Washington, D.C. 20549
ICL
GROUP LTD.
ICL Group Ltd.
P.O. Box 20245
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
This report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form S-8 (Registration Number: 333-205518) of ICL
Group Ltd. and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished. In addition, this report on Form 6-K shall be deemed to be incorporated by
reference into the Israeli Shelf Prospectus of ICL Group Ltd. filed with the Israel Securities Authority and dated February 28, 2022 (Filing Number: 2022-02-019821) and to be a part thereof from the date on which this report is filed, to the extent
not superseded by documents or reports subsequently filed or furnished.
ICL GROUP LTD.
ICL Reports Second Quarter 2024 Results
Delivers third quarter of sequential growth, with sales of $1.8 billion,
operating income of $211 million and adjusted EBITDA of $377 million
Raising guidance for specialties-driven businesses
Tel Aviv, Israel,
August 14, 2024 – ICL (NYSE: ICL) (TASE: ICL), a leading global specialty minerals company, today reported its financial results for the second quarter ended June 30, 2024. Consolidated sales were $1.75 billion versus $1.87 billion in the
prior year. Operating income was $211 million, with adjusted operating income of $225 million, versus $300 million of operating income in the second quarter of last year. Adjusted EBITDA was $377 million versus $441 million. Diluted earnings per
share were $0.09, with adjusted diluted EPS of $0.10, versus $0.13 in the second quarter of last year.
“ICL delivered sequentially improving results for the third consecutive
quarter, as we continued to build momentum by focusing on the areas under our control, including the introduction of innovative solutions and continued cost efficiencies, while managing the risks associated with geopolitical uncertainties. All
three of our specialties-driven segments were up versus the second quarter of 2023 and contributed to the sequential increase in adjusted EBITDA and margins,” said Raviv Zoller, president and CEO of ICL. “While we were ahead of our expectations in
the first half of the year, we remain cautious regarding short-term expectations for some of the end markets we serve, including electronics, housing and construction, and food.”
The company raised its guidance for full year 2024 and now expects
specialties-driven EBITDA of between $0.8 billion to $1.0 billion, an increase from previous guidance of $0.7 billion to $0.9 billion, without any change to expected potash sales volumes. (1a)
Financial Results and Business Overview
This Financial Results and Business Overview is based on the Company’s
unaudited interim condensed consolidated financial statements as of and for the six and three-month periods ended June 30, 2024 (hereinafter - Interim Financial Statements), and is prepared
in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”, unless otherwise
stated. The Financial Results and Business Overview contains certain non‑IFRS financial measures and forward-looking statements, which are described in the “Financial Figures and non‑GAAP
Financial Measures” section and the “Forward-looking Statements” section, respectively.
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 12,000 people worldwide, and its 2023 revenues totaled approximately $7.5 billion. For more information, visit the Company's website at www.icl-group.com[1].
[1] The 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.
Financial Figures and non-GAAP Financial Measures
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Adjusted operating income (1)
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Net income attributable to the Company's shareholders
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Adjusted net income attributable to the Company’s shareholders (1)
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Diluted earnings per share (in dollars)
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Diluted adjusted earnings per share (in dollars) (2)
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Cash flows from operating activities (4)
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Purchases of property, plant and equipment and intangible assets (5)
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(1) |
See “Adjustments to Reported Operating and Net income (non-GAAP)” below.
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(2) |
See "Adjusted EBITDA and Diluted Adjusted Earnings Per Share for the periods of activity" below.
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(3) |
In the first half of 2024, the Company’s adjusted EBITDA was positively impacted by an immaterial accounting reclassification. For further
information, see below in our Potash segment results.
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(4) |
Reclassified – see Note 2 to the Company's Interim Financial Statements.
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(5) |
See “Condensed consolidated statements of cash flows (unaudited)” in the accompanying financial statements.
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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 certain adjustments 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.
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.
(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. The Company provides guidance for Specialties-driven EBITDA, which includes Industrial Products, Growing Solutions and Phosphate Solutions, as the Phosphate Solutions business is now
predominantly specialties-focused. For our Potash business we provide sales volumes guidance. The Company believes this information 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)
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Charges related to the security situation in Israel (1)
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Write-off of assets and provision for site closure (2)
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Provision for early retirement (3)
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Total adjustments to operating income
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Adjusted operating income
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Net income attributable to the shareholders of the Company
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Total adjustments to operating income
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Total tax adjustments (5)
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Total adjusted net income - shareholders of the Company
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(1) |
For 2024 and 2023, reflects charges relating to the security situation in Israel.
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(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.
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(3) |
For 2023, reflects provisions for early retirement, due to restructuring at certain sites, as part of the Company’s global efficiency plan.
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(4) |
For 2023, reflects a reversal of a legal provision.
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(5) |
For 2024 and 2023, reflects the tax impact of adjustments made to operating income.
