ICL Reports Solid Results & Strong Cash Flow for 2012 Despite Weak Global Economic Environment
TEL-AVIV, Israel, March 13, 2013 /PRNewswire/ --
- Key 2012 Results: $1.3B Net Profit, $6.7B Sales -
- 2nd-Best Annual Cash Flow Ever of $1.6B, Up 26% Compared With 2011-
- ICL Fertilizers: As Expected, Low Q4 Potash Sales to China and India Impacted Q4 & 2012 Revenues; Significant New Potash Supply Agreements Were Signed During Q1 2013 -
- ICL Industrial Products: 2nd-Best-Ever Annual Operating Income Despite Slower Flame Retardant Sales Due to Weak Global Electronic Markets; Stronger Sales of Drilling Fluids & Other Brominated Products for the Energy and Water Markets -
- ICL Performance Products: Year-Over-Year Increase in European Sales Led to Increased Sales in Q4;Trend Continuing into Q1 2013 -
ICL (TASE:ICL), a multinational fertilizer and specialty chemicals company, today reported its financial results for the fourth quarter and full year ended December 31, 2012.
Financial Results
Revenues: For the full year 2012, ICL's sales totaled $6,672.2 million, a 5.6% decline compared with $7,067.8 million in 2011. The decrease derived from reduced sales of the fourth quarter, countered partially by a rise in selling prices and the consolidation of companies acquired in 2011-2012.
For the fourth quarter of 2012, sales totaled $1,338.1 million, a $374 million decline compared with $1,712.4 million in the fourth quarter of 2011, reflecting lower quantity sales, including primarily the low level of potash shipments to India and China, and lower average prices. During the first quarter of 2013, ICL Fertilizers signed a number of significant potash supply agreements with customers in both India and China indicating strong volumes for 2013(see "Outlook" section below).
Gross profit: Gross profit for the fourth quarter totaled $507.1 million compared with $775.4 million in the fourth quarter of 2011. The decline reflected lower selling prices for most of the Company's products coupled with lower quantities sold and an increase in raw-material and energy prices. Gross margin for the period was 37.9% compared with 45.3% for the fourth quarter of 2011.
For the full year, gross profit totaled $2,757.2 million compared with $3,155.7 million in 2011. The decrease derived primarily from the lower quantities sold together with a rise in raw material and energy costs, offset partially by a decline in other operating expenses. Gross margin for the year was 41.3% compared with 44.6% for 2011.
Operating income: Operating income for the fourth quarter of 2012 was $238.0 million, excluding one-time expenses (associated mainly with early retirement plans), compared with $466.5 million for the parallel quarter of 2011. The decrease derived from the reduction in the gross profit, partially offset by lower operating expenses.
For the full year, operating income totaled $1,576.5 million compared with $1,926.0 million in 2011. The decrease derived from the reduction in the gross profit and the impact of one-time expenses, as explained above. Operating margin for the year was 23.6% compared with 27.2% for 2011.
Net income: Net income to shareholders for the fourth quarter of 2012 totaled $209.5 million compared with $369.6 million in the parallel period of 2011. For the full year, net income to shareholders totaled $1,300.5 million compared with $1,511.8 million in 2011.
Cash flow: During the fourth quarter of 2012, cash flow from current operations totaled $275.0 million. For the full year, cash flow totaled $1,592.7 million, a 25% increase compared with $1,269.4 million for 2011.
Outlook:
- The high price of agricultural products, together with the past year's decline in fertilizer prices, has given farmers a strong incentive to increase fertilizer application.
- The world economic environment is expected to continue impacting the sales of ICL Industrial Products and ICL Performance Products.
Highlights of Core Business Segments
ICL Fertilizers: The segment's sales for the fourth quarter of 2012 totaled $709.7 million, representing 53.0% of total revenues (before offsets of inter-segment sales), a 31% decline compared with Q4 2011. This decrease reflected the lack of significant potash sales to customers in China and India. However, during the first quarter of 2013, the Company has signed significant potash supply agreements with customers in both of these key markets.
