TEL AVIV, Israel, Nov. 12, 2020 /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, 2020.
Highlights for the Third Quarter of 2020
ICL's President & CEO, Raviv Zoller, stated "ICL's ability to execute on strategic priorities is reflected in our consistent delivery of positive results in all operating segments, as well as continuous solid cash generation, while commodity prices remain at cyclically low levels and dislocations persist in many of our end markets. The diversity and breadth of our products, as well as our continued cost efficiency initiatives, partly offset the impact of COVID-19 and lower commodity prices in the third quarter of 2020. Despite these ongoing challenges, we remain focused on important growth initiatives across our segments, as we announced in our recent capital markets day, and are pleased with the progress we are making. ICL's strong financial position and balanced capital priorities will help us navigate through the current global market challenges and position ICL to execute on timely opportunities, as we have demonstrated with our recently announced agreement to acquire Fertiláqua, one of Brazil's leading specialty plant nutrition companies. This acquisition will unlock immediate synergies for distribution in Brazil and further expands ICL's product portfolio with higher margin products, and we intend to continue executing on our specialty businesses' growth strategy, both organically and inorganically. Although COVID-19 may continue to impact our results in the near term, we are very well-positioned for the future. As conditions begin to normalize, which we expect to occur during 2021, we will see further benefits from our strategic efficiency plans, which were accelerated by COVID-19 and implemented across all of our business segments and will result in annualized savings of about $50 million, driving margin expansion and cash flow generation."
Results for the third quarter of 2020 were impacted by the COVID-19 pandemic and the resulting decline in industrial activity and crude oil production, as well as continued lower prices of commodity fertilizers, which impacted sales and operating income. Notwithstanding the market environment, ICL maintained profitability in each of its operating segments due to its diverse business mix, the impact of cost efficiency initiatives and ICL's ongoing focus on increasing its specialties businesses. In the Phosphate Solutions segment, operating income from phosphate specialties increased by 13% compared to the third quarter of 2019, reaching a record level. The recent increase in phosphate commodity market prices and an optimized geographical sales mix, as well as record operating profits from the YPH JV in China, decreased the operating loss from phosphate commodities by $16 million compared to the prior quarter. In the Potash segment, total production from ICL Dead Sea reached a record level for the first nine months of the year, offsetting decreased production from ICL Iberia and positively contributing to the segment's results. Our Industrial Products segment was impacted by lower sales volumes of bromine-based flame retardants due the impact of COVID-19 on global industrial activity and by lower demand for clear brine fluids due to lower oil and gas drilling activity. Demand in certain end markets, including building and construction and electronics manufacturing began to recover towards the end of the third quarter of 2020. The IAS segment reported its third consecutive quarterly year-over-year increase in operating income, due to higher sales volumes, lower costs of raw materials and the continuous implementation of efficiency and cost reduction initiatives.