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Consolidated adjusted EBITDA and diluted adjusted Earnings Per
Share for the periods of activity
Calculation of adjusted EBITDA was made as follows:
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Less: Share in earnings of equity-accounted investees
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Depreciation and amortization
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Total adjusted EBITDA (2)
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(1) |
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
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(2) |
In the first half of 2024, the Company’s adjusted EBITDA was positively impacted by an immaterial accounting reclassification. For further
information, see below in our Potash segment results.
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Calculation of diluted adjusted earnings per share was made as follows:
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Net income attributable to the Company's shareholders
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Adjusted net income - shareholders of the Company
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Weighted-average number of diluted ordinary shares outstanding (in thousands)
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Diluted adjusted earnings per share (in dollars) (2)
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(1) |
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
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(2) |
The diluted adjusted earnings per share are calculated as follows: dividing the adjusted net income attributable to the shareholders of the
Company by the weighted-average number of diluted ordinary shares outstanding (in thousands).
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Events in the reporting period
The security situation in Israel since October 2023, when the Israeli
government declared a state of war in response to attacks on its civilians, has posed several challenges. These include some disruptions in supply chains, a shortage of personnel due to mobilization for reserve duty, and fluctuations in foreign
currency exchange rates relative to the Israeli shekel. Regional tensions involving Houthis attacks and threats on commercial ships have intensified, leading to disruptions in shipping routes and commercial shipping arrangements, as well as
increased shipping costs.
The Company has taken measures to ensure the safety of its employees and
business partners, as well as the communities in which it operates. Additionally, it has implemented supportive measures to accommodate employees who are called for reserve duty, to minimize any potential impact on its business, including avoidance
of disruption to production activities at its facilities in Israel.
The security situation in recent months has not had a material impact on
the Company's business results. However, as the developments related to the war, as well as its duration, are unpredictable, the Company is unable to estimate the extent of the war’s potential impact on its future business and results. The Company
continuously monitors developments and will take all necessary actions to minimize any negative consequences to its operations and assets.
Consolidated Results Analysis
Results analysis for the period April – June 2024
* See "Adjustments to reported Operating and Net income (non-GAAP)"
above.
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Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of bromine-based flame retardants,
elemental bromine, specialty agriculture and FertilizerpluS products, turf and ornamental products, magnesium, phosphate fertilizers, white phosphoric acid (WPA), and salts. This impact was partially offset by lower sales volumes of potash.
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Price – The negative impact on operating income was primarily related to a decrease of $103 in the price of potash (CIF) per tonne
year-over-year, as well as a decrease in selling prices of magnesium, WPA, phosphate-based food additives, salts, bromine and phosphorus-based flame retardants, bromine-based industrial solutions, specialty minerals products, specialty
agriculture and FertilizerpluS products. This impact was partially offset by higher sales price of phosphate fertilizers.
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Exchange rates – The favorable impact on operating income was due to the positive impact on operational costs resulting from the depreciation
of the average exchange rate of the Israeli shekel, the Brazilian real, the euro, and the Chinese yuan against the US dollar, partially offset by a negative impact on sales resulting from the depreciation of the average exchange rate of the
Brazilian real and the Chinese yuan against the US dollar.
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Raw materials – The positive impact on operating income was primarily due to the lower costs of sulphur, commodity fertilizers, potassium
hydroxide (KOH), caustic soda, and ammonia.
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Energy – The positive impact on operating income was due to decreased electricity and gas prices.
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Operating and other expenses – The positive impact on operating income was primarily due to lower operational costs.
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The following table sets forth sales by geographical regions based on
the location of the customers:
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Europe – The decrease in sales was primarily due to lower sales
of potash, WPA, specialty agriculture products and phosphate-based food additives, as lower selling prices offset higher volumes. This decrease was partially offset by higher sales of FertilizerpluS products, phosphate fertilizers, bromine-based flame retardants, specialty minerals,
magnesium and salts, as higher sales volumes offset lower
selling prices
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Asia – The decrease in sales was primarily due to lower selling prices and sales volumes of potash, as well as lower sales volumes
of clear brines fluids. This decrease was partially offset by higher sales of bromine-based flame retardants, elemental bromine, specialty agriculture products and WPA, as
higher sales volumes offset lower selling prices, together with higher sales volumes and selling prices of phosphate fertilizers and higher sales volumes of MAP used as raw materials for energy storage solutions.
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Financing expenses, net
Net financing expenses in the second quarter of 2024 amounted to $33
million, compared to $49 million in the corresponding quarter last year, a decrease of $16 million. This decrease is mainly due to a reduction of $9 million in losses from hedging transactions and a decrease of $4 million in net interest expenses.
Tax expenses
In the second quarter of 2024, the Company’s reported tax expenses
amounted to $48 million, compared to $84 million in the corresponding quarter of last year, reflecting an effective tax rate of 27% and 33%, respectively. The Company’s relatively lower effective tax rate for this quarter, reflected a lower surplus profit levy mainly due to a decrease in potash prices.
