ICL Reports Financial Results for the Second Quarter of 2012

TEL–AVIV, Israel, August 15, 2012 /PRNewswire/ --

• Near-Record Quantities of Potash and Phosphate Fertilizers Sold Result in Strong Quarter With Nearly $2B in Revenues & $407M Net Income
• Contracted Quantities of Potash to be Shipped to China and India, Together With Strong Demand in Brazil, Expected to Enhance Q3’12 Results

ICL (TASE:ICL), a multinational fertilizer and specialty chemicals company, today reported its financial results for the second quarter ended June 30, 2012.

Financial Results

Revenues: ICL’s revenues for the second quarter of 2012 were the Company’s second-highest ever for a second quarter, totaling $1,964.6 million compared with $1,928.8 million in the second quarter of 2011. This is up 27% compared with the $1,552.1 million in the first quarter of 2012.

The increase derived primarily from the quarter’s near-record volumes of potash sold, reflecting the accelerated pace of deliveries made against the contracts signed with Chinese customers and strong sales in Brazil. In addition, the higher revenues reflect a sharp rise in the quantities of phosphate and potash fertilizers sold, as well as in the sales of ICL Industrial Products and ICL Performance Products as compared with Q1 2012.

Gross profit: Gross profit for the second quarter totaled $852.7 million, a slight decline compared with $870.8 million in the second quarter of 2011 but up 39% compared with the first quarter of 2012. The decline reflected increased raw material costs, energy costs and other costs, together with the negative effect of currency fluctuations. This was countered partially by rising quantity sales combined with higher selling prices. Gross margin for the period was 43.4% compared with 45.1% for the second quarter of 2011 and 39.4% for the first quarter of 2012.

Operating income: Operating income for the second quarter of 2012 totaled $545.1 million, up slightly compared with $542.8 million for the second quarter of 2011. This was a 56% increase compared with $349.4 million in the first quarter of 2012, reflecting the strong sales and reductions in selling and administrative expenses, which compensated for the reduction in gross profit.

Net income: Net income to shareholders for the second quarter of 2012 totaled $407.3 million compared with $426.2 million in the parallel period of 2011, representing a 41% increase compared with $288.9 million in the first quarter of 2012. This slight decrease reflected higher financial expenses and a higher effective tax rate compared to the second quarter of 2011 due to the impact of the dollar/shekel exchange rate, which resulted in a higher tax rate for Israel-based subsidiaries due to differences in the measurement basis.

Cash flow: During the second quarter of 2012, operating cash flow totaled $363.2 million, up 28% from $284.3 million in the second quarter of 2011 and 32% from the first quarter of 2012. For the six-month period, cash flow totaled $638 million, a 50% increase compared with the first half of 2011.

Construction of New Power Plant at Sdom: On June 28, 2012, ICL’s subsidiary Dead Sea Works (DSW) entered into an agreement to construct a new cogeneration power plant in Sdom. The station will be a dual fuel plant with a production capacity of 330 tons of steam per hour and a generating capacity of 250MW of electricity, sufficient to supply the Company’s long-term electricity and steam requirements in the region, while also protecting the environment and the quality of the air. The project is expected to be completed in the second half of 2015 and to cost approximately $320 million.

Highlights of Core Business Segments

• ICL Fertilizers: The segment’s sales for the second quarter of 2012 totaled $1.2 billion, representing 57.5% of total revenues (before offsets of inter-segment sales). This is an increase of 8% compared with the second quarter of 2011 and 41% compared with the first quarter of 2012. The year-over-year increase derived primarily from a significant rise in the quantities sold of potash and phosphate fertilizers, together with a moderate rise in the selling price of potash. In addition, the segment benefited from the contribution of the companies acquired and consolidated during the 12-month period. The remaining quantities of potash to be shipped to China and India under existing contracts, together with strong demand from Brazil, are expected to enhance the segment’s Q3 2012 results.
  
  During the quarter, the segment sold 1.5 million tons of potash (including internal sales), an increase of 12% compared with the second quarter of 2011 and 65% compared with the first quarter of 2012. This is the third-highest quantity of potash sold for a quarter in the Company’s history. The increased quantity sold reflects the accelerated pace of deliveries made to China after the signing of contracts for H1 2012 was delayed to the end of the first quarter, together with strong sales to Brazil.
  
  Quantities of phosphate fertilizers sold reached approximately 511 thousand tons, an increase of 17% compared with the second quarter of 2011 and 55% compared with the first quarter of 2012.
  
  ICL Fertilizers’ operating income for the second quarter of 2012 totaled $410 million, an increase of 8% compared with $379 million in the second quarter of 2011 and up 69% compared with the first quarter of 2011. The year-over-year increase reflected the higher quantities sold together with the higher selling price of potash.
  
  Fertilizer market trends: In its monthly World Supply and Demand Estimates published in August 2012, the US Department of Agriculture updated the 2012/13 global grains stock-to-use ratio forecast to 18.85% compared with 20.48% at the end of the 2011/12 season and 20.7% at the end of the 2010/11 season, reflecting unfavorable weather conditions in the U.S., Russia and the Ukraine. This is the lowest level since the 2007/08 season. Agricultural yields have been much lower than expected, leading to a renewal of significant price increases for grains. The higher prices are expected to increase demand for fertilizers in the upcoming fertilizing season. In addition, the downward trend in the grain Stock-to-Use ratio supports a forecast for a strong future fertilizer price environment.
  
