Delivers annual sales of $7,536 million, with
adjusted EBITDA of $1,754 million, and continued strong cash
generation of $818 million
ICL (NYSE: ICL) (TASE: ICL), a leading global specialty
minerals company, today reported its financial results for the
fourth quarter and full year ended December 31, 2023. Consolidated
annual sales were $7,536 million versus a record $10,015 million in
2022. Net income was $647 million versus $2,159 million, while
adjusted net income was $715 million versus $2,350 million. Annual
adjusted EBITDA was $1,754 million versus $4,007 million in 2022.
Diluted earnings per share for 2023 were $0.50, while adjusted
diluted EPS was $0.55. Operating cash flow was $1,595 million in
2023, while free cash flow was $818 million. For 2023, the Company
paid out more than $350 million in dividends.
For the fourth quarter of 2023, consolidated sales were $1,690
million versus $2,091 million. Net income was $67 million, with
adjusted net income of $123 million, versus $331 million and $358
million, respectively, for fourth quarter 2022. Adjusted EBITDA in
the fourth quarter was $357 million versus $698 million. Fourth
quarter diluted earnings per share were $0.05, with adjusted
diluted EPS of $0.10, versus $0.25 and $0.28, respectively.
Operating cash flow was $415 million in the fourth quarter, while
free cash flow was $160 million.
“ICL delivered adjusted EBITDA of $1.8 billion and operating
cash flow of $1.6 billion, on the backdrop of a record 2022. During
2023, we expanded into additional new end-markets, with the
groundbreaking of new advanced facilities and the launch of new
innovative products, which will have a long-term impact on growth.
We executed against our cost reduction plan and launched further
efficiency measures in the fourth quarter, as we continued to
respond to challenging market conditions and remained resilient in
the face of war,” said Raviv Zoller, president and CEO of ICL. “For
the year, ICL delivered significant value to shareholders, with
$818 million of free cash flow and more than $350 million in
dividend payments, as we diligently managed the areas under our
control, swiftly reacting to changing external conditions. We
currently see improving demand in our key end-markets and, while we
expect there will be new and continued challenges in 2024, we are
looking forward to achieving our goals for the year, including
inorganic growth.”
The Company also announced it is making a change to guidance
practices, in order to provide greater transparency for its
shareholders. Going forward, the Company will be providing guidance
for expected potash sales volumes and EBITDA guidance for all of
its business segments other than potash, which will be referred to
as specialties-driven business segments.
For 2024, the Company expects the specialties-driven segments
adjusted EBITDA to be between $0.7 billion to $0.9 billion. For
potash, the Company expects 2024 sales volumes to be between 4.6
million metric tons and 4.9 million metric tons. The Company’s
fourth quarter 2023 Potash segment EBITDA should give a good
indication of EBITDA at current prices, and ICL expects every $20
change in the average potash CIF price from current levels to
result in a $100 million annual impact to EBITDA (1a).
Financial Figures and non-GAAP Financial Measures
10-12/2023
10-12/2022
1-12/2023
1-12/2022
$ millions
% of Sales
$ millions
% of Sales
$ millions
% of Sales
$ millions
% of Sales
Sales
1,690
-
2,091
-
7,536
-
10,015
-
Gross profit
560
33
933
45
2,671
35
5,032
50
Operating income
149
9
540
26
1,141
15
3,516
35
Adjusted operating income (1)
211
12
562
27
1,218
16
3,509
35
Net income attributable to the
Company's shareholders
67
4
331
16
647
9
2,159
22
Adjusted net income attributable
to the Company’s shareholders (1)
123
7
358
17
715
9
2,350
23
Diluted earnings per share (in
dollars)
0.05
-
0.25
-
0.50
-
1.67
-
Diluted adjusted earnings per
share (in dollars) (2)
0.10
-
0.28
-
0.55
-
1.82
-
Adjusted EBITDA (2)
357
21
698
33
1,754
23
4,007
40
Cash flows from operating
activities
415
-
467
-
1,595
-
2,025
-
Purchases of property, plant and
equipment and intangible assets (3)
255
-
212
-
780
-
747
-
(1)
See “Adjustments to Reported Operating and
Net income (non-GAAP)” below.
(2)
See “Consolidated Adjusted EBITDA and
Diluted Adjusted Earnings Per Share for the periods of activity"
below.
(3)
See “Condensed consolidated statements of
cash flows (unaudited)” to the accompanying financial
statements.
Industrial Products
Potash
Phosphate Solutions
Growing Solutions
Three-months ended 31
December
2023
2022
2023
2022
2023
2022
2023
2022
Segment operating income
39
95
122
340
74
116
(5)
32
Depreciation and amortization
17
15
46
45
59
49
20
24
Segment EBITDA
56
110
168
385
133
165
15
56
Segment Information
Industrial Products
The Industrial Products segment produces bromine from a highly
concentrated solution in the Dead Sea and bromine‑based compounds
at its facilities in Israel, the Netherlands and China. In
addition, the segment produces several grades of salts, magnesium
chloride, magnesia-based products, phosphorus-based products, and
functional fluids.
Results of operations
10-12/2023
10-12/2022
1-12/2023
1-12/2022
$ millions
$ millions
$ millions
$ millions
Segment Sales
299
349
1,227
1,766
Sales to external customers
294
343
1,206
1,737
Sales to internal customers
5
6
21
29
Segment Operating
Income
39
95
220
628
Depreciation and amortization
17
15
57
61
Segment EBITDA
56
110
277
689
Capital expenditures
29
27
91
90
Significant highlights
- Flame retardants: Sales of both bromine and phosphorous-based
flame retardants decreased year-over-year due to lower prices, as
electronics and construction end-market demand remained
subdued.
- Industrial solutions: Elemental bromine sales decreased
year-over-year, as higher volumes only partially offset lower
bromine prices.
- Oil and gas: Record clear brine fluids sales and operating
profit for 2023, due to strong end-market demand.
- Specialty minerals: Record operating profit for 2023, despite
slightly lower volumes.