Results analysis for the period January – June 2024
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Total adjustments YTD 2023*
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Adjusted YTD 2023 figures
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Operating and other expenses
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Adjusted YTD 2024 figures
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Total adjustments YTD 2024*
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* See "Adjustments to reported operating and net
income (non-GAAP)" above.
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Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of bromine-based flame retardants,
elemental bromine, magnesium, specialty agriculture products and FertilizerpluS products, turf and ornamental products, MAP used as raw materials for energy storage solutions, and phosphate fertilizers. This impact was partially offset by
lower sales volumes of phosphorus-based industrial solutions and white phosphoric acid (WPA).
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Price – The negative impact on operating income was primarily related to a decrease of $141 in the price of potash (CIF) per tonne
year-over-year, as well as a decrease in selling prices of magnesium, specialty agriculture and FertilizerpluS products, turf and ornamental products, bromine-based industrial solutions, bromine and phosphorus-based flame retardants,
specialty minerals products, WPA, salts, MAP used as raw materials for energy storage solutions, and phosphate fertilizers.
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Exchange rates - The favorable impact on operating income was due to the positive impact on operational costs resulting from the depreciation
of the average exchange rate of the Israeli shekel, the Chinese yuan, and the Brazilian real against the US dollar, partially offset by a negative impact on sales resulting from the depreciation of the average exchange rate of the Chinese
yuan and the Brazilian real against the US dollar.
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Raw materials - The positive impact on operating income was primarily due to lower costs of commodity fertilizers, sulphur, potassium
hydroxide (KOH), caustic soda, ammonia, and raw materials used in the production of industrial solutions products.
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Energy – The positive impact on operating income was due to decreased electricity and gas prices.
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Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs, as well as lower
royalty payments.
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The following table sets forth sales by geographical regions based on
the location of the customers:
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Europe – The decrease in sales was primarily due to lower sales of potash, specialty agriculture products, white phosphoric acid
(WPA), phosphate-based food additives, salts, bromine-based flame retardants and elemental bromine, as higher sales volumes were offset by lower selling prices. This decrease was partially offset by higher sales of FertilizerpluS
products, phosphate fertilizers and magnesium, as higher sales volumes offset lower selling prices, together with a positive impact resulting from the appreciation of the average exchange rate of the euro against the US dollar.
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Asia – The decrease in sales was primarily due to lower selling prices and sales volumes of potash and specialty minerals products, as
well as lower sales of WPA as lower selling prices offset higher sales volumes, together with a negative impact resulting from the depreciation of the average exchange rate of the Chinese yuan against the US dollar. This decrease in sales
was partially offset by higher sales of bromine-based flame retardant, elemental bromine, phosphate fertilizer, specialty agriculture products and MAP used as raw materials for
energy storage solutions, as increased sales volumes outweighed lower selling prices.
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South America – The decrease in sales was primarily due to lower selling prices and sales volumes of FertilizerpluS products,
phosphate fertilizers, WPA and phosphate-based food additives, as well as lower sales of potash, as higher sales volumes were offset by lower selling prices, together with a negative impact resulting from the depreciation of the average
exchange rate to the Brazilian real against the US dollar. This decrease in sales was partially offset by higher sales of specialty agriculture products and magnesium, as higher sales volumes offset lower selling prices.
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North America – The decrease in sales was primarily due to lower sales volumes and selling prices of WPA, phosphate-based food
additives, salts, phosphorous-based flame retardant and phosphorous-based industrial solutions, as well as lower sales of magnesium, potash, specialty agriculture products and clear brines fluids, as higher sales volumes were offset by
lower selling prices. This decrease in sales was partially offset by higher sales of turf and ornamental products, as increased sales volumes outweighed lower selling prices.
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Rest of the world – The decrease in sales was primarily due to lower sales volumes and selling prices of specialty agriculture
products, which was partially offset by higher sales of potash and phosphate fertilizers, as higher sales volumes offset lower selling prices.
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Financing expenses, net
Net financing expenses for the six-month period ended June 30, 2024,
amounted to $68 million, compared to $93 million in the corresponding period last year, a decrease of $25 million. This reduction is primarily due to a decrease of $25 million in losses from hedging transactions and a $6 million in net interest
expenses. This was partially offset by a reduction of $6 million in income from long-term employee benefits provisions and lease revaluation, which resulted from lower depreciation of the Israeli shekel against the US dollar compared to the
corresponding period.
Tax expenses
For the six-month period ended June 30, 2024, the Company's reported tax
expenses amounted to $90 million, compared to $211 million in the corresponding period of last year, reflecting an effective tax rate of 26% and 31%, respectively. The Company’s relatively lower effective tax rate for this period, reflected a lower
surplus profit levy mainly due to a decrease in potash prices.
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 and key indicators
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Sales to external customers
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Sales to internal customers
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Depreciation and amortization
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Highlights and business environment
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Elemental bromine sales increased year-over-year, as higher volumes offset lower bromine prices.
