste in bromine production facilities in Israel.

(2)  For 2020, this reflects an increase in the provision related to headcount reduction, which was implemented as part of the Company's efficiency initiatives and measures, primarily through an early retirement plan for the Israeli production facilities (Rotem Amfert Israel, Bromine Compounds and Dead Sea Magnesium).

(3)  For 2019, this reflects an increase in the provision for the finalization of the royalties' arbitration in Israel related to prior periods, which was partly offset by a decrease in the provision related to legal claims in Spain.

 

 

 

Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share for the periods of activity

Calculation of adjusted EBITDA was made as follows:

10-12/2020

10-12/2019

1-12/2020

1-12/2019

$ millions

$ millions

$ millions

$ millions

Net income (loss) attributable to the shareholders of the Company

65

48

11

475

Financing expenses, net

46

25

158

129

Taxes on income, net

24

15

25

147

Minority and equity income, net

4

-

8

5

Operating income

139

88

202

756

Minority and equity income, net

(4)

-

(8)

(5)

Depreciation and amortization

129

113

489

443

Adjustments*

4

-

307

4

Total adjusted EBITDA

268

201

990

1,198

 

*    See "Adjustments to reported operating and net income (Non-GAAP)" above.

 

Calculation of diluted adjusted earnings per share was made as follows:

10-12/2020

10-12/2019

1-12/2020

1-12/2019

$ millions

$ millions

$ millions

$ millions

Net income (loss) - shareholders of the Company

65

48

11

475

Adjustments*

4

-

307

4

Total tax impact of the above operating income & finance expenses adjustments

(1)

-

(60)

-

Adjusted net income - shareholders of the Company

68

48

258

479

Weighted-average number of diluted ordinary shares outstanding (in thousands)

1,280,605

1,283,232

1,280,273

1,282,056

Diluted adjusted earnings per share (in dollars)**

0.05

0.04

0.20

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 net income–shareholders of the Company by the weighted-average number of diluted ordinary shares outstanding (in thousands).

 

Operating segment data

 

Industrial Products

Potash

Phosphate Solutions

Innovative Ag Solutions

Other

Activities

Reconciliations

Consolidated

$ millions

For the three-month period ended December 31, 2020

Sales to external parties

333

337

479

158

10

-

1,317

Inter-segment sales

3

42

22

5

-

(72)

-

Total sales

336

379

501

163

10

(72)

1,317

Segment profit (loss)

80

40

21

5

(2)

(1)

143

Other expenses not allocated to the segments

(4)

Operating income

139

Financing expenses, net

(46)

Share in earnings of equity-accounted investees

1

Income before income taxes

94

Depreciation and amortization

23

43

54

6

(4)

7

129

Capital expenditures as part of business combination

-

-

-

-

1

-

1

Capital expenditures

23

104

95

9

2

8

241

 

 

Operating segment data (cont'd)

 

Industrial Products

Potash

Phosphate Solutions

Innovative Ag Solutions

Other

Activities

Reconciliations

Consolidated

$ millions

For the three-month period ended December 31, 2019

Sales to external parties

290

262

400

145

9

-

1,106

Inter-segment sales

3

40

17

5

-

(65)

-

Total sales

293

302

417

150

9

(65)

1,106

Segment profit

60

22

1

(2)

2

5

88

Operating income

88

Financing expenses, net

(25)

Income before income taxes

63

Depreciation, amortization and impairment

18

38

44

6

6

1

113

Implementation of IFRS 16

2

-

4

1

10

-

17

Capital expenditures

16

137

67

7

3

2

232

 

Operating Segments

Information based on geographical location

The following table sets forth sales by geographical regions based on the location of the customers:

10-12/2020

10-12/2019

$

millions

% of

Sales

$

millions

% of

Sales

Europe

435

33

379

34

Asia

409

31

301

27

North America

228

17

209

19

South America

140

11

123

11

Rest of the world

105

8

94

9

Total

1,317

100

1,106

100

 

 

  • Europe – The increase in sales primarily relates to an increase in sales volumes of potash, phosphate fertilizers, specialty agriculture products, phosphorus-based flame retardants and bromine-based flame retardants, together with the positive impact of the appreciation of the average exchange rate of the euro against the dollar. The increase was partly offset by a decrease in the selling prices of potash and phosphate fertilizers.
  • Asia – The increase in sales primarily relates to an increase in sales volumes of potash, phosphate fertilizers, acids, elemental bromine, bromine-based flame retardants and dairy proteins, together with the positive impact of the appreciation of the average exchange rate of the Chinese yuan against the dollar. The increase was partly offset by a decrease in the selling prices of potash and phosphate fertilizers.  
  • North America – The increase in sales primarily relates to an increase in sales volumes of potash and phosphorus-based flame retardants. The increase was partly offset by a decrease in sales volumes of bromine-based industrial solutions.
  • South America – The increase in sales primarily relates to an increase in the sales volumes of potash, partly offset by a decrease in the selling prices of potash.
  • Rest of the world – The increase in sales primarily relates to an increase in sales volumes of dairy proteins.