Results analysis for the period October
– December 2023
Sales
Expenses
Operating income
$ millions
Q4 2022 figures
349
(254)
95
Quantity
63
(34)
29
Price
(115)
-
(115)
Exchange rates
2
6
8
Raw materials
-
7
7
Energy
-
4
4
Transportation
-
8
8
Operating and other expenses
-
3
3
Q4 2023 figures
299
(260)
39
- Quantity – The positive impact on
operating income was primarily related to an increase in sales
volumes of bromine-based flame retardants and elemental bromine.
This was partially offset by lower sales volumes of
phosphorus-based flame retardants, specialty minerals and clear
brine fluids.
- Price – The negative impact on
operating income was primarily due to lower selling prices of
bromine and phosphorus-based flame retardants, bromine-based
industrial solutions, and specialty minerals.
- Exchange rates – The favorable
impact on operating income was mainly due to the positive impact on
operational costs resulting from the depreciation of the average
exchange rate of the Israeli shekel against the US dollar, as well
as the positive impact on sales resulting from the appreciation of
the average exchange rate of the euro against the US dollar.
- Raw materials – The positive
impact on operating income was due to a decrease in raw material
costs.
- Transportation – The positive
impact on operating income was due to a decrease in marine and
inland transportation costs.
Potash
The Potash segment produces and sells mainly potash, salts,
magnesium, and electricity. Potash is produced in Israel using an
evaporation process to extract it from the Dead Sea at Sodom and in
Spain using conventional mining from an underground mine. The
segment also produces and sells pure magnesium, magnesium alloys
and chlorine. In addition, the segment sells salt products produced
at its potash site in Spain. The segment operates a power plant in
Sodom which supplies electricity and steam to ICL facilities in
Israel, with surplus electricity sold to external customers.
Results of operations
10-12/2023
10-12/2022
1-12/2023
1-12/2022
$ millions
$ millions
$ millions
$ millions
Segment Sales
474
713
2,182
3,313
Potash sales to external
customers
336
568
1,693
2,710
Potash sales to internal
customers
49
36
129
184
Other and eliminations (1)
89
109
360
419
Gross Profit
231
456
1,171
2,292
Segment Operating
Income
122
340
668
1,822
Depreciation and amortization
46
45
175
166
Segment EBITDA
168
385
843
1,988
Capital expenditures
132
92
384
346
Potash price - CIF ($ per
tonne)
345
594
393
682
(1)
Primarily includes salt produced in Spain,
metal magnesium-based products, chlorine, and sales of excess
electricity produced by ICL’s power plant at the Dead Sea in
Israel.
Significant highlights
- ICL's potash price (CIF) per tonne of $345 in the quarter was
1% higher than the third quarter of 2023 and 42% lower
year-over-year.
- The Grain Price Index decreased by 6.7% during the quarter due
to decreased prices of wheat, corn and soybean by 16.2%, 12.8% and
8.5%, respectively, partially offset by an increase in prices of
rice by 5.4%.
- The WASDE (World Agricultural Supply and Demand Estimates)
report, published by the USDA in January 2024, showed a continued
decrease in the expected ratio of global inventories of grains to
consumption to 27.7% for the 2023/24 agriculture year, compared to
28.1% for the 2022/23 agriculture year and 28.4% for the 2021/22
agriculture year.
- Freight rates have been increasing, with disruptions in the Red
Sea and in Panama. Suez Canal shipments have plummeted due to the
security situation in the area with many vessels rerouted around
southern Africa, and the Panama Canal is navigating a historic
water crisis, limiting the number of ships crossing.
Additional segment
information
Global potash market - average prices and imports:
Average prices
10-12/2023
10-12/2022
VS Q4 2022
7-9/2023
VS Q3 2023
Granular potash – Brazil
CFR spot
($ per tonne)
336
570
(41.1)%
351
(4.3)%
Granular potash – Northwest
Europe
CIF spot/contract
(€ per tonne)
388
813
(52.3)%
392
(1.0)%
Standard potash – Southeast
Asia
CFR spot
($ per tonne)
318
675
(52.9)%
309
2.9%
Potash imports
To Brazil
million tonnes
3.4
1.5
126.7%
3.6
(5.6)%
To China
million tonnes
3.6
1.8
100.0%
2.9
24.1%
To India
million tonnes
0.8
0.5
60.0%
0.6
33.3%
Sources: CRU (Fertilizer Week Historical Price: January 2024),
SIACESP (Brazil), World Shipping Agenciamentos (WSA), FAI, Brazil
and Chinese customs data.
Potash – Production and
Sales
Thousands of tons
10-12/2023
10-12/2022
1-12/2023
1-12/2022
Production
1,139
1,224
4,420
4,691
Total sales (including internal
sales)
1,179
1,068
4,683
4,499
Closing inventory
284
547
284
547
Fourth quarter 2023
- Production – Production was 85
thousand tonnes lower year-over-year, mainly due to operational
challenges and war related issues in the Dead Sea, as well as a
planned production shutdown in Spain.
- Sales – The quantity of potash
sold was 111 thousand tonnes higher year-over-year, mainly due to
increased sales volumes to Brazil, China and Europe.
Full year 2023
- Production – Production was 271
thousand tonnes lower year-over-year, in the Dead Sea mainly due to
operational challenges, such as weather conditions and war related
issues in the fourth quarter, as well as on-going geologic
constraints in Spain.
- Sales – The quantity of potash
sold was 184 thousand tonnes higher year-over-year, mainly due to
increased sales volumes to Europe and China, partially offset by
lower sales volumes to India, Brazil and the US.
Results analysis for the period October
– December 2023
Sales
Expenses
Operating income
$ millions
Q4 2022 figures
713
(373)
340
Quantity
11
2
13
Price
(255)
-
(255)
Exchange rates
5
3
8
Raw materials
-
4
4
Energy
-
5
5
Transportation
-
(2)
(2)
Operating and other expenses
-
9
9
Q4 2023 figures
474
(352)
122
- Quantity – The positive impact on
operating income was primarily related to an increase in sales
volumes of potash to China, Brazil and Europe, partially offset by
lower sales volumes to India and the US.
- Price – The negative impact on
operating income resulted primarily from a decrease of $249 in the
potash price (CIF) per tonne, year-over-year.
- Exchange rates – The favorable
impact on operating income was due to a positive impact on sales
resulting from the appreciation of the average exchange rate of the
euro and the British pound against the US dollar, as well as a
positive impact on operational costs resulting from the
depreciation of the average exchange rate of the Israeli shekel
against the US dollar.