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Bromine-based flame retardants sales increased year-over-year with higher volumes partially offset by lower prices, as demand in the electronics and
construction end-markets remained soft.
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Phosphorus-based flame retardants sales decreased year-over-year due to lower prices with soft demand and strong competition in the construction
end-market.
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Clear brine fluids sales decreased year-over-year mainly due to lower volumes.
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Specialty minerals sales decreased year-over-year, driven by lower sales of KCl due to reduced prices amid stronger competition.
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Results analysis for the period April – June 2024
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Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of bromine-based flame retardants,
elemental bromine and specialty minerals. This was partially offset by lower sales volumes of clear brine fluids and phosphorus-based industrial solutions.
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Price – The negative impact on operating income was primarily due to lower selling prices of bromine-based industrial solutions, bromine and
phosphorus-based flame retardants, as well as specialty minerals.
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Exchange rates – The favorable impact on operating income was 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.
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Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs.
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Results analysis for the period January – June 2024
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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 impact was partially offset by lower sales volumes of clear brine fluids and phosphorus-based industrial solutions.
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Price – The negative impact on operating income was due to lower selling prices of bromine-based industrial solutions, bromine and
phosphorus-based flame retardants, and specialty minerals.
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Exchange rates – The favorable impact on operating income was 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.
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Raw materials – The positive impact on operating income was due to decreased costs of raw materials.
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Transportation – The positive impact on operating income was due to a decrease in marine and in-land transportation costs.
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Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs.
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Potash
The Potash segment produces and sells mainly potash, salts, magnesium
and electricity. Potash is produced in Israel using an evaporation process to extract potash 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 (surplus electricity is sold to external customers).
Results of operations and key indicators
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Potash sales to external customers
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Potash sales to internal customers
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Other and eliminations (1)
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Depreciation and amortization (2)
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Potash price - CIF ($ per tonne)
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(1) |
Primarily includes salt produced in Spain, metal magnesium-based products, chlorine,
and sales of surplus electricity produced by ICL’s power plant at the Dead Sea in Israel.
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(2) |
In the first half and in Q2 2024, the Potash segment's EBITDA increased by $32 million and by $16 million, respectively, following an immaterial
accounting reclassification of certain assets.
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Highlights and business environment
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ICL's potash price (CIF) per tonne of $300 in the second quarter was 7% lower than the first quarter and 26% lower year-over-year.
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The Grain Price Index increased by 2.7% during the quarter. Corn, wheat, and rice prices were 4.5%, 5.3% and 1.7% higher, respectively, while soy
prices continued to weaken, falling by 0.5%.
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The WASDE (World Agricultural Supply and Demand Estimates) report, published by the USDA in July 2024, showed a continued decrease in the expected
ratio of global inventories of grains to consumption to 27.3% for the 2024/25 agriculture year, compared to 27.5% for the 2023/24 agricultural year and a five-year average of 28.8%.
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In July 2024, as part of ICL's 2022-2024 Chinese framework agreements, ICL
signed contracts with its Chinese customers to supply 840,000 tonnes of potash at a price of $273 per tonne, which aligns with recent contract settlements.
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Additional segment information
Global potash market - average prices and imports:
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Granular potash – Northwest Europe
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CIF spot/contract
(€ per tonne)
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Standard potash – Southeast Asia
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Sources: CRU (Fertilizer Week July 2024), FAI,
SIACESP (Brazil) & Chinese customs.
Potash – Production and Sales
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Total sales (including internal sales)
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Second quarter 2024
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- |
Production – Production was stable year-over-year.
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- |
Sales – The quantity of potash sold was 108 thousand tonnes lower year-over-year mainly due to decreased sales volumes in India, the US and
China, partially offset by higher sales volumes in Brazil and Europe.
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First half 2024
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- |
Production – Production was 58 thousand tonnes higher year-over-year, mainly due to operational improvements.
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Sales – The quantity of potash sold was 13 thousand tonnes higher year-over-year, mainly due to higher sales volumes in Europe, Brazil and
the US, partially offset by lower sales volumes in India and China.
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Results analysis for the period April – June 2024
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- |
Quantity – The negative impact on operating income primarily related to a decrease in sales volumes of potash to India, the US, and China,
partially offset by higher sales volumes in Brazil and Europe, as well as an increase in sales volumes of magnesium.
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Price – The negative impact on operating income resulted primarily from a decrease of $103 in the potash price (CIF) per tonne,
year-over-year.
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Exchange rates – The favorable impact on operating income was due to a positive impact on operational costs resulting from the depreciation
of the average exchange rate of the Israeli shekel against the US dollar.
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Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs.
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Results analysis for the period January – June 2024
|
- |
Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of magnesium as well as an increase
in sales volumes of potash in Europe, Brazil, and the US, partially offset by lower sales volumes of potash to India and China.