Financial Figures and Non-GAAP Financial Measures
7-9/2020 | 7-9/2019 | 1-9/2020 | 1-9/2019 | 1-12/2019 | ||||||
$ millions | % of sales | $ millions | % of sales | $ millions | % of sales | $ millions | % of sales | $ millions | % of sales | |
Sales | 1,204 | - | 1,325 | - | 3,726 | - | 4,165 | - | 5,271 | - |
Gross profit | 365 | 30 | 472 | 36 | 1,085 | 29 | 1,481 | 36 | 1,817 | 34 |
Operating income | 100 | 8 | 201 | 15 | 63 | 2 | 668 | 16 | 756 | 14 |
Adjusted operatingincome (1) | 106 | 9 | 201 | 15 | 366 | 10 | 672 | 16 | 760 | 14 |
Net income (loss) - shareholders of the Company | 54 | 4 | 130 | 10 | (54) | (1) | 427 | 10 | 475 | 9 |
Adjusted net income - shareholders of the Company (1) | 58 | 5 | 130 | 10 | 190 | 5 | 431 | 10 | 479 | 9 |
Diluted earnings (loss) per share (in dollars) | 0.04 | - | 0.10 | - | (0.04) | - | 0.33 | - | 0.37 | - |
Diluted adjusted earnings per share (in dollars) (2) | 0.05 | - | 0.10 | - | 0.15 | - | 0.34 | - | 0.37 | - |
Adjusted EBITDA (2) | 226 | 19 | 307 | 23 | 722 | 19 | 997 | 24 | 1,198 | 23 |
Cash flows from operating activities | 203 | - | 368 | - | 546 | - | 780 | - | 992 | - |
Purchases of property, plant and equipment and intangible assets (3) | 143 | - | 147 | - | 443 | - | 419 | - | 576 | - |
(1) See "Adjustments to reported operating and net income (Non-GAAP)" below. | ||||||||||
(2) See "Adjusted EBITDA and Diluted Adjusted Earnings Per Share for the periods of activity" below. | ||||||||||
(3) See "Condensed consolidated statements of cash flows (unaudited)" to the accompanying financial statements. |
ConsolidatedResults Analysis
Results analysis for the period July – September 2020 | ||||
Sales | Expenses | Operating income | ||
$ millions | ||||
Q3 2019 figures | 1,325 | (1,124) | 201 | |
Total adjustments Q3 2019* | - | - | - | |
Adjusted Q3 2019 figures | 1,325 | (1,124) | 201 | |
Quantity | (50) | 29 | (21) | |
Price | (92) | - | (92) | |
Exchange rates | 21 | (21) | - | |
Raw materials | - | 18 | 18 | |
Energy | - | (2) | (2) | |
Transportation | - | 5 | 5 | |
Operating and other expenses | - | (3) | (3) | |
Adjusted Q3 2020 figures | 1,204 | (1,098) | 106 | |
Total adjustments Q3 2020* | - | (6) | (6) | |
Q3 2020 figures | 1,204 | (1,104) | 100 |
* See "Adjustments to reported operating and net income (Non-GAAP)".
Financing expenses, net
Net financing expenses in the third quarter of 2020 amounted to $29 million, compared to $32 million in the same quarter last year - a decrease of $3 million, mainly related to lower interest expenses due to our ability to reduce the average interest rate we pay on our debt.
Tax expenses
Tax expenses in the third quarter of 2020 and 2019 amounted to $14 million and $35 million, reflecting an effective tax rate of about 19% and 21%, respectively. The Company's lower effective tax rate in the current quarter is mainly due to utilization of prior-year tax losses in China.
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. Directed by the senior management of the Company, 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 the Company's facilities, quick implementation of necessary adjustments to our operations, management of internal communications to inform our employees on a regular basis, and support our employees to adapt to this challenging environment.
During the first nine months of 2020, most of our manufacturing facilities in Israel and around the world continued to operate undisturbed and have been deemed to be essential businesses by most of the relevant local government authorities. The emergence of the COVID-19 pandemic had a negative impact on our business performance during the first nine months of the year, 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, our operating results were negatively impacted, primarily due to lower production in Europe and other operational costs related to the COVID-19 pandemic. 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 remains unclear at this stage, we anticipate that it will have a continuing impact on our results for the next few quarters, including but not limited to, affecting our 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.
As of the end of September 2020, the Company had approximately $1.25 billion in cash, deposits and unutilized credit facilities.
Segment Information
Industrial Products
The Industrial Products segment produces bromine out of a highly concentrated solution in the Dead Sea, as well as bromine–based compounds at its facilities in Israel, the Netherlands and China. In addition, the segment produces salts, magnesium chloride, magnesia-based products, phosphorus-based flame retardants and functional fluids.
Segment sales and operating income in the third quarter of 2020 decreased by 20% and 43% year–over-year, respectively, due to lower sales volumes, slightly offset by a positive price contribution. Lower demand for elemental bromine, clear brine fluids and bromine-based flame retardants, resulting from the negative impact of the COVID-19 pandemic on global industrial activity and demand for oil and gas, was partly offset by higher sales volumes of phosphorus–based flame retardants. The moderate recovery in demand for certain flame retardants for the building and construction and electronics industries in the fourth quarter of 2020 could partially mitigate the usual seasonal fourth quarter pattern.