- Energy – The positive impact on
operating income was primarily due to a decrease in electricity and
gas prices.
- Operating and other expenses – The
positive impact on operating income was primarily related to
operational savings.
Phosphate Solutions
The Phosphate Solutions segment operates ICL's phosphate value
chain and uses phosphate rock and fertilizer-grade phosphoric acid
to produce phosphate-based specialty products with higher added
value, as well as to produce and sell phosphate-based
fertilizers.
Phosphate specialties sales of $343 million and operating income
of $38 million in the fourth quarter of 2023 were approximately 15%
and 42% lower, respectively, compared to the fourth quarter of
2022. The decrease in operating income was driven mainly by lower
selling prices and sales volumes, partially offset by lower costs
of raw materials.
Sales of phosphate commodities amounted to $201 million,
approximately 10% lower than in the fourth quarter of 2022.
Operating income of $36 million decreased year-over-year by $14
million, primarily due to lower prices, partially offset by higher
volumes sold and lower raw material costs, mainly sulphur.
Results of operations
10-12/2023
10-12/2022
1-12/2023
1-12/2022
$ millions
$ millions
$ millions
$ millions
Segment Sales
544
627
2,483
3,106
Sales to external customers
503
574
2,274
2,851
Sales to internal customers
41
53
209
255
Segment Operating
Income
74
116
329
777
Depreciation and
amortization*
59
49
221
189
Segment EBITDA
133
165
550
966
Phosphate specialties EBITDA
55
79
277
436
Phosphate commodities EBITDA
78
86
273
530
Capital expenditures
90
78
272
259
*
For Q4 2023, comprised of $17 million in
phosphate specialties and $42 million in phosphate commodities. For
Q4 2022, comprised of $13 million in phosphate specialties and $36
million in phosphate commodities.
Significant highlights
- White phosphoric acid (WPA): Sales decreased year-over-year, as
higher volumes - mainly in Europe – only partially offset lower
prices.
- Industrial specialties: Sales decreased year-over-year, with
lower prices in key markets, partially offset by higher volumes
globally.
- Food specialties: Volumes in Europe increased year-over-year,
while global sales declined versus the prior year, due to lower
volumes in the Americas related to a slower than expected recovery
in consumer demand.
- A positive pricing effect continued into the fourth quarter of
2023 with prices up to 15% higher when compared to the third
quarter average. Negative sentiment was generated early in the
quarter due to a reduction of DAP subsidies by India and a
reduction of countervailing duties (CVDs) by the US on OCP,
partially offset by lower market liquidity due to China’s decision
to limit exports.
- In India, DAP prices decreased by $7/t from the previous
quarter to $593/t CFR, due to the government’s decision to reduce
the DAP subsidy for the rabi crop, which lowered demand for
imports.
- US phosphate imports remained firm in October 2023, as
distributors continued to restock depleted inventories. DAP FOB
Nola prices increased by 7% during the quarter, finishing the year
at $623/t despite decreased volumes in November and December, and
the US Department of Commerce’s decision to decrease OCP’s CVDs
from 19.97% to 2.12%.
- In Brazil, MAP prices were 6% higher in the quarter, reaching
$563/t at the end of December. A lack of prompt availability and
poor weather, which created a delayed import window for soy
planting, continued to support prices at a time when demand usually
begins to wane.
- In November 2023, China’s economic planning committee, the
NDRC, suspended review of new export applications until year-end,
in an effort to lower domestic prices.
- Indian phosphoric acid prices are negotiated on a quarterly
basis. The fourth quarter price was agreed at $985/t P2O5, up $135
from the third quarter price, reflecting a surge in DAP/MAP prices
during the fourth quarter. The price for the first quarter of 2024
is still under negotiation.
- Spot sulphur FOB Middle East eased to $78/t at the end of
December, down from $108/t at the beginning of the quarter, as
concerns over Chinese demand and ample availability weighed on
fundamentals.
Additional segment
information
Global phosphate commodities market - average prices:
Average prices
$ per tonne
10-12/2023
10-12/2022
VS Q4 2022
07-09/2023
VS Q3 2023
DAP
CFR India Bulk Spot
594
734
(19)%
518
15%
TSP
CFR Brazil Bulk Spot
422
543
(22)%
394
7%
SSP
CPT Brazil inland 18-20% P2O5
Bulk Spot
278
270
3%
275
1%
Sulphur
Bulk FOB Adnoc monthly Bulk
contract
102
138
(26)%
82
24%
Source: CRU (Fertilizer Week Historical Prices, January
2024).
Results analysis for the period October
– December 2023
Sales
Expenses
Operating income
$ millions
Q4 2022 figures
627
(511)
116
Quantity
(7)
8
1
Price
(81)
-
(81)
Exchange rates
5
1
6
Raw materials
-
24
24
Energy
-
(1)
(1)
Transportation
-
(3)
(3)
Operating and other expenses
-
12
12
Q4 2023 figures
544
(470)
74
- Quantity – The positive impact on
operating income was primarily related to higher volumes of
phosphate fertilizers and white phosphoric acid (WPA). This was
partially offset by lower sales volumes of phosphate-based food
additives and MAP used as raw material for energy storage
solutions.
- Price – The negative impact on
operating income was primarily due to lower selling prices of WPA,
phosphate fertilizers and salts.
- Exchange rates – The favorable
impact on operating income was mainly due to the positive impact on
sales resulting from the appreciation of the average exchange rate
of the euro against the US dollar which exceeded its negative
impact on operational costs, as well as the positive impact on
operational costs due to the depreciation of the average exchange
rate of the Israeli shekel and the Chinese yuan against the US
dollar.
- Raw materials – The positive
impact on operating income was mainly due to lower costs of
sulphur, potassium hydroxide (KOH) and caustic soda.
- Operating and other expenses – The
positive impact on operating income was primarily related to lower
maintenance and operational costs.