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Price – The negative impact on operating income resulted primarily from a decrease of $141 in the potash price (CIF) per tonne,
year-over-year.
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Exchange rates – The favorable impact on operating income was due to a 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 a positive impact on sales resulting from the appreciation of the average exchange rate of the euro against the US dollar.
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Energy – The positive impact on operating income was primarily due to decreased electricity and gas prices.
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Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs and royalty payments.
|
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.
Results of operations and key indicators (1)
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Sales to external customers
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Sales to internal customers
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Depreciation and amortization
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(1) |
In alignment with the Company’s efficiency plan, which includes a change of reporting responsibilities as of January 2024, the results of a
non-phosphate related business were allocated from the Phosphate Solutions segment to Other Activities. Comparative figures have been restated to reflect the organizational change in the reportable segments.
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(2) |
For Q2 2024, Phosphate Specialties comprised $325 million of segment sales, $46 million of operating income, $11 million of D&A and represented
$57 million of EBITDA, while Phosphate Commodities comprised $247 million of segment sales, $47 million of operating income, $42 million of D&A and represented $89 million of EBITDA.
|
Significant Highlights
|
• |
Phosphate prices began the quarter stable-to-weak but firmed up late in the quarter driven by a renewed lack of availability and tight stocks.
Whereas key benchmarks were 2% lower quarter-over-quarter, the trend turned increasingly positive through June 2024.
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|
• |
Developments in key markets are described in detail below:
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|
- |
Chinese export DAP prices fell by $68/t by the end of May, as product allocations were shifted from domestic to international markets late in the
first quarter, and export availability improved. A similar but more pronounced trend on nitrogen led to the rapid depletion of local urea stocks and a renewal of local inflationary concerns. This prompted the government to burden exports,
and towards the end of the quarter, global prices began to recover.
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As a result of the reduced phosphate subsidy on DAP imports in the first quarter, Indian importers managed to decrease prices early in the second
quarter. The improved Chinese availability spurred competition and lowered DAP CFR India prices. This improved distribution affordability and increased buying interest. However, as Chinese export inspections started to slow, prices began to
recover and by the end of the quarter, the DAP CFR India price reached $539/mt.
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- |
Following an active first quarter, US imports slowed in April and May as planting seasons began. Lower corn prices led the USDA (United States
Department of Agriculture) to cut its planting acreage to just 90M (5M lower than last year). This weighed on sentiment and subsequently reduced fertilizer prices. DAP FOB Nola decreased to $565/mt by mid-May. Prices subsequently rose by
$39/mt by the end of the quarter, due to improved corn planting estimates (+1.5M acres) and tight DAP/MAP availability.
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- |
For much of the first half of 2024, Brazilian MAP prices remained steady, trading between $560 and $575/t. However, with MAP imports running behind
2023, limited supplies from Morocco and the US, and the prospect of a large soybean area increase for Safra 2024/25, phosphate prices began to rise in June, ending the quarter with an MAP CFR Brazil price of $615/t.
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• |
Indian phosphoric acid prices are negotiated on a quarterly basis. The second quarter price was agreed at $948/t P2O5, $20 lower than the first
quarter of 2024.
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• |
Sulphur FOB Middle East prices ended the second quarter at $82/t, similar to prevailing levels at the end of the first quarter.
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• |
While food specialties volumes increased year-over-year, global revenue declined due to lower prices in line with decreasing input costs. Industrial
salts revenue saw a downturn compared to the previous year, driven by price adjustments reflecting decreasing input costs, partly offset by a year-over-year volume increase noticeable in Europe.
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• |
Sales of white phosphoric acid (WPA) decreased year-over-year due to decreased selling prices in all regions, partially offset by an increase in
volumes, especially in Europe and Asia.
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• |
Sales of battery materials in Asia increased year-over-year as the Company continues to execute its long-term strategy to provide commercial
solutions for the energy storage systems (ESS) market. The increase in sales was driven mainly by higher sales volumes.
|
Additional segment information
Global phosphate commodities market - average prices:
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CPT Brazil inland 18-20% P2O5 Bulk Spot
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Bulk FOB Adnoc monthly Bulk contract
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Source: CRU (Fertilizer Week Historical Prices,
July 2024).
Results analysis for the period April – June 2024
|
- |
Quantity – The positive impact on operating income was primarily related to higher sales volumes of phosphate fertilizers, white phosphoric
acid (WPA), salts, MAP used for energy storage solutions and phosphate-based food additives.
|
|
- |
Price – The negative impact on operating income was primarily due to lower selling prices of WPA, phosphate-based food additives and salts.
This was partially offset by higher selling prices of phosphate fertilizers.
|
|
- |
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 and the Chinese yuan against the US dollar which exceeded the negative impact on sales resulting from the depreciation of the average exchange rate of the Chinese yuan against
the US dollar.
