ICL Group (ICL) Q4 2020 earnings summary

Executive summary

• FY20 sales fell 4% YoY to $5.043B; reported operating income was $202M and net income attributable to shareholders was $11M, versus $756M and $475M in FY19.

• Adjusted operating income was $509M and adjusted net income attributable to shareholders was $258M, excluding $307M of operating adjustments, chiefly impairments, site-restoration costs and early-retirement provisions.

• COVID-19 weakened industrial demand and European production, while record Dead Sea potash output, specialty product growth and efficiency actions partly offset the pressure.

Financial highlights

• Gross profit declined 18% to $1.490B; operating income fell 73% to $202M, and income before tax fell 92% to $49M.

• Net income was $24M, down from $481M; attributable net income was $11M, and basic and diluted EPS were $0.01 versus $0.37 in FY19.

• Sales decreased $228M: lower potash and phosphate commodity prices and reduced bromine industrial-solutions volumes were partly offset by higher potash and specialty product volumes.

• Net financing expenses rose to $158M from $129M; income tax expense was $25M versus $147M, with a 51% effective tax rate versus 23% due mainly to impairment-related deferred-tax effects and shekel appreciation.

• Operating cash flow was $804M versus $992M; cash capex was $626M versus $576M, and year-end cash, cash equivalents, short-term investments and deposits totaled $314M.

Outlook and guidance

• COVID-19 was expected to affect results over the next few quarters; the duration, end-market demand, operating restrictions and supply-chain effects remained uncertain.

• 2021 priorities included commissioning the P-9 pumping station, completing Spain’s potash ramp and capacity work, building a new US food-fiber protein plant and continuing Israeli Clean Air Act projects.

• Spain’s ramp was expected to support annual potash output of ~1M tonnes by end-2021, with potential capacity up to ~1.3M tonnes after further site adjustments.

• Environmental spending was projected at $134M in 2021, including $54M of capital projects and $80M of current expenses.

• The board extended a dividend policy of up to 50% of annual adjusted net income; distributions remain discretionary and subject to financial position and investment needs.