Growing Solutions
The Growing Solutions segment aims to achieve global leadership
in plant nutrition by enhancing its position in its core markets of
specialty agriculture, ornamental horticulture, turf and
landscaping, fertilizers and FertilizerpluS, and by targeting
high-growth markets such as Brazil, India, and China. The segment
also looks to leverage its unique R&D capabilities, substantial
agronomic experience, global footprint, backward integration to
potash, phosphate and polysulphate and its chemistry know-how, as
well as its ability to integrate and generate synergies from
acquired businesses. ICL continuously works to expand its broad
portfolio of specialty plant nutrition, plant stimulation and plant
health solutions, which consist of enhanced efficiency and
controlled release fertilizers (CRF), water-soluble fertilizers
(WSF), liquid fertilizers and straights (MKP/MAP/PeKacid),
FertilizerpluS, soil and foliar micronutrients, secondary
nutrients, biostimulants, soil conditioners, seed treatment
products, and adjuvants.
Results of operations
10-12/2023
10-12/2022
1-12/2023
1-12/2022
$ millions
$ millions
$ millions
$ millions
Segment Sales
478
527
2,073
2,422
Sales to external customers
475
513
2,047
2,376
Sales to internal customers
3
14
26
46
Segment Operating
Income
(5)
32
51
378
Depreciation and amortization
20
24
68
70
Segment EBITDA
15
56
119
448
Capital expenditures
36
38
92
101
Significant highlights
- Specialty agriculture: Sales slightly decreased year-over-year,
due to lower prices, partially offset by an increase in volumes,
mainly in micronutrients, controlled released fertilizers and
straight fertilizers.
- Turf and ornamental: Sales decreased year-over-year, with turf
sales decreasing, while ornamental horticulture sales remained
stable.
- Brazil: Weather-related challenges delayed fourth quarter
orders, impacting both quarter and full year results.
- ICL Boulby: Production of Polysulphate decreased by 6%
year-over-year for the fourth quarter, declining to 238 thousand
tonnes. For 2023 production reached 1,009 thousand tonnes, an
annual production record.
- FertilizerpluS: sales decreased year-over-year, as higher
volumes only partially offset lower prices.
- Planned maintenance in certain facilities was shifted from the
first quarter of 2024 to the fourth quarter of 2023, as a response
to application delays in Europe, mainly due to weather, and Israel,
mainly due to the war.
- In the beginning of 2024, the Company completed the acquisition
of Nitro 1000, a manufacturer, developer and provider of biological
crop inputs in Brazil, for a consideration of $30 million. Nitro
1000’s products mainly target soybean, corn and sugar cane crops,
and their application replaces or optimizes the use of fertilizers.
These products help farmers increase profitability, as well as
offer more sustainable options.
Results analysis for the period October
– December 2023
Sales
Expenses
Operating income
$ millions
Q4 2022 figures
527
(495)
32
Quantity
98
(67)
31
Price
(165)
-
(165)
Exchange rates
18
(16)
2
Raw materials
-
111
111
Energy
-
1
1
Transportation
-
2
2
Operating and other expenses
-
(19)
(19)
Q4 2023 figures
478
(483)
(5)
- Quantity – The positive impact on
operating income was primarily due to higher sales volumes of
specialty agriculture and FertilizerpluS products.
- Price – The negative impact on
operating income was primarily due to lower selling prices across
most product lines, mainly specialty agriculture and FertilizerpluS
products.
- Exchange rates – The favorable
impact on operating income was primarily due to the positive impact
on sales resulting from the appreciation of the average exchange
rate of the Brazilian real and the euro against the US dollar,
which exceeded their negative impact on operational costs.
- Raw materials – The positive
impact on operating income was primarily related to lower costs of
commodity fertilizers, potassium hydroxide (KOH) and ammonia.
- Operating and other expenses – The
negative impact on operating income was primarily related to higher
maintenance and operational costs, as well as sales
commissions.
Financing expenses, net
Net financing expenses in the fourth quarter of 2023 amounted to
$33 million, compared to $41 million in the corresponding quarter
last year, a decrease of $8 million. This decrease is mainly due to
a decrease of $10 million in account receivables factoring
expenses, partially offset by an increase of $2 million in interest
expenses.
Tax expenses
In the fourth quarter of 2023, the Company’s reported tax
expenses amounted to $33 million, compared to $158 million in the
corresponding quarter of last year, reflecting an effective tax
rate of 28% and 32%, respectively. The Company’s relatively low
effective tax rate for this quarter was mainly due to the
devaluation of the shekel against the US dollar.
Liquidity and Capital Resources
As of December 31, 2023, the Company’s cash, cash equivalents,
short-term investments and deposits amounted to $592 million
compared to $508 million as of December 31, 2022. In addition, the
Company maintained about $1.2 billion of unused credit facilities
as of December 31, 2023.
Outstanding net debt
As of December 31, 2023, ICL’s net financial liabilities
amounted to $2,095 million, a decrease of $221 million compared to
December 31, 2022.
Credit facilities
Sustainability-linked Revolving Credit
Facility (RCF)
In April 2023, the Company entered into a Sustainability-Linked
Revolving Credit Facility Agreement made between ICL Finance B.V.
and a consortium of twelve international banks for a $1,550 million
credit facility. The Sustainability-Linked RCF replaced a previous
revolving credit facility that was entered into in 2015, as amended
and extended in 2018, and which was due to expire in 2025.
As of December 31, 2023, the Company had utilized $376 million
of the credit facility.
Securitization
The total amount of the Company's committed securitization
facility framework is $300 million with an additional $100 million
uncommitted. As of December 31, 2023, ICL had utilized
approximately $182 million of the facility’s framework.
Ratings and financial covenants
Fitch Ratings
In June 2023, Fitch Ratings reaffirmed the Company’s long-term
issuer default rating and senior unsecured rating at 'BBB-'. The
outlook on the long-term issuer default rating is stable.
S&P Ratings
In July 2023, the S&P credit rating agency reaffirmed the
Company’s international credit rating and senior unsecured rating
of 'BBB-'. In addition, the S&P Maalot credit rating agency
reaffirmed the Company’s credit rating of 'ilAA' with a stable
rating outlook.
Financial covenants
As of December 31, 2023, the Company was in compliance with all
of its financial covenants stipulated in its financing
agreements.