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|
- |
Raw materials –The positive impact on operating income was mainly due to lower costs of sulphur, caustic soda and potassium hydroxide (KOH).
|
Results analysis for the period January – June 2024
|
- |
Quantity – The positive impact on operating income was due to higher sales volumes of phosphate fertilizers, MAP used for energy storage
solutions and salts. This was partially offset by lower sales volumes of WPA and phosphate-based food additives.
|
|
- |
Price – The negative impact on operating income was primarily related to lower selling prices of WPA, phosphate-based food additives, salts,
phosphate fertilizers and MAP used for energy storage solutions.
|
|
- |
Exchange rates – The favorable impact on operating income was due to the positive impact on operational costs resulting from the depreciation
of the average exchange rate of the Israeli shekel and the Chinese yuan against the US dollar, which exceeded the negative impact on sales resulting from the depreciation of the average exchange rate of the Chinese yuan against the US
dollar.
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|
- |
Raw materials – The positive impact on operating income was due to lower costs of sulphur, caustic soda, and potassium hydroxide (KOH).
|
|
- |
Operating and other expenses – The positive impact on operating income 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
leverages 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. The segment continuously works to expand its broad portfolio of specialty plant nutrition, plant stimulation and plant health solutions, which consists of enhanced efficiency and controlled release fertilizers (CRF),
water-soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid), FertilizerpluS, soil and foliar micronutrients, biostimulants, soil conditioners, seed treatment products and adjuvants.
Results of operations and key indicators
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Sales to external customers
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Sales to internal customers
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Depreciation and amortization
|
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|
|
|
|
|
Highlights and business environment
|
• |
FertilizerpluS: Sales increased year-over-year as higher sales volumes offset lower prices, with increased demand mainly in Europe and China.
|
|
• |
Specialty Agriculture (SA): Sales increased year-over-year due to higher sales volumes, partially offset by lower prices, mainly in
Biostimulants and water-soluble fertilizers, with increased demand in Brazil, China and India.
|
|
• |
Turf and Ornamental (T&O): Sales increased year-over-year, primarily due to higher sales of ornamental horticulture, with increased demand in
all regions, mainly in CRF Ornamental and SRF. However, Turf and landscape sales slightly decreased as higher volumes, mostly in CRF Turf, were unable to offset lower prices.
|
|
• |
As part of the Company’s goal to expand its Growing Solutions’ product offerings, in July 2024, the Company completed the acquisition of Custom Ag
Formulators (hereinafter - CAF), a North American provider of customized agriculture formulations and products for growers. CAF offers a diverse assortment of liquid adjuvants and enhanced nutrients, as well as various other specialty
products.
|
|
• |
In the second quarter of 2024, the collaboration with Lavie Bio Ltd. to develop novel bio-stimulant products to enrich fertilizer efficiency,
achieved significant progress, identifying over a dozen novel microbe-based solutions through AI-driven technologies. Field trials are planned in the US and Brazil for the second half of 2024, with regulatory processes anticipated to begin
in 2026.
|
Results analysis for the period April – June 2024
|
- |
Quantity – The positive impact on operating income was primarily related to higher sales volumes of specialty agriculture and FertilizerpluS
products, as well as turf and ornamental products.
|
|
- |
Price – The negative impact on operating income was due to lower selling prices of specialty agriculture and FertilizerpluS products, as well
as turf and ornamental products.
|
|
- |
Exchange rates – The unfavorable impact on operating income was due to the negative impact on sales resulting from the depreciation of the
average exchange rate of the Brazilian real, the euro and the Chinese yuan against the US dollar, which was partially offset by a positive impact on operational costs resulting from the depreciation of the average exchange rate of the
Brazilian real and the euro against the US dollar.
|
|
- |
Raw materials – The positive impact on operating income primarily related to lower costs of commodity fertilizers, potassium hydroxide (KOH)
and ammonia.
|
|
- |
Operating and other expenses – The negative impact on operating income primarily related to higher maintenance and operational costs.
|
Results analysis for the period January – June 2024
|
- |
Quantity – The positive impact on operating income was primarily related to higher sales volumes of specialty agriculture and FertilizerpluS
products, as well as turf and ornamental products.
|
|
- |
Price – The negative impact on operating income was due to lower selling prices of FertilizerpluS and specialty agriculture products, as well
as turf and ornamental products.
|
|
- |
Exchange rates – The unfavorable impact on operating income was due to the negative impact on sales resulting from the depreciation of the
average exchange rate of the Brazilian real, Israeli shekel and the Chinese yuan against the US dollar, which slightly exceeded their positive impact on operational costs.
|
|
- |
Raw materials - The positive impact on operating income was primarily related to lower costs of commodity fertilizers, potassium hydroxide
(KOH), ammonia and caustic soda.
|
|
- |
Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs.
|
Liquidity and Capital Resources
Net cash provided by operating activities
In the second quarter,
cash flow provided by operating activities amounted to $316 million, compared to $433 million in the corresponding quarter last year. This decrease was mainly due to lower operating profit and changes in working capital.