Significant highlights and business environment
Results of Operations
7-9/2020 | 7-9/2019 | |
$ millions | $ millions | |
Segment Sales | 270 | 339 |
Sales to external customers | 267 | 337 |
Sales to internal customers | 3 | 2 |
Segment profit | 50 | 88 |
Depreciation and Amortization | 19 | 17 |
Capital expenditures* | 16 | 26 |
* For information regarding the effect of IFRS 16 implementation on 2019 capital expenditures, see "Note 3 – Operating segments" of the financial statements. |
Results analysis for the period July - September 2020
Sales | Expenses | Operatingincome | |
$ millions | |||
Q3 2019 figures | 339 | (251) | 88 |
Quantity | (76) | 31 | (45) |
Price | 3 | - | 3 |
Exchange rates | 4 | (6) | (2) |
Raw materials | - | 1 | 1 |
Energy | - | 1 | 1 |
Transportation | - | - | - |
Operating and other expenses | - | 4 | 4 |
Q3 2020 figures | 270 | (220) | 50 |
Potash
The Potash segment produces and sells mainly potash, using an evaporation process to extract potash from the Dead Sea in Israel and conventional mining from an underground mine in Spain. The segment also produces Polysulphate® in its Boulby mine in the UK and magnesium in the Dead Sea in Israel. In addition, the segment sells salt produced in its facilities, and has a power plant in Sodom, which supplies electricity to ICL's companies in Israel (electricity surplus is sold to external customers) and steam to all facilities in the Sodom site.
The Potash segment's sales and operating income decreased in the third quarter of 2020 by 17% and 66%, respectively, compared to the same quarter in the prior year. Business performance was primarily impacted by a $64 decrease in the average potash realized price per tonne, mainly due to higher sales volumes to India and China at low contract prices, and higher operating costs, mainly due to decreased production in Spain and costs related to COVID-19. As of the date of the report, production sites are operating as planned, with ICL Dead Sea reaching a record high production level for the first nine months of the year, and we do not expect a very significant impact from the COVID-19 pandemic on the segment's results in the fourth quarter of 2020, although the full effect of the pandemic on our operations is uncertain and difficult to assess or predict.
Highlights and business environment
Results of Operations
7-9/2020 | 7-9/2019 | |
$ millions | $ millions | |
Segment sales | 313 | 376 |
Potash sales to external customers | 224 | 280 |
Potash sales to internal customers | 20 | 26 |
Other and eliminations* | 69 | 70 |
Gross profit | 115 | 176 |
Segment profit | 28 | 83 |
Depreciation and Amortization | 42 | 37 |
Capital expenditures** | 76 | 93 |
Average realized price (in $)*** | 220 | 284 |
* 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 our power plants in Israel.
** For information regarding the effect of IFRS 16 implementation on 2019 capital expenditures, see "Note 3 – Operating segments" of the accompanying Financial Statements.
*** 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.
Potash – Production and Sales
Thousands of tonnes | 7-9/2020 | 7-9/2019 |
Production | 1,064 | 1,050 |
Total sales (including internal sales) | 1,111 | 1,079 |
Closing inventory | 401 | 355 |
Results analysis for the period July – September 2020
Sales | Expenses | Operatingincome | |
$ millions | |||
Q3 2019 figures | 376 | (293) | 83 |
Quantity | (1) | 18 | 17 |
Price | (66) | - | (66) |
Exchange rates | 4 | (5) | (1) |
Energy | - | (2) | (2) |
Transportation | - | 4 | 4 |
Operating and other expenses | - | (7) | (7) |
Q3 2020 figures | 313 | (285) | 28 |
Phosphate Solutions
The Phosphate Solutions segment operates ICL's phosphate value chain, using phosphate rock and fertilizer-grade phosphoric acid to produce phosphate-based specialty products with higher added value, as well as to produce and sell phosphate-based fertilizers.