Dividend Distribution
In connection with ICL’s fourth quarter 2023 results, the Board
of Directors declared a dividend of 4.76 cents per share, or
approximately $61 million. The dividend will be paid on March 26,
2024. The record date is March 14, 2024.
About ICL
ICL Group Ltd. is a leading global specialty minerals company,
which creates impactful solutions for humanity’s sustainability
challenges in the food, agriculture, and industrial markets. ICL
leverages its unique bromine, potash, and phosphate resources, its
global professional workforce, and its sustainability focused
R&D and technological innovation capabilities, to drive the
Company’s growth across its end markets. ICL shares are dual listed
on the New York Stock Exchange and the Tel Aviv Stock Exchange
(NYSE and TASE: ICL). The Company employs more than 12,500 people
worldwide, and its 2023 revenue totaled approximately $7.5 billion.
For more information, visit the Company’s website at
www.icl-group.com1.
We disclose in this quarterly report non-IFRS financial measures
titled adjusted operating income, adjusted net income attributable
to the Company’s shareholders, diluted adjusted earnings per share,
and adjusted EBITDA. Our management uses adjusted operating income,
adjusted net income attributable to the Company’s shareholders,
diluted adjusted earnings per share, and adjusted EBITDA to
facilitate operating performance comparisons from period to period.
We calculate our adjusted operating income by adjusting our
operating income to add certain items, as set forth in the
reconciliation table under “Adjustments to reported operating, and
net income (non-GAAP)” below. Certain of these items may recur. We
calculate our adjusted net income attributable to the Company’s
shareholders by adjusting our net income attributable to the
Company’s shareholders to add certain items, as set forth in the
reconciliation table under “Adjustments to reported operating, and
net income (non-GAAP)” below, excluding the total tax impact of
such adjustments. We calculate our diluted adjusted earnings per
share by dividing adjusted net income by the weighted-average
number of diluted ordinary shares outstanding. Our adjusted EBITDA
is calculated as net income before financing expenses, net, taxes
on income, share in earnings of equity-accounted investees,
depreciation and amortization, and adjust items presented in the
reconciliation table under “Consolidated adjusted EBITDA, and
diluted adjusted Earnings Per Share for the periods of activity”
below, which were adjusted for in calculating the adjusted
operating income. Commencing with the year 2022, the Company’s
“adjusted EBITDA” calculation is no longer adding back “minority
and equity income, net“. While “minority and equity income, net”
reflects the share of an equity investor in one of our owned
operations, since adjusted EBITDA measures the Company’s overall
performance, its operations and its ability to satisfy cash needs,
before profit is allocated to the equity investor, management
believes that adjusted EBITDA before deduction of such item is more
reflective.
You should not view adjusted operating income, adjusted net
income attributable to the Company’s shareholders, diluted adjusted
earnings per share or adjusted EBITDA as a substitute for operating
income or net income attributable to the Company’s shareholders
determined in accordance with IFRS, and you should note that our
definitions of adjusted operating income, adjusted net income
attributable to the Company’s shareholders, diluted adjusted
earnings per share, and adjusted EBITDA may differ from those used
by other companies. Additionally, other companies may use other
measures to evaluate their performance, which may reduce the
usefulness of our non-IFRS financial measures as tools for
comparison. However, we believe adjusted operating income, adjusted
net income attributable to the Company’s shareholders, diluted
adjusted earnings per share, and adjusted EBITDA provide useful
information to both management, and investors by excluding certain
items that management believes are not indicative of our ongoing
operations. Our management uses these non-IFRS measures to evaluate
the Company's business strategies, and management performance. We
believe that these non IFRS measures provide useful information to
investors because they improve the comparability of our financial
results between periods and provide for greater transparency of key
measures used to evaluate our performance.
1The reference to our website is intended
to be an inactive textual reference and the information on, or
accessible through, our website is not intended to be part of this
Form 6-K.
(1a) The Company only provides guidance on a non-GAAP basis. The
Company does not provide a reconciliation of forward-looking
adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the
inherent difficulty in forecasting, and quantifying certain amounts
that are necessary for such reconciliation, in particular, because
special items such as restructuring, litigation, and other matters,
used to calculate projected net income (loss) vary dramatically
based on actual events, the Company is not able to forecast on a
GAAP basis with reasonable certainty all deductions needed in order
to provide a GAAP calculation of projected net income (loss) at
this time. The amount of these deductions may be material, and
therefore could result in projected GAAP net income (loss) being
materially less than projected adjusted EBITDA (non-GAAP). The
guidance speaks only as of the date hereof. We undertake no
obligation to update any of these forward-looking statements to
reflect events or circumstances after the date of this news release
or to reflect actual outcomes, unless required by law. For 2023,
Specialties businesses are represented by the Industrial Products,
and Growing Solutions segments, and the specialties part of the
Phosphate Solutions segment, and we present EBITDA from the
phosphate specialties part of the Phosphate Solutions segment as we
believe this information is useful to investors in reflecting the
specialty portion of our business. Beginning with 2024, we are
providing specialties-driven Adjusted EBITDA which will include
Industrial Products, Growing Solutions and Phosphate Solutions, as
the Phosphate Solutions business is now predominantly
specialties-focused and for our Potash business we will be
providing sales volumes guidance. The company believes this change
provides greater transparency, as these new metrics are less
impacted by fertilizer commodity prices, given the extreme
volatility in recent years.
We present a discussion in the period-to-period comparisons of
the primary drivers of change in the Company’s results of
operations. This discussion is based in part on management’s best
estimates of the impact of the main trends on our businesses. We
have based the following discussion on our financial statements.
You should read such discussion together with our financial
statements.
Adjustments to Reported Operating and Net income
(non-GAAP)
10-12/2023
10-12/2022
1-12/2023
1-12/2022
$ millions
$ millions
$ millions
$ millions
Operating income
149
540
1,141
3,516
Provision for early retirement
(1)
16
-
16
-
Write-off of assets and provision
for site closure (2)
34
-
49
-
Legal proceedings, dispute and
other settlement expenses (3)
(2)
22
(2)
22
Charges related to the security
situation in Israel (4)
14
-
14
-
Divestment related items and
transaction costs (5)
-
-
-
(29)
Total adjustments to operating
income
62
22
77
(7)
Adjusted operating
income
211
562
1,218
3,509
Net income attributable to the
shareholders of the Company
67
331
647
2,159
Total adjustments to operating
income
62
22
77
(7)
Total tax adjustments (6)
(6)
5
(9)
198
Total adjusted net income -
shareholders of the Company
123
358
715
2,350
(1)
For 2023, reflects provisions for early
retirement, due to restructuring at certain sites, as part of the
Company’s global efficiency plan.