Net cash used in investing activities
In the second quarter, net cash used in investing activities amounted to
$125 million, compared to $202 million in the corresponding quarter last year. This decrease was mainly due to proceeds received from deposits and lower payments for property, plant and equipment.
Net cash used in financing activities
In the second quarter, net cash used in financing activities amounted to
$263 million, compared to $393 million in the corresponding quarter last year. This decrease was mainly due to receipt of long-term debt and lower dividend payments.
As of June 30, 2024, ICL’s net financial liabilities amounted to $2,031
million, a decrease of $64 million compared to December 31, 2023.
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. in April 2024, all lenders exercised the option to extend the agreement by one year, until April
2029.
As of June 30, 2024, the Company had utilized $417 million out of the
$1,550 million credit facility framework.
Securitization
The total amount of the Company's committed securitization facility
framework is $300 million and an additional $100 million uncommitted. As of June 30, 2024, ICL had utilized approximately $177 million of the facility’s framework.
ICL Group Limited Q2 2024 Results 28
Ratings and financial covenants
Fitch Ratings
In June 2024, 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 Rating
Subsequent to the date of this report, in July 2024, 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 June 30, 2024, the Company was in compliance with all of its
financial covenants stipulated in its financing agreements.
Critical Accounting Estimates
In the six and three month periods ended June 30, 2024, there were no
material changes in the critical accounting estimates previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2023.
Board of Directors and Senior Management Updates
Mr. Shalom Shlomo was appointed to the Board of Directors, effective as
of January 1, 2024, to serve until the next annual general meeting of shareholders of the Company.
As of May 8, 2024, Ms. Maya Grinfeld, ICL’s VP, Marketing and
Communication, is considered an office holder of the Company.
On July 17, 2024, at the Company’s 2024 Annual General Meeting of
Shareholders (the "AGM"), the shareholders approved the following resolutions: (a) the re-election of Yoav Doppelt, Aviad Kaufman, Avisar Paz, Sagi Kabla, Reem Aminoach, Lior Reitblatt, Tzipi Ozer Armon, Gadi Lesin, Michal Silverberg and Shalom
Shlomo to serve as directors of the Company, effective as of the date of the AGM, until the next annual general meeting of shareholders of the Company or until any of their earlier resignation or removal; (b) the re-election of Dr. Miriam Haran as
an external director (within the meaning of the Israeli Companies Law, 1999) for a second three-year term; (c) an amendment to the Company’s Articles of Association in order to allow for indemnification and insurance of directors and officers under
the Israeli Economic Competition Law, 1988 (the “Israeli Competition Law”); (d) an amendment to the exemption, insurance and indemnification undertaking letter issued by the Company to each of its directors and officers to allow for indemnification
and insurance in connection with proceedings under the Israeli Competition Law; and, (e) the reappointment of Somekh Chaikin, a Member Firm of KPMG International, as the Company’s independent auditor until the next annual general meeting of
shareholders of the Company.
On July 18, 2024, the Company’s Board of Directors determined that Mr.
Avisar Paz qualifies as an independent director under the New York Stock Exchange corporate governance standards.
In the six and three month periods ended June 30, 2024, there were no
material changes in the risk factors previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2023.
Quantitative and Qualitative Exposures stemming from Market Risks
Reference is made to “Item 11 – Quantitative and Qualitative Disclosures
about Market Risks” in our Annual Report on Form 20-F for the year ended December 31, 2023.
For further information regarding legal proceedings and other
contingencies, see Note 6 to the Company's Interim Financial Statements.
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. The Company is relying on the safe harbor provided in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in making such forward-looking statements.
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:
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; litigation, arbitration and regulatory proceedings; disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; changes in exchange rates or prices compared to those
we are currently experiencing; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; pandemics may create disruptions, impacting our sales,
operations, supply chain and customers; 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; 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; 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; The Company is exposed to risks relating
to its current and future activity in emerging markets; 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; disruption of our, or our service providers', sales of our magnesium products being affected by various factors that are not within our control; 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; 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; 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; closing of transactions, mergers and acquisitions; 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, 2023, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 14, 2024 (the “Annual Report”).
Forward‑looking statements speak only as of the date
they are made, and, except as otherwise required by law, 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, targets or goals in order to
reflect later events or circumstances or to reflect the occurrence of unanticipated events. Investors are cautioned to consider these risk and uncertainties and to not place undue reliance on such information. Forward-looking statements should not
be read as a guarantee of future performance or results and are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward-looking statements.
This report for the second quarter of 2024 (the
“Quarterly Report”) should be read in conjunction with the Annual Report of 2023 published by the Company on Form 20-F and the report for the first quarter of 2024 published by the Company (the "prior quarterly report"), including the description
of events occurring subsequent to the date of the statement of financial position, as filed with the US SEC.
