Form 20-F ☒       Form 40-F ☐

Yes ☐       No ☒

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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

 

”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

 

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Consolidated Results Analysis

 

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

 

 

 

 

 

 

 

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.

 

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

 

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          Fourth Quarter 2020

 

 

 

 

 

 

 

Significant highlights and business environment

 

 

 

 

 

 

 

Potash

 

Results of operations

 

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          *   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.

 

ICL Group Limited Q4 2020 Results 5

Fourth Quarter 2020

 

 

 

 

 

 

Significant highlights and business environment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Potash – Production and Sales

 

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          Fourth quarter 2020

 

 

 

Phosphate Solutions

 

Results of operations

 

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          Fourth Quarter 2020

 

 

 

 

 

 

 

 

 

ICL Group Limited Q4 2020 Results 7

 

Significant highlights and business environment

 

 

 

 

 

 

 

 

 

 

Innovative Ag Solutions

 

Results of operations

 

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Fourth Quarter 2020

 

 

 

 

Significant highlights and business environment

 

 

 

 

 

 

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.com¹.

 

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

 

 

 

 

 

Appendix:

 

INDUSTRIAL PRODUCTS

 

Results analysis for the period October - December 2020

 

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

 

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PHOSPHATE SOLUTIONS

 

Results analysis for the period October - December 2020

 

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INNOVATIVE AG SOLUTIONS

 

 

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Additional segment information

 

Global potash market - average prices and imports:

 

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

 

Global phosphate commodities market - average prices:

 

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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.

 

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

 

Calculation of adjusted EBITDA was made as follows:

 

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

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

 

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

 

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*    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).

 

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

 

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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.