The segment's sales were stable, while operating income decreased by 13%, year–over–year, mainly due to lower phosphate commodity market prices, which started to gradually recover during the third quarter, partly offset by lower raw materials prices and efficiency initiatives. Strong phosphate specialties performance, despite global challenges related to the COVID-19 pandemic, ongoing positive operating income of the YPH JV in China and a recovery in phosphate commodity prices resulted in a significant sequential improvement in operating income. Fourth quarter results for both the commodities and the specialties phosphate businesses are expected to decrease, compared to the current quarter, due to the usual seasonal pattern.
Phosphate specialties sales of $295 million and operating income of $34 million in the third quarter of 2020 were approximately 2% and 13% higher, respectively, compared to the third quarter of 2019. The increase in operating income was driven mainly by strong volumes, lower costs and a positive exchange rates impacts.
Sales of phosphate commodities amounted to $211 million, approximately 3% lower than the third quarter of 2019, mostly due to significantly lower market prices which was partly offset by higher sales volumes and favorable exchange rates. Operating loss of $6 million in the third quarter of 2020, compared to operating income of $2 million in the third quarter of 2019, is attributed to a decrease in prices, partly offset by lower raw materials costs and higher sales volumes, mainly to Asia and North America.
Highlights and business environment
Results of Operations
7-9/2020 | 7-9/2019 | |
$ millions | $ millions | |
Segment Sales | 506 | 508 |
Sales to external customers | 488 | 491 |
Sales to internal customers | 18 | 17 |
Segment profit | 28 | 32 |
Depreciation and Amortization | 55 | 44 |
Capital expenditures* | 56 | 51 |
* For information regarding the effect of IFRS 16 implementation on 2019 capital expenditures, see "Note 3 – Operating segments" of the financial statements.
Results analysis for the period July - September 2020
Sales | Expenses | Operatingincome | |
$ millions | |||
Q3 2019 figures | 508 | (476) | 32 |
Quantity | 16 | (14) | 2 |
Price | (30) | - | (30) |
Exchange rates | 12 | (9) | 3 |
Raw materials | - | 16 | 16 |
Energy | - | - | - |
Transportation | - | 1 | 1 |
Operating and other expenses | - | 4 | 4 |
Q3 2020 figures | 506 | (478) | 28 |
Innovative Ag Solutions
The Innovative Ag Solutions (IAS) segment develops, manufactures, markets and sells specialty fertilizers based primarily on nitrogen, potash and phosphate. The segment produces water soluble specialty fertilizers, liquid fertilizers, soluble fertilizers and controlled–release fertilizers in its plants in Israel, Europe, China and the United States. The segment markets its products worldwide, mainly in Europe, Asia, North America, Brazil and Israel.
Sales in the third quarter of 2020 increased by 8% year-over-year, driven by higher sales volumes of both specialty agriculture and turf and ornamental products, mainly in Europe and North America, as well as favorable exchange rates, partly offset by lower prices. Operating income amounted to $6 million in the third quarter of 2020, compared to an operating loss of $2 million in the third quarter of 2019, primarily due to lower cost of raw materials, higher sales volumes and cost-saving initiatives. Fourth quarter results are expected to follow the usual seasonal pattern.
Highlights and business environment
Results of Operations
7-9/2020 | 7-9/2019 | |
$ millions | $ millions | |
Segment Sales | 173 | 160 |
Sales to external customers | 168 | 156 |
Sales to internal customers | 5 | 4 |
Segment profit | 6 | (2) |
Depreciation and Amortization | 7 | 5 |
Capital expenditures* | 4 | 5 |
* For information regarding the effect of IFRS 16 implementation on 2019 capital expenditures, see "Note 3 – Operating segments" of the financial statements.