(2)
For 2023, reflects mainly a write-off of
assets related to restructuring at certain sites, including site
closures and facility modifications, as part of the Company’s
global efficiency plan.
(3)
For 2023, reflects a reversal of a legal
provision. For 2022, reflects mainly the costs of a mediation
settlement regarding the claims related to the Ashalim Stream
incident.
(4)
For 2023, reflects charges relating to the
security situation in Israel deriving from the war which commenced
on October 7, 2023.
(5)
For 2022, reflects a capital gain related
to the sale of an asset in Israel and the Company’s divestment of a
50%-owned joint venture, Novetide.
(6)
For 2023, reflects the tax impact of
adjustments made to operating income. For 2022, reflects tax
expenses in respect of prior years following a settlement with
Israel’s Tax Authority regarding Israel's surplus profit levy,
which outlines understandings for the calculation of the levy,
including the measurement of fixed assets, as well as the tax
impact of adjustments made to operating income.
Consolidated adjusted EBITDA and diluted adjusted Earnings
Per Share for the periods of activity
Calculation of adjusted EBITDA was made as follows:
10-12/2023
10-12/2022
1-12/2023
1-12/2022
$ millions
$ millions
$ millions
$ millions
Net income
84
342
687
2,219
Financing expenses, net
33
41
168
113
Taxes on income
33
158
287
1,185
Less: Share in earnings of
equity-accounted investees
(1)
(1)
(1)
(1)
Operating income
149
540
1,141
3,516
Depreciation and amortization
146
136
536
498
Adjustments (1)
62
22
77
(7)
Total adjusted EBITDA
(2)
357
698
1,754
4,007
(1)
See "Adjustments to Reported Operating and
Net income (non-GAAP)" above.
(2)
Commencing 2022, the Company’s adjusted
EBITDA definition was updated, see the disclaimer above.
Calculation of diluted adjusted earnings per share was made as
follows:
10-12/2023
10-12/2022
1-12/2023
1-12/2022
$ millions
$ millions
$ millions
$ millions
Net income attributable to the
Company's shareholders
67
331
647
2,159
Adjustments (1)
62
22
77
(7)
Total tax adjustments
(6)
5
(9)
198
Adjusted net income -
shareholders of the Company
123
358
715
2,350
Weighted-average number of
diluted ordinary shares outstanding (in thousands)
1,290,575
1,291,299
1,290,668
1,289,947
Diluted adjusted earnings per
share (in dollars) (2)
0.10
0.28
0.55
1.82
(1)
See "Adjustments to Reported Operating and
Net income (non-GAAP)" above.
(2)
The diluted adjusted earnings per share is
calculated by dividing the adjusted net income‑shareholders of the
Company by the weighted-average number of diluted ordinary shares
outstanding (in thousands).
Consolidated Results Analysis
Results analysis for the period October – December
2023
Sales
Expenses
Operating income
$ millions
Q4 2022 figures
2,091
(1,551)
540
Total adjustments Q4 2022*
-
22
22
Adjusted Q4 2022
figures
2,091
(1,529)
562
Quantity
170
(84)
86
Price
(601)
-
(601)
Exchange rates
30
(2)
28
Raw materials
-
105
105
Energy
-
10
10
Transportation
-
5
5
Operating and other expenses
-
16
16
Adjusted Q4 2023
figures
1,690
(1,479)
211
Total adjustments Q4 2023*
-
(62)
(62)
Q4 2023 figures
1,690
(1,541)
149
* See "Adjustments to reported Operating and Net income
(non-GAAP)" above.
- Quantity – The positive impact on
operating income was primarily due to higher sales volumes of
potash, bromine-based flame retardant, elemental bromine, specialty
agriculture and FertilizerpluS products, as well as phosphate
fertilizers and white phosphoric acid (WPA). These were partially
offset by lower sales volumes of phosphate-based food additives and
magnesium.
- Price – The negative impact on
operating income was primarily related to a decrease of $249 in the
potash price (CIF) per tonne year-over-year, as well as lower
selling prices of specialty agriculture and FertilizerpluS
products, bromine-based flame retardants, bromine-based industrial
solutions, white phosphoric acid (WPA) and phosphate
fertilizers.
- Exchange rates – The favorable
impact on operating income was mainly due to a positive impact on
sales resulting from the appreciation of the average exchange rate
of the euro and the Brazilian Real against the US dollar, which was
partially offset by a negative impact on operational costs
resulting from the above-mentioned appreciation, together with a
positive impact due to the depreciation of the average exchange
rate of the Israeli shekel against the US dollar.
- Raw materials – The positive
impact on operating income was due to lower costs of sulphur,
commodity fertilizers, potassium hydroxide (KOH), raw materials
used in the production of industrial solutions products, and
caustic soda.
- Energy – The positive impact on
operating income was due to lower gas and electricity prices.
- Transportation – The positive
impact on operating income resulted from decreased marine
transportation costs.
- Operating and other expenses – The
positive impact on operating income was primarily related to lower
operational costs and sales commissions.
The following table sets forth sales by geographical regions
based on the location of the customers:
10-12/2023
10-12/2022
$ millions
% of Sales
$ millions
% of Sales
Europe
464
27
608
29
Asia
440
26
592
28
South America
364
22
396
19
North America
318
19
358
17
Rest of the world
104
6
137
7
Total
1,690
100
2,091
100
- Europe – The decrease in sales was
primarily due to lower selling prices of potash, phosphate
fertilizers, FertilizerpluS and specialty agriculture products and
WPA, as well as lower sales volumes and selling prices of
bromine-based flame retardants and salts, together with lower
volumes of bromine-based industrial solutions. The decrease was
partially offset by higher sales volumes of potash, phosphate
fertilizers, FertilizerpluS and specialty agriculture products and
WPA, together with a positive impact on sales resulting from the
appreciation of the average exchange rate of the euro against the
US dollar.