For the full year, sales totaled $3.8 billion, representing 57.1% of total revenues (before offsets of inter-segment sales), a 7% decrease compared with 2011. The decrease derived from the lower potash quantities sold together with unfavorable exchange rate fluctuations.
ICL Fertilizers' operating income for the fourth quarter of 2012 totaled $140.0 million, representing an operating margin of 19.7%. Excluding one-time expenses associated with early retirement plans, the segment's operating income totaled $173 million, representing an operating margin of 24.4%. For the full year, operating income totaled $1,158.9 million, representing an operating margin of 30.4%.
During 2012, ICL Fertilizers manufactured 4.94 million tons of potash, a 16% increase compared with 4.26 million tons in 2011. This reflected the Company's continued full-capacity operations in Israel despite the lower sales, which is enabled by its strategic ability to store nearly unlimited quantities of potash outdoors at its Sodom site. In addition, the increase reflected higher production in Spain during the year. The strike in DSW in Israel in early 2011 reduced the quantities of potash manufactured during the comparative year.
2012 sales of phosphate fertilizers were slightly higher compared to their level in 2011 reflecting the consolidation of companies acquired during 2011, countered by lower quantities and prices as well as fluctuations in exchange rates. The global phosphate market was relatively stable in 2012 as strong demand in Brazil offset lower demand in China and India. The Company's plan for mining phosphates in Israel's Barir Field (South Zohar) has reached the planning approval stages. Non-receipt of approvals needed to mine the Barir Field could have a significant negative impact on the Company's future mining reserves, both in the medium and the long term.
Agreements in early 2013: During the first half of 2013, the Company will supply 660,000 tons of potash to China, a quantity that represents more than 20% of the total potash supply contracts announced for the first half of 2013. ICL Fertilizers has signed 3-year framework agreements with a number of Chinese customers for the sale of 3.3 million tons of potash at prices to be negotiated between the parties.
The Company will also supply 820,000 tons of potash to customers in India during 2013. This represents approximately 23% of the total potash supply contracts announced so far in 2013.
Fertilizer market trends: According to the reports of fertilizer distributors in Brazil, 2012 potash sales to local farmers totaled 8.1 million tons, representing a 9% increase compared to their level in 2011. Based on this data, it is estimated that potash inventory levels in Brazil at the end of 2012 were lower than their level at the end of 2011, leading to an expectation for strong demand in the next fertilizing season.
During the last months of 2012, world fertilizer prices moderated, but remained at historically high levels. The high price of agricultural products and the reduction of world stocks of grains represent, in general, an incentive for farmers to apply more fertilizers in order to increase their yields and profits.
According to the Agricultural Outlook published by the US Department of Agriculture in February 2013, the global grain stock-to-use ratio is expected to decline to 18.6% at the end of the 2012/2013 agricultural season, compared with 20.19% at the end of the 2011/12 season and 20.66% at the end of the 2010/11 season.
- ICL Industrial Products: The segment's sales for the fourth quarter of 2012 totaled $326.4 million, representing 24.4% of total revenues (before offsets of inter-segment sales), a 2.6% decrease compared with the fourth quarter of 2011, reflecting lower quantities sold, lower prices and exchange rate fluctuations.
For the full year, sales totaled $1,436.6 million, a 5% decrease compared with 2011. The decline reflected lower quantities sold, countered partially by higher selling prices.
The segment's operating income for the fourth quarter of 2012 totaled $27.2 million compared with $63.5 million for the fourth quarter of 2011. The decrease reflected the impact of one-time expenses associated with the segment's early retirement program. Excluding these expenses, operating income for the quarter totaled $49 million.
For the full year, operating income totaled $230.7 million compared with $297.7 million in 2011, its second-highest level ever. The decrease in operating income derived from the reduced quantities sold, higher raw material and energy costs, countered partially by higher prices. Excluding one-time expenses associated with the segment's early retirement program, the annual operating income totaled $253 million.
