ICL Group (ICL) Q4 2019 earnings summary

Executive summary

• 2019 sales were $5.271B, down 5% YoY; operating income fell 50% to $756M, while adjusted operating income was $760M versus $750M in 2018 excluding divested businesses.

• Operating cash flow increased to $992M from $620M; lower potash volumes and weaker phosphate markets weighed on results, partly offset by stronger pricing and cost savings.

Financial highlights

• Gross profit was $1.817B versus $1.854B; net income attributable to shareholders was $475M versus $1.240B, and diluted EPS was $0.37 versus $0.97.

• 2018 operating income included an $841M capital gain from the sale of the fire safety and oil additives businesses; adjusted net income was $479M in 2019 versus $477M in 2018.

• Net financing expense declined to $129M from $158M; income tax expense rose to $147M from $129M, with effective tax rates of 23% and 9%, respectively.

• Cash capital expenditures were $576M versus $572M; total assets were $9.173B and total equity was $4.061B at year-end 2019.

Outlook and guidance

• 2020 plans included completing Spain potash capacity expansion, beginning Dead Sea salt harvesting, advancing the P-9 pumping station, expanding downstream bromine capacity and continuing Israeli Clean Air Act projects.

• Expected 2020 environmental spending was $130M, including $70M of capital projects and $60M of current expenses.

• Coronavirus-related effects were excluded from the outlook because the impact could not then be reasonably estimated; prolonged disruptions could materially affect supply, sales and operating results.

• Chinese food-grade phosphoric acid production was scheduled to begin commercial quantities in 2020; the plant adds 70,000 tonnes of capacity, alongside 60,000 tonnes of technical-grade capacity.