- Asia – The decrease in sales was
primarily due to lower selling prices and sales volumes of potash
and MAP used as raw material for energy storage solutions, as well
as lower selling prices of bromine-based flame retardants,
bromine-based industrial solutions, specialty agriculture products,
together with lower volumes of clear brine fluids and phosphate
fertilizers. The decrease was partially offset by higher sales
volumes of bromine-based flame retardants, bromine-based industrial
solutions, specialty agriculture products and WPA.
- South America – The decrease in
sales was primarily due to lower selling prices of potash and
specialty agriculture products, partially offset by higher sales
volumes of the above-mentioned products.
- North America – The decrease in
sales was primarily due to lower selling prices and sales volumes
of potash, magnesium and phosphate-based flame retardants, as well
as lower sales volumes of phosphate-based food additives. This was
partially offset by higher sales volumes of phosphate fertilizers
and specialty agriculture products, together with higher prices of
phosphate-based food additives.
- Rest of the world – The decrease
in sales was primarily due to lower sales volumes and selling
prices of potash and phosphate fertilizers, as well as lower
volumes of FertilizerpluS products, together with lower selling
prices of specialty agriculture products and bromine-based
industrial solutions, partially offset by higher sales volumes of
bromine-based industrial solutions and specialty agriculture
products.
Forward-looking Statements
This announcement contains statements that constitute
“forward‑looking statements”, many of which can be identified by
the use of forward‑looking words such as “anticipate”, “believe”,
“could”, “expect”, “should”, “plan”, “intend”, “estimate”,
“strive”, “forecast”, “targets” and “potential”, among others.
Forward‑looking statements appear in a number of places in this
announcement and include, but are not limited to, statements
regarding our intent, belief or current expectations.
Forward‑looking statements are based on our management’s beliefs
and assumptions and on information currently available to our
management. Such statements are subject to risks and uncertainties,
and the actual results may differ materially from those expressed
or implied in the forward‑looking statements due to various
factors, including, but not limited to:
Changes in exchange rates or prices compared to those we are
currently experiencing; loss or impairment of business licenses or
mineral extractions permits or concessions; volatility of supply
and demand and the impact of competition; the difference between
actual reserves and our reserve estimates; natural disasters and
cost of compliance with environmental regulatory legislative and
licensing restrictions including laws and regulation related to,
and physical impacts of climate change and greenhouse gas
emissions; failure to "harvest" salt which could lead to
accumulation of salt at the bottom of the evaporation Pond 5 in the
Dead Sea; disruptions at our seaport shipping facilities or
regulatory restrictions affecting our ability to export our
products overseas; general market, political or economic conditions
in the countries in which we operate; price increases or shortages
with respect to our principal raw materials; delays in termination
of engagements with contractors and/or governmental obligations;
the inflow of significant amounts of water into the Dead Sea which
could adversely affect production at our plants; labor disputes,
slowdowns and strikes involving our employees; pension and health
insurance liabilities; Pandemics may create disruptions, impacting
our sales, operations, supply chain and customers; changes to
governmental incentive programs or tax benefits, creation of new
fiscal or tax related legislation; and/or higher tax liabilities;
changes in our evaluations and estimates, which serve as a basis
for the recognition and manner of measurement of assets and
liabilities; failure to integrate or realize expected benefits from
mergers and acquisitions, organizational restructuring and joint
ventures; currency rate fluctuations; rising interest rates;
government examinations or investigations; disruption of our, or
our service providers', information technology systems or breaches
of our, or our service providers', data security; failure to retain
and/or recruit key personnel; inability to realize expected
benefits from our cost reduction program according to the expected
timetable; inability to access capital markets on favorable terms;
cyclicality of our businesses; changes in demand for our fertilizer
products due to a decline in agricultural product prices, lack of
available credit, weather conditions, government policies or other
factors beyond our control; sales of our magnesium products being
affected by various factors that are not within our control; our
ability to secure approvals and permits from the authorities in
Israel to continue our phosphate mining operations in Rotem Amfert
Israel; volatility or crises in the financial markets; hazards
inherent to mining and chemical manufacturing; the failure to
ensure the safety of our workers and processes; litigation,
arbitration and regulatory proceedings; exposure to third party and
product liability claims; product recalls or other liability claims
as a result of food safety and food-borne illness concerns;
insufficiency of insurance coverage; closing of transactions,
mergers and acquisitions; war or acts of terror and/or political,
economic and military instability in Israel and its region;
including the current state of war declared in Israel and any
resulting disruptions to our supply and production chains; filing
of class actions and derivative actions against the Company, its
executives and Board members; The Company is exposed to risks
relating to its current and future activity in emerging markets;
and other risk factors discussed under ”Item 3 - Key Information—
D. Risk Factors" in the Company's Annual Report on Form 20-F for
the year ended December 31, 2022, filed with the U.S. Securities
and Exchange Commission (the “SEC”) on February 28, 2023 (the
“Annual Report”).
Forward looking statements speak only as at the date they are
made, and we do not undertake any obligation to update them in
light of new information or future developments or to release
publicly any revisions to these statements in order to reflect
later events or circumstances or to reflect the occurrence of
unanticipated events.
This report for the fourth quarter of 2023 (the “Quarterly
Report”) should be read in conjunction with the Annual Report and
the report for the first, second and third quarter of 2023
published by the Company (the “prior quarterly report”), including
the description of the events occurring subsequent to the date of
the statement of financial position, as filed with the U.S.
SEC.