• ICL Industrial Products: The segment’s sales for the second quarter of 2012 totaled $401 million, representing 19.4% of total revenues (before offsets of inter-segment sales), compared with $424 million for the second quarter of 2011. This is up 11% compared with the first quarter of 2012, reflecting higher quantities sold of the segment’s primary products.
  
  Despite the reduction of sales on a year-over-year basis, the segment’s operating income for the second quarter of 2012 totaled $82 million, the second-highest quarterly operating income for a second quarter in its history, after the $87 million in operating income that was recorded in the second quarter of 2011. This represented a 31% increase compared with $63 million in the first quarter of 2012.
  
  Market developments: The economic uncertainty currently evident throughout the world has reduced worldwide sales of electronic goods, and therefore subdued demand for flame retardants. In parallel, the sharp reduction in the price of natural gas in the U.S. has led to the conversion of some coal power plants to natural gas, resulting in a lower-than-expected growth in sales of the Company’s new Merquell™ product line.
  
• ICL Performance Products: The segment’s sales for the second quarter of 2012 totaled $377 million, representing 18.2% of total revenues (before offsets of inter-segment sales), compared with $408 million for the second quarter of 2011. This is up 9% compared with the first quarter of 2012, reflecting an increase in quantities sold of the segment’s major product lines.
  
  The segment’s operating income for the quarter totaled $48 million, a decrease compared with $66 million in the second quarter of 2011 but up 20% compared with the first quarter of 2012.
  
  Market developments: Sales of the segment continue to be impacted by the economic uncertainty of world markets, which has reduced sales of some products that incorporate the segment’s chemicals, primarily in Europe.

Dividends:

• On April 30, 2012, the Company paid a dividend totaling $260 million in respect of its fourth quarter 2011 results. This brought the total dividend paid in respect of 2011 results to $1,053 million.
• On June 26, 2012, the Company paid a dividend totaling $200 million in respect of its first quarter 2011 results.
• The Company’s Board of Directors today declared that a dividend totaling $285 million will be paid on September 12, 2012 in respect of its second quarter 2012 results.

About ICL

ICL is one of the world’s leading fertilizer and specialty chemicals companies. For a world challenged by population growth and 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 6^th 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 benefits from exclusive concessions to extract minerals from Israel’s Dead Sea, a vast source of high-quality and low-cost potash, bromine, magnesium chloride and sodium chloride.  ICL also mines phosphate rock from Israel’s Negev Desert and potash and salt from its mines 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.  

                                  (financial tables follow)

                                             ICL
                                 PRINCIPAL FINANCIAL RESULTS
                        THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2012

                              3 months ended June 30,           6 months ended June 30,
                               2012             2011             2012             2011
                             $      % of      $      % of      $      % of      $      % of
                         millions  sales  millions  sales  millions  sales  millions  sales

    Sales                  1964.6  100.0   1,928.8  100.0   3,516.7  100.0   3,457.1  100.0
    Gross profit            852.7   43.4     870.8   45.1   1,464.1   41.6   1,508.9   43.6
    Operating income        545.1   27.7     542.8   28.1     894.6   25.4     903.3   26.1
    Net income to the 
    Company's shareholders  407.3   20.7     426.2   22.1     696.2   19.8     705.9   20.4
    Operating cash flow     363.2            284.3            637.6            426.2
    EBITDA*                 610.6   31.1     611.0   31.1   1,033.8   29.4   1,029.9   29.8

* EBITDA is calculated as follows:

                               3 months ended June 30,  6 months ended June 30,
                                     2012        2011         2012        2011

    Net income                      407.3       426.2        696.2       705.9
    Amortization & depreciation      65.2        67.6        137.8       122.6
    Financing expenses, net          28.6        21.3         46.0        44.3
    Taxes on income                 109.5        95.9        153.8       157.1
    EBITDA                          610.6       611.0       1033.8      1029.9

                                             ICL
                       PRINCIPAL RESULTS FROM CORE MANAGERIAL SEGMENTS
                       THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2012

                             3 months ended June 30,           6 months ended June 30,
                              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     1,189.8   57.5   1,100.8   54.4   2,036.1   54.8   1,937.4   53.2
    ICL Industrial 
    Products              401.2   19.4     424.4   21.0     763.6   20.6     797.3   21.9
    ICL Performance 
    Products              377.0   18.2     408.2   20.2     721.7   19.4     758.4   20.8
    Other and offsets      (3.4)            (4.6)            (4.7)           (36.0)
    Total               1,964.6          1,928.8          3,516.7          3,457.1

Note: Segment sales data and their percentage of total sales are before offsets of inter-segment sales.

                             3 months ended June 30,           6 months ended June 30,
                              2012             2011             2012             2011
    Operating                     % of             % of             % of             % of
    income by              $    segment     $    segment     $    segment     $    segment
    segment            millions  sales  millions  sales  millions  sales  millions  sales

    ICL Fertilizers       409.9   34.4     379.0   34.4     652.0   32.0     622.5   32.1
    ICL Industrial
    Products               82.1   20.5      87.0   20.5     144.9   19.0     158.3   19.9
    ICL Performance
    Products               48.1   12.7      65.7   16.1      88.0   12.2     113.1   14.9
    Other and offsets       5.0             11.1              9.7              9.4
    Total                 545.1            542.8            894.6            903.3

PRESS CONTACT
Fleisher Communications and Public Relations    
Amiram Fleisher
+972-3-6241241    
[email protected]

SOURCE ICL - Israel Chemicals Ltd