Results analysis for the period July – September 2020
Sales | Expenses | Operatingincome | |
$ millions | |||
Q3 2019 figures | 160 | (162) | (2) |
Quantity | 13 | (9) | 4 |
Price | (4) | - | (4) |
Exchange rates | 4 | (4) | - |
Raw materials | - | 6 | 6 |
Energy | - | - | - |
Transportation | - | - | - |
Operating and other expenses | - | 2 | 2 |
Q3 2020 figures | 173 | (167) | 6 |
Dividend Distribution
In connection with ICL's third quarter 2020 results, the Board of Directors declared a dividend of 2.3 cents per share, or approximately $29 million in the aggregate. The dividend will be paid on December 16, 2020. The record date is December 2, 2020.
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 2019 revenues totaled approximately $5.3 billion.
For more information, visit the Company's website at www.icl-group.com[1].
ICL makes its financial results easily accessible to investors through an interactive data tool available in the 'Investors' section of the Company's website. The Interactive Analyst Center will provide the company's historical financial, operational and ESG data in the context of an easy-to-access online web platform. Data drills/views are customizable based on time periods and various parameters. The information is available for download at any time. To access the Interactive Data Tool, click here.
To access ICL's interactive Corporate Social Responsibility Report, please click here.
You can also learn more about ICL on Facebook, LinkedIn and Instagram.
Appendix:
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 ended | |||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | December 31, 2019 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Sales | 1,204 | 1,325 | 3,726 | 4,165 | 5,271 |
Cost of sales | 839 | 853 | 2,641 | 2,684 | 3,454 |
Gross profit | 365 | 472 | 1,085 | 1,481 | 1,817 |
Selling, transport and marketing expenses | 191 | 199 | 562 | 590 | 767 |
General and administrative expenses | 55 | 62 | 175 | 190 | 254 |
Research and development expenses | 13 | 13 | 37 | 38 | 50 |
Other expenses | 6 | 2 | 252 | 23 | 30 |
Other income | - | (5) | (4) | (28) | (40) |
Operating income | 100 | 201 | 63 | 668 | 756 |
Finance expenses | 52 | 67 | 130 | 195 | 220 |
Finance income | (23) | (35) | (18) | (91) | (91) |
Finance expenses, net | 29 | 32 | 112 | 104 | 129 |
Share in earnings of equity-accounted investees | 2 | - | 4 | 1 | 1 |
Income (loss) before income taxes | 73 | 169 | (45) | 565 | 628 |
Provision for income taxes | 14 | 35 | 1 | 132 | 147 |
Net income (loss) | 59 | 134 | (46) | 433 | 481 |
Net income attributable to the non-controlling interests | 5 | 4 | 8 | 6 | 6 |
Net income (loss) attributable to theshareholders of the Company | 54 | 130 | (54) | 427 | 475 |
Earnings (loss) per share attributable to the shareholders of the Company: | |||||
Basic earnings (loss) per share (in dollars) | 0.04 | 0.10 | (0.04) | 0.33 | 0.37 |
Diluted earnings (loss) per share (in dollars) | 0.04 | 0.10 | (0.04) | 0.33 | 0.37 |
Weighted-average number of ordinary shares outstanding: | |||||
Basic (in thousands) | 1,280,179 | 1,280,586 | 1,279,964 | 1,279,146 | 1,278,950 |
Diluted (in thousands) | 1,280,403 | 1,283,675 | 1,280,190 | 1,283,401 | 1,282,056 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Financial Position as at (Unaudited) | |||
September 30, 2020 | September 30, 2019 | December 31, 2019 | |
$ millions | $ millions | $ millions | |
Current assets | |||
Cash and cash equivalents | 216 | 96 | 95 |
Short-term investments and deposits | 98 | 91 | 96 |
Trade receivables | 813 | 979 | 778 |