Appendix:
Condensed Consolidated
Statements of Financial Position as of (Unaudited)
December 31, 2023
December 31, 2022
$ millions
$ millions
Current assets
Cash and cash equivalents
420
417
Short-term investments and
deposits
172
91
Trade receivables
1,376
1,583
Inventories
1,703
2,134
Prepaid expenses and other
receivables
363
323
Total current assets
4,034
4,548
Non-current assets
Deferred tax assets
152
150
Property, plant and equipment
6,329
5,969
Intangible assets
873
852
Other non-current assets
239
231
Total non-current
assets
7,593
7,202
Total assets
11,627
11,750
Current liabilities
Short-term debt
858
512
Trade payables
912
1,006
Provisions
85
81
Other payables
783
1,007
Total current
liabilities
2,638
2,606
Non-current
liabilities
Long-term debt and debentures
1,829
2,312
Deferred tax liabilities
489
423
Long-term employee
liabilities
354
402
Long-term provisions and
accruals
224
234
Other
56
60
Total non-current
liabilities
2,952
3,431
Total liabilities
5,590
6,037
Equity
Total shareholders’ equity
5,768
5,464
Non-controlling interests
269
249
Total equity
6,037
5,713
Total liabilities and
equity
11,627
11,750
Condensed Consolidated Statements of
Income (Unaudited)
(In millions except per share data)
For the three-month
period ended
For the year ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
$ millions
$ millions
$ millions
$ millions
Sales
1,690
2,091
7,536
10,015
Cost of sales
1,130
1,158
4,865
4,983
Gross profit
560
933
2,671
5,032
Selling, transport and marketing
expenses
286
281
1,093
1,181
General and administrative
expenses
71
78
260
291
Research and development
expenses
17
15
71
68
Other expenses
44
24
128
30
Other income
(7)
(5)
(22)
(54)
Operating income
149
540
1,141
3,516
Finance expenses
4
65
259
327
Finance income
29
(24)
(91)
(214)
Finance expenses, net
33
41
168
113
Share in earnings of
equity-accounted investees
1
1
1
1
Income before taxes on
income
117
500
974
3,404
Taxes on income
33
158
287
1,185
Net income
84
342
687
2,219
Net income attributable to the
non-controlling interests
17
11
40
60
Net income attributable to the
shareholders of the Company
67
331
647
2,159
Earnings per share
attributable to the shareholders of the Company:
Basic earnings per share (in
dollars)
0.05
0.26
0.50
1.68
Diluted earnings per share (in
dollars)
0.05
0.25
0.50
1.67
Weighted-average number of
ordinary shares outstanding:
Basic (in thousands)
1,289,449
1,289,100
1,289,361
1,287,304
Diluted (in thousands)
1,290,575
1,291,299
1,290,668
1,289,947
Condensed Consolidated Statements of
Cash Flows (Unaudited)
For the three-month period
ended
For the year ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
$ millions
$ millions
$ millions
$ millions
Cash flows from operating
activities
Net income
84
342
687
2,219
Adjustments for:
Depreciation and amortization
146
136
536
498
Exchange rate, interest and
derivative, net
(51)
(4)
24
157
Tax expenses
33
158
287
1,185
Change in provisions
9
(8)
(32)
(83)
Other
22
4
29
(15)
159
286
844
1,742
Change in inventories
50
(72)
465
(527)
Change in trade receivables
47
149
252
(215)
Change in trade payables
66
(100)
(101)
(42)
Change in other receivables
37
12
26
(46)
Change in other payables
16
48
(210)
107
Net change in operating assets
and liabilities
216
37
432
(723)
Interest paid, net
(37)
(38)
(115)
(106)
Income taxes paid, net of
refund
(7)
(160)
(253)
(1,107)
Net cash provided by operating
activities
415
467
1,595
2,025
Cash flows from investing
activities
Proceeds (payments) from
deposits, net
(10)
1
(88)
(36)
Purchases of property, plant and
equipment and intangible assets
(255)
(212)
(780)
(747)
Proceeds from divestiture of
assets and businesses, net of transaction expenses
-
4
4
33
Business combinations
-
-
-
(18)
Other
-
-
1
14
Net cash used in investing
activities
(265)
(207)
(863)
(754)
Cash flows from financing
activities
Dividends paid to the Company's
shareholders
(68)
(314)
(474)
(1,166)
Receipt of long-term debt
149
311
633
1,045
Repayments of long-term debt
(183)
(383)
(836)
(1,181)
Receipts (repayments) of
short-term debt
64
30
(25)
(21)
Receipts (repayments) from
transactions in derivatives
(1)
1
5
20
Dividend paid to the
non-controlling interests
-
-
(15)
-
Net cash used in financing
activities
(39)
(355)
(712)
(1,303)
Net change in cash and cash
equivalents
111
(95)
20
(32)
Cash and cash equivalents as of
the beginning of the period
307
498
417
473
Net effect of currency
translation on cash and cash equivalents
2
14
(17)
(24)
Cash and cash equivalents as
of the end of the period
420
417
420
417
Operating segment data
Industrial Products
Potash
Phosphate Solutions
Growing Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the three-month period
ended December 31, 2023
Sales to external parties
294
408
503
475
10
-
1,690
Inter-segment sales
5
66
41
3
(1)
(114)
-
Total sales
299
474
544
478
9
(114)
1,690
Segment operating income
(loss)
39
122
74
(5)
(1)
(18)
211
Other expenses not allocated to
the segments
(62)
Operating income
149
Financing expenses, net
(33)
Share in earnings of
equity-accounted investees
1
Income before income taxes
117
Depreciation and amortization
17
46
59
20
1
3
146
Capital expenditures
29
132
90
36
5
12
304
Operating segment data (cont'd)
Industrial Products
Potash
Phosphate Solutions
Growing Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the three-month period
ended December 31, 2022
Sales to external parties
343
656
574
513
5
-
2,091
Inter-segment sales
6
57
53
14
1
(131)
-
Total sales
349
713
627
527
6
(131)
2,091
Segment operating income
(loss)
95
340
116
32
(2)
(19)
562
Other expenses not allocated to
the segments
(22)
Operating income
540
Financing expenses, net
(41)
Share in earnings of
equity-accounted investees
1
Income before income taxes
500
Depreciation and amortization
15
45
49
24
1
2
136
Capital expenditures
27
92
78
38
2
7
244
Information based on geographical
location
The following table presents the
distribution of the operating segments sales by geographical
location of the customer:
10-12/2023
10-12/2022
$
millions
% of
sales
$
millions
% of
sales
Brazil
347
21
359
17
USA
295
17
333
16
China
284
17
283
14
Spain
77
5
80
4
United Kingdom
74
4
108
5
Israel
72
4
76
4
Germany
68
4
94
4
France
63
4
66
3
India
29
2
153
7
Austria
28
2
38
2
All other
353
20
501
24
Total
1,690
100
2,091
100
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227509674/en/
Investor and Press Contact – Global Peggy Reilly Tharp
VP, Global Investor Relations +1-314-983-7665
Peggy.ReillyTharp@icl-group.com
Investor and Press Contact - Israel Adi Bajayo ICL
Spokesperson +972-3-6844459 Adi.Bajayo@icl-group.com
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