Condensed Consolidated Statements of Financial Position as of (Unaudited)
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Cash and cash equivalents
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Short-term investments and deposits
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Prepaid expenses and other receivables
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Property, plant and equipment
|
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Total current liabilities
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Long-term debt and debentures
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Long-term employee liabilities
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Long-term provisions and accruals
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Total non-current liabilities
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Total shareholders’ equity
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Non-controlling interests
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Total liabilities and equity
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The accompanying notes are an integral part of these condensed consolidated interim financial statements.
ICL Group Limited Quarterly Report 32
Condensed Consolidated Statements of Income (Unaudited)
(In millions except per share data)
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For the three-month period ended
June 30
|
For the six-month period ended
June 30
|
For the year ended December 31
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Selling, transport and marketing expenses
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General and administrative expenses
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Research and development expenses
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Share in earnings of equity-accounted investees
|
|
|
|
|
|
| |
|
|
|
|
|
Income before taxes on income
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Net income attributable to the non-controlling interests
|
|
|
|
|
|
| |
|
|
|
|
|
Net income attributable to the shareholders of the Company
|
|
|
|
|
|
| |
|
|
|
|
|
Earnings per share attributable to the shareholders of the Company:
|
|
|
|
|
|
| |
|
|
|
|
|
Basic earnings per share (in dollars)
|
|
|
|
|
|
| |
|
|
|
|
|
Diluted earnings per share (in dollars)
|
|
|
|
|
|
| |
|
|
|
|
|
Weighted-average number of ordinary shares outstanding:
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim
financial statements.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
| |
For the three-month period ended
|
For the six-month period ended
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Components of other comprehensive income that will be reclassified subsequently to net income
|
|
|
|
|
|
Foreign currency translation differences
|
|
|
|
|
|
Change in fair value of cash flow hedges transferred to the statement of income
|
|
|
|
|
|
Effective portion of the change in fair value of cash flow hedges
|
|
|
|
|
|
Tax relating to items that will be reclassified subsequently to net income
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
Components of other comprehensive income that will not be reclassified to net income
|
|
|
|
|
|
Actuarial gains from defined benefit plans
|
|
|
|
|
|
Tax relating to items that will not be reclassified to net income
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
| |
|
|
|
|
|
Comprehensive income (loss) attributable to the non-controlling interests
|
|
|
|
|
|
| |
|
|
|
|
|
Comprehensive income attributable to the shareholders of the Company
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Condensed Consolidated Statements of Cash Flows (Unaudited)
| |
For the three-month period ended
|
For the six-month period ended
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
Exchange rate, interest and derivative, net
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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| |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Change in trade receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in operating assets and liabilities
|
|
|
|
|
|
| |
|
|
|
|
|
Income taxes paid, net of refund
|
|
|
|
|
|
| |
|
|
|
|
|
Net cash provided by operating activities (*)
|
|
|
|
|
|
| |
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Proceeds (payments) from deposits, net
|
|
|
|
|
|
Purchases of property, plant and equipment and intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from divestiture of assets and businesses, net of transaction expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
| |
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Dividends paid to the Company's shareholders
|
|
|
|
|
|
Receipt of long-term debt
|
|
|
|
|
|
Repayments of long-term debt
|
|
|
|
|
|
Repayments of short-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
Receipts from transactions in derivatives
|
|
|
|
|
|
Dividend paid to the non-controlling interests
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
|
| |
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
|
|
|
Cash and cash equivalents as of the beginning of the period
|
|
|
|
|
|
Net effect of currency translation on cash and cash equivalents
|
|
|
|
|
|
Cash and cash equivalents as of the end of the period
|
|
|
|
|
|
(*) Reclassification - see Note 2 below.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
| |
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
| |
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
| |
|
For the three-month period ended June 30, 2024
|
|
|
|
|
|
|
|
|
|
Balance as of April 1, 2024
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2024
|
|
|
|
|
|
|
|
|
|
| |
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
| |
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
| |
|
For the three-month period ended June 30, 2023
|
|
|
|
|
|
|
|
|
|
Balance as of April 1, 2023
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2023
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
ICL Group Limited Quarterly Report 36
Condensed Consolidated Statements of Changes in Equity (Unaudited)
| |
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
| |
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
| |
|
For the six-month period ended June 30, 2024
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2024
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2024
|
|
|
|
|
|
|
|
|
|
| |
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
| |
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
| |
|
For the six-month period ended June 30, 2023
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2023
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2023
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
ICL Group Limited Quarterly Report 37
Condensed Consolidated Statements of Changes in Equity (Unaudited) (cont'd)
| |
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
| |
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
| |
|
For the year ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2023
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2023
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Ltd. (hereinafter – the Company), is a company incorporated
and domiciled in Israel. The Company's shares are traded on both the Tel-Aviv Stock Exchange (TASE) and the New York Stock Exchange (NYSE) under the ticker: ICL. The address of the Company’s registered headquarters is 23 Aranha St., Tel Aviv,
Israel. The Company is a subsidiary of Israel Corