ICL Group (ICL) Q4 2016 earnings summary

Executive summary

• FY16 sales were $5.363B; reported operating loss was $3M and net loss attributable to shareholders was $122M, while adjusted operating income was $582M and adjusted net income was $451M.

• Results reflected lower potash and phosphate prices, alongside one-time impairments and provisions; operating cash flow rose to $966M from $573M.

Financial highlights

• Sales fell to $5.363B from $5.405B; gross profit was $1.660B versus $1.803B, and operating income was $(3)M versus $765M.

• Net loss attributable to shareholders was $122M versus income of $509M; basic and diluted EPS were both (10) cents versus 40 cents.

• Adjusted operating income was $582M versus $994M; adjusted net income attributable to shareholders was $451M versus $699M.

• Other expenses rose to $618M from $211M, including $282M ERP write-down and closure provision, $202M Allana impairment and closure costs, and $51M Spain historical-waste provision.

• Net financing expense increased to $132M from $108M; tax expense declined to $55M from $162M, with the adjusted pretax effective tax rate at ~30% versus ~25%.

Outlook and guidance

• FY17 polysulphate production target was ~450,000 tonnes, rising to ~1M tonnes in 2019; commercial production of Potashplus was planned for 2017.

• The Sodom cogeneration station was expected to start operating in H1 2017, with additional costs described as not material.

• Global potash demand was forecast to grow 2.6% annually from 38.9M tonnes K₂O in 2016 to 43.1M tonnes in 2020; phosphoric acid demand forecast growth was 2.4% annually through 2020.

• FY17 dividend policy remained up to 50% of adjusted net profit; the Board planned to revisit the policy when market conditions stabilize.