Inventories | 1,233 | 1,205 | 1,312 |
Other receivables | 388 | 324 | 403 |
Total current assets | 2,748 | 2,695 | 2,684 |
Non-current assets | |||
Investments at fair value through other comprehensive income | 73 | 144 | 111 |
Deferred tax assets | 121 | 97 | 109 |
Property, plant and equipment | 5,368 | 5,068 | 5,331 |
Intangible assets | 645 | 641 | 652 |
Other non-current assets | 311 | 468 | 286 |
Total non-current assets | 6,518 | 6,418 | 6,489 |
Total assets | 9,266 | 9,113 | 9,173 |
Current liabilities | |||
Short-term credit | 614 | 476 | 420 |
Trade payables | 669 | 691 | 712 |
Provisions | 51 | 34 | 42 |
Other current liabilities | 633 | 578 | 587 |
Total current liabilities | 1,967 | 1,779 | 1,761 |
Non-current liabilities | |||
Long-term debt and debentures | 2,125 | 2,101 | 2,181 |
Deferred tax liabilities | 307 | 357 | 341 |
Long-term employee liabilities | 602 | 576 | 575 |
Provisions | 268 | 221 | 202 |
Other non-current liabilities | 57 | 45 | 52 |
Total non-current liabilities | 3,359 | 3,300 | 3,351 |
Total liabilities | 5,326 | 5,079 | 5,112 |
Equity | |||
Total shareholders' equity | 3,791 | 3,901 | 3,925 |
Non-controlling interests | 149 | 133 | 136 |
Total equity | 3,940 | 4,034 | 4,061 |
Total liabilities and equity | 9,266 | 9,113 | 9,173 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||
For the three-month period ended | For the nine-month period ended | For the year ended | |||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | December 31, 2019 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Cash flows from operating activities | |||||
Net income (loss) | 59 | 134 | (46) | 433 | 481 |
Adjustments for: | |||||
Depreciation and amortization and impairment of fixed assets | 82 | 110 | 450 | 320 | 433 |
Exchange rate and interest expenses, net | (7) | 68 | 56 | 146 | 153 |
Share in earnings of equity-accounted investees | (2) | - | (4) | (1) | (1) |
Loss from divestiture of businesses | - | - | 4 | - | - |
Capital loss (gain) | - | - | 1 | (12) | (12) |
Share-based compensation | 2 | 3 | 7 | 9 | 12 |
Deferred tax expenses (income) | - | 14 | (42) | 90 | 67 |
75 | 195 | 472 | 552 | 652 | |
Change in inventories | (10) | (26) | 52 | - | (72) |
Change in trade receivables | 33 | 70 | (42) | (11) | 199 |
Change in trade payables | (55) | 27 | 12 | (9) | (58) |
Change in other receivables | 28 | (15) | 14 | (4) | 5 |
Change in other payables | 35 | (19) | (41) | (184) | (194) |
Change in provisions and employee benefits | 38 | 2 | 125 | 3 | (21) |
Net change in operating assets and liabilities | 69 | 39 | 120 | (205) | (141) |
Net cash provided by operating activities | 203 | 368 | 546 | 780 | 992 |
Cash flows from investing activities | |||||
Proceeds (investments) in deposits, net | (1) | (7) | 28 | 4 | (2) |
Business combinations, net of cash acquired | - | - | (27) | - | - |
Purchases of property, plant and equipment and intangible assets | (143) | (147) | (443) | (419) | (576) |
Proceeds from divestiture of businesses net of transaction expenses | - | - | 17 | - | - |
Dividends from equity-accounted investees | - | - | 3 | 1 | 3 |
Proceeds from sale of property, plant and equipment | - | 1 | 2 | 36 | 50 |
Net cash used in investing activities | (144) | (153) | (420) | (378) | (525) |
Cash flows from financing activities | |||||
Dividends paid to the Company's shareholders | (35) | (73) | (88) | (209) | (273) |
Payments from transactions in derivatives used for hedging | (2) | - | (4) | - | - |
Receipt of long-term debt | 182 | 50 | 1,059 | 457 | 657 |