Recent developments:
Having signed an agreement in January 2012 with Dow Global Technologies for the licensing of its patent for the manufacture of FR122P, a new bromine-based polymeric flame retardant, ICL IP has now begun construction of new FR122P manufacturing plants. The segment expects to be able to begin supplying customers in the second half of 2013, which is earlier than originally expected.
During 2012, the segment's sales of Merquel™, a new mercury emission reduction product line, rose at a double-digit rate as compared with 2011. Sales of Merquel™ in 2013 are expected to continue growing at a similar rate, due to its adoption by additional U.S. power plants.
Market developments: In March 2011, the American government ended its suspension of gas and oil exploration activities in the Gulf of Mexico and began granting licenses for deep-water drilling in that region. Sales of drilling fluids to the area rose throughout 2012 and have now reached pre-freeze levels. In addition, drilling activities throughout the world have been increasing, including deep-water drilling activities.
- ICL Performance Products: The segment's sales for the fourth quarter of 2012 totaled $339.2 million, representing 25.3% of total revenues (before offsets of inter-segment sales), a 2% increase compared with $333.3 million for the fourth quarter of 2011. The increase reflects higher quantities sold.
For the full year, sales totaled $1,476.5 million, a 1% decrease compared with 2011 reflecting decreased quantities sold and the negative effect of currency fluctuations, countered partially by price increases and the consolidation of companies acquired during 2011.
The segment's operating income for the quarter totaled $32.0 million, a 19% increase compared with $26.8 million in the fourth quarter of 2011, reflecting the higher sales. For 2012, operating income totaled $179.9 million compared with $192.9 million in 2011, reflecting increased costs of raw materials and energy.
Recent developments: ICL Performance Products has recently acquired the phosphorus pentasulfide (P2S5) business aspects and operations of Thermphos International B.V. (NL) located in Knapsack, Germany. The acquisition expands ICL Performance Products' leadership in global markets for phosphorus-based specialty chemicals while expanding its European footprint.
Dividends:
The Company's Board of Directors declared that a dividend totaling $147 million will be paid on April 25, 2013 in respect of its fourth quarter 2012 results. This brings total dividend paid in respect of ICL's 2012 results to $908 million, which represents a 6.4% dividend yield based on the Company's average share price in 2012.
About ICL
ICL is one of the world's leading fertilizer and specialty chemicals companies. For a world challenged by the rapid growth rate of its population and the deterioration of its scarce resources, ICL makes products that increase global food and water supplies and improve industrial materials and processes.
ICL produces approximately a third of the world's bromine and is the 6th largest potash producer in the world. ICL is a leading supplier of fertilizers in Europe and a major player in specialty fertilizer market segments. One of the world's most integrated manufacturers and suppliers of phosphate products, ICL has become the world's leading provider of pure phosphoric acid and a major specialty phosphate player.
ICL is comprised of three core segments: ICL Fertilizers, ICL Industrial Products and ICL Performance Products. Its major production activities are located in Israel, Europe, the US, South America and China, and are supported by major global marketing and logistics networks. ICL extracts potash, bromine, magnesium chloride and sodium chloride from Israel's Dead Sea, mines phosphate rock from Israel's Negev Desert, and mines potash and salt in Spain and the UK.
ICL's shares are traded on the Tel Aviv Stock Exchange (TASE: ICL).
Forward Looking Statement
This press release contains forward-looking assessments and judgments regarding macro-economic conditions and the Group's markets, and there is no certainty as to whether, when and/or at what rate these projections will materialize. Management's projections are likely to change in light of market fluctuations, especially in ICL's manufacturing locations and target markets. In addition, ICL is likely to be affected by changes in the demand and price environment for its products as well as the cost of shipping and energy, whether caused by actions of governments, manufacturers or consumers. ICL can also be affected by changes in the capital markets, including fluctuations in currency exchange rates, credit availability, interest rates, etc.