 

The following table presents the distribution of the operating segments sales by geographical location of the customer:

10-12/2020

10-12/2019

$

millions

% of

sales

$

millions

% of

sales

China

240

18

139

13

USA

210

16

190

17

Brazil

116

9

106

10

Germany

81

6

70

6

United Kingdom

74

6

62

6

Spain

66

5

57

5

Israel

63

5

55

5

France

55

4

57

5

India

55

4

50

5

Australia

31

2

27

2

All other

326

25

293

26

Total

1,317

100

1,106

100

 

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" and "potential", among others.

Forward–looking statements appear in a number of places in this announcement and include, but are not limited to, our 2021 adjusted EBITDA guidance, 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; failure to raise the water level in evaporation Pond 5 in the Dead Sea; construction of a new pumping station; disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; delays in the completion of major projects by third party contractors and/or termination of engagements with contractors and/or governmental obligations; the inflow of significant amounts of water into the Dead Sea could adversely affect production at our plants; labor disputes, slowdowns and strikes involving our employees; pension and health insurance liabilities; the ongoing COVID-19 pandemic, which has impacted, and may continue to impact our sales, operating results and business operations by disrupting our ability to purchase raw materials, by negatively impacting the demand and pricing for some of our products, by disrupting our ability to sell and/or distribute products, impacting customers' ability to pay us for past or future purchases and/or temporarily closing our facilities or the facilities of our suppliers or customers and their contract manufacturers, or restricting our ability to travel to support our sites or our customers around the world; changes to governmental incentive programs or tax benefits, creation of new fiscal or tax related legislation; changes in our evaluations and estimates, which serve as a basis for the recognition and manner of measurement of assets and liabilities; higher tax liabilities; failure to integrate or realize expected benefits from mergers and acquisitions, organizational restructuring and joint ventures; currency rate fluctuations; rising interest rates; government examinations or investigations; disruption of our, or our service providers', information technology systems or breaches of our, or our service providers', data security; failure to retain and/or recruit key personnel; inability to realize expected benefits from our cost reduction program according to the expected timetable; inability to access capital markets on favorable terms; cyclicality of our businesses; changes in demand for our fertilizer products due to a decline in agricultural product prices, lack of available credit, weather conditions, government policies or other factors beyond our control; sales of our magnesium products being affected by various factors that are not within our control; our ability to secure approvals and permits from the authorities in Israel to continue our phosphate mining operations in Rotem; volatility or crises in the financial markets; uncertainties surrounding the proposed withdrawal of the United Kingdom from the European Union; hazards inherent to mining and chemical manufacturing; the failure to ensure the safety of our workers and processes; cost of compliance with environmental legislative and licensing restrictions; laws, regulations and physical impacts of climate change and greenhouse gas emissions; litigation, arbitration and regulatory proceedings; exposure to third party and product liability claims; product recalls or other liability claims as a result of food safety and food-borne illness concerns; insufficiency of insurance coverage; closing of transactions, mergers and acquisitions; war or acts of terror and/or political, economic and military instability in Israel and its region; filing of class actions and derivative actions against the Company, its executives and Board members; and other risk factors discussed under "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 (SEC) on March 5, 2020.

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 2020 (hereinafter – "the Quarterly Report") should be read in conjunction with the Annual Report published by the Company on Form 20–F as at and for the year ended December 31, 2019 (hereinafter – the "Annual Report") and the report for the first quarter, second quarter and third quarter of 2020 published by the Company (the "prior quarterly reports"), including the description of the events occurring subsequent to the date of the statement of financial position, as filed with the U.S. Securities and Exchange Commission. As part of the Quarterly Report, the Company updated the disclosures provided in the Annual Report, to the extent there were material developments since the publication date of the Annual Report, on March 5, 2020 and the prior quarterly reports, on May 12, 2020, July 29, 2020, November 12, 2020, and up to the publication date of the Quarterly Report.

 

INVESTOR RELATIONS CONTACTS

PRESS CONTACT

Peggy Reilly Tharp

Dudi Musler

Adi Bajayo

VP, ICL Global Investor Relations

Director, Investor Relations

Scherf Communications

+314-983-7665

+972-3-684-4448

+972-52-4454789

Peggy.ReillyTharp@icl-group.com 

Dudi.Musler@icl-group.com

Adi@scherfcom.com

 

 

Cision View original content:http://www.prnewswire.com/news-releases/icl-reports-full-year-and-strong-fourth-quarter-results-301226639.html

SOURCE ICL



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