Payments of long-term debt | (375) | (138) | (926) | (550) | (689) |
Receipts (payments) of short-term credit from banks and others, net | 61 | (90) | (47) | (120) | (183) |
Other | - | (2) | - | (2) | (2) |
Net cash used in financing activities | (169) | (253) | (6) | (424) | (490) |
Net change in cash and cash equivalents | (110) | (38) | 120 | (22) | (23) |
Cash and cash equivalents as at the beginning of the period | 323 | 137 | 95 | 121 | 121 |
Net effect of currency translation on cash and cash equivalents | 3 | (3) | 1 | (3) | (3) |
Cash and cash equivalents as at the end of the period | 216 | 96 | 216 | 96 | 95 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows (Unaudited) (cont'd)
Additional Information | |||||
For the three-month period ended | For the nine-month period ended | For the year ended | |||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | December 31, 2019 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Income taxes paid (received), net of refunds | (13) | 20 | 11 | 78 | 120 |
Interest paid | 19 | 17 | 75 | 77 | 115 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
We disclose in this Press Release 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) | |||||
7-9/2020 | 7-9/2019 | 1-9/2020 | 1-9/2019 | 1-12/2019 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Operating income (loss) | 100 | 201 | 63 | 668 | 756 |
Impairment of assets, provision for site closure and restoration costs (1) | 6 | - | 225 | (10) | (3) |
Provision for early retirement (2) | - | - | 78 | - | - |
Provision for legal proceedings (3) | - | - | - | 14 | 7 |
Total adjustments to operating income | 6 | - | 303 | 4 | 4 |
Adjusted operating income | 106 | 201 | 366 | 672 | 760 |
Net income (loss) attributable to the shareholders of the Company | 54 | 130 | (54) | 427 | 475 |
Total adjustments to operating income | 6 | - | 303 | 4 | 4 |
Total tax impact of the above operating income | (2) | - | (59) | - | - |
Total adjusted net income - shareholders of the Company | 58 | 130 | 190 | 431 | 479 |
For more information, see Note 4 to the Company's condensed consolidated interim financial statements as at September 30, 2020.
Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share for the periods of activity
Calculation of adjusted EBITDA was made as follows:
7-9/2020 | 7-9/2019 | 1-9/2020 | 1-9/2019 | 1-12/2019 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Net income (loss) attributable to the shareholders of the Company | 54 | 130 | (54) | 427 | 475 |
Depreciation and Amortization | 123 | 110 | 360 | 330 | 443 |
Financing expenses, net | 29 | 32 | 112 | 104 | 129 |
Taxes on income | 14 | 35 | 1 | 132 | 147 |
Adjustments* | 6 | - | 303 | 4 | 4 |
Total adjusted EBITDA | 226 | 307 | 722 | 997 | 1,198 |
* See "Adjustments to reported operating and net income (Non-GAAP)" above.
Calculation of diluted adjusted earnings per share was made as follows:
7-9/2020 | 7-9/2019 | 1-9/2020 | 1-9/2019 | 1-12/2019 | |
$ millions | $ millions | $ millions | $ millions | $ millions | |
Net income (loss) - shareholders of the Company | 54 | 130 | (54) | 427 | 475 |
Adjustments* | 6 | - | 303 | 4 | 4 |
Total tax impact of the above operating income & finance expenses adjustments | (2) | - | (59) | - | - |
Adjusted net income - shareholders of the Company | 58 | 130 | 190 | 431 | 479 |
Weighted-average number of diluted ordinary shares outstanding (in thousands) | 1,280,403 | 1,283,675 | 1,280,190 | 1,283,401 | 1,282,056 |
Diluted adjusted earnings per share (in dollars)** | 0.05 | 0.10 | 0.15 | 0.34 | 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).