ICL
PRINCIPAL FINANCIAL RESULTS
THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 2012
3 months ended December 12 months ended December
31, 31,
2012 2011 2012 2011
$ % of $ % of $ % of $ % of
millions sales millions sales millions sales millions sales
Net Sales 1,338.2 100.0 1,712.4 100.0 6,672.2 100.0 7,067.8 100.0
Gross profit 507.1 37.9 775.4 45.3 2,757.2 41.3 3,155.7 44.6
Operating
income* 194.0 14.5 466.5 27.2 1,576.5 23.6 1,926.0 27.2
Pre-tax income 195.9 14.6 461.5 27.0 1,526.2 22.9 1,871.7 26.5
Net income to
the
Company's
shareholders 209.5 15.7 369.6 21.6 1,300.5 19.5 1,511.8 21.4
EBITDA** 315.7 23.6 528.6 30.9 1,911.2 28.6 2,190.2 31.0
Operating cash
flow 275.0 344.4 1,592.7 1,269.4
Investment in
property,
plant and
equipment less
grants
received 145.5 134.1 667.8 494.9
*Excluding the impact of one-time expenses associated with early retirement plans and one time gain associated with VAT refund received by a subsidiary abroad, operating profit for Q4'12 and 2012 totaled $238 million & 1,621 million, respectively.
** EBITDA is calculated as follows:
3 months ended December 12 months ended December
31, 31,
2012 2011 2012 2011
Net income 209.5 369.6 1,300.5 1,511.8
Amortization &
depreciation 76.8 69.8 287.1 267.4
Financing
expenses, net (0.8) 1.7 58.6 62.3
Taxes on income (13.8) 87.5 221.0 348.7
Unusual or
one-time expenses 44.0*** - 44.0* -
_________ _______ ________ _______
EBITDA 315.7 528.6 1911.2 2,190.2
========= ======= ======== =======
*** Mainly expenses in respect of early retirement plan.
ICL
PRINCIPAL RESULTS FROM CORE
MANAGERIAL SEGMENTS
THREE MONTHS AND TWELVE MONTHS ENDED
DECEMBER 31, 2012
3 months ended December 12 months ended December
31, 31,
2012 2011 2012 2011
% of % of % of % of
Sales CIF by $ gross $ gross $ gross $ gross
segment millions sales millions sales millions sales millions sales
ICL
Fertilizers 709.7 53.0 1,034.2 60.4s 3812.2 57.1 4,097.6 58.0
ICL
Industrial
Products 326.4 24.4 335.0 19.6 1,436.6 21.5 1,513.0 21.4
ICL
Performance
Products 339.2 25.3 333.3 19.5 1,476.5 22.1 1,494.8 21.1
Other and
offsets (37.2) 9.8 (53.0) (37.6)
Total 1,338.1 1712.3 6,672.2 7,067.8
Note: Segment sales data and their percentage of total sales are before offsets of inter-segment sales.
3 months ended December 31, 12 months ended December 31,
2012 2011 2012 2011
Reported
operating % of % of % of % of
income by $ segment $ segment $ segment $ segment
segment millions sales millions sales millions sales millions sales
ICL
Fertilizers
[1] 140.0 19.7 364.6 35.3 1,158.9 30.4 1,403.4 34.2
ICL
Industrial
Products
[2] 27.2 8.3 63.5 18.9 230.7 16.1 297.7 19.7
ICL
Performance
Products
[3] 32.0 9.4 26.8 8.1 179.9 12.2 192.9 12.9
Other and
offsets (5.1) 11.5 7.0 32.0
Total 194.0 466.5 1,576.5 1,926.0
- Includes a non-recurring expense in respect of an early retirement plan for employees, in the amount of about $33 million , which was recognized during the fourth quarter of 2012
- Includes a non-recurring expense in respect of an early retirement plan for employees, in the amount of about $22 million , which was recognized during the fourth quarter of 2012.
- Includes non-recurring income in respect of a VAT refund, in the amount of about $ 11 million , which was received by a foreign subsidiary during the fourth quarter of 2012.
SOURCE ICL - Israel Chemicals Ltd
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