Global potash market - average prices and imports:
Average prices | Q3 2020 | Q3 2019 | VS Q3 2019 | Q2 2020 | VS Q2 2020 | |
Granular potash - Brazil | CFR spot ($ per tonne) | 239 | 327 | (27%) | 222 | 8% |
Granular potash - Northwest Europe | CIF spot/contract (€ per tonne) | 241 | 280 | (14%) | 245 | (2%) |
Standard potash -Southeast Asia | CFR spot ($ per tonne) | 240 | 293 | (18%) | 243 | (1%) |
Potash imports | ||||||
To Brazil | million tonnes | 3.3 | 3.4 | (3%) | 3.1 | 6% |
To China | million tonnes | 2.9 | 2.3 | 26% | 1.7 | 71% |
To India | million tonnes | 1.5 | 1.0 | 50% | 0.9 | 67% |
Sources: CRU (Fertilizer Week Historical Price: October 2020), FAI, Brazil and Chinese customs data.
Global phosphate commodities market - average prices:
$ per tonne | Q3 2020 | Q3 2019 | VS Q3 2019 | Q2 2020 | VS Q2 2020 | |
DAP | CFR India Spot | 338 | 342 | (1.2%) | 316 | 7.0% |
TSP | CFR Brazil Spot | 246 | 306 | (19.6%) | 245 | 0.4% |
SSP | CPT Brazil inland 18-20% P2O5 Spot | 170 | 221 | (23.1%) | 173 | (1.7%) |
Sulphur | Bulk FOB Adnoc monthly contract | 59 | 84 | (29.8%) | 60 | (1.7%) |
Source: CRU (Fertilizer Week Historical Prices, October 2020).
Operating Segments
Industrial Products | Potash | Phosphate Solutions | Innovative Ag Solutions | Other Activities | Reconciliation | Consolidated | |
$ millions | |||||||
For the three-month period ended September 30, 2020 | |||||||
Sales to external parties | 267 | 274 | 488 | 168 | 7 | - | 1,204 |
Inter-segment sales | 3 | 39 | 18 | 5 | 1 | (66) | - |
Total sales | 270 | 313 | 506 | 173 | 8 | (66) | 1,204 |
Segment profit (loss) | 50 | 28 | 28 | 6 | (1) | (5) | 106 |
Other expenses not allocated to the segments | (6) | ||||||
Operating income | 100 | ||||||
Financing expenses, net | (29) | ||||||
Share in earnings of equity-accounted investees | 2 | ||||||
Income before income taxes | 73 | ||||||
Depreciation and amortization | 19 | 42 | 55 | 7 | - | - | 123 |
Capital expenditures | 16 | 76 | 56 | 4 | - | 6 | 158 |
Operating Segments (cont'd)
Industrial Products | Potash | Phosphate Solutions | Innovative Ag Solutions | Other Activities | Reconciliation | Consolidated | |
$ millions | |||||||
For the three-month period ended September 30, 2019 | |||||||
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 (loss) | 88 | 83 | 32 | (2) | 5 | (5) | 201 |
Other income not allocated to the segments | - | ||||||
Operating income | 201 | ||||||
Financing expenses, net | (32) | ||||||
Income before income taxes | 169 | ||||||
Depreciation, amortization and impairment | 17 | 37 | 44 | 5 | 4 | 3 | 110 |
Implementation of IFRS 16 | - | - | - | - | 5 | 1 | 6 |
Capital expenditures | 26 | 93 | 51 | 5 | 1 | 2 | 178 |
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, 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:
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 press release for the third quarter of 2020 (hereinafter – "the Press Release") 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"), the report for the third quarter of 2020 (hereinafter – "the Quarterly Report") and the report for the first quarter and second 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 Press Release and 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 and July 29, 2020, and up to the publication date of the Quarterly Report.
[1] The reference to our website is intended to be an inactive textual reference and the information on, or accessible through, our website is not intended to be part of this Form 6-K.
INVESTOR RELATIONS CONTACTS | PRESS CONTACT | |
Peggy Reilly Tharp | Dudi Musler | Or-li Kasuto Madmon |
VP, ICL Global Investor Relations | Director, Investor Relations | Scherf Communications |
+1-314-983-7665 | +972-3-684-4448 | +972-52-4447750 |
View original content:http://www.prnewswire.com/news-releases/icl-reports-resilient-third-quarter-2020-results-301171627.html
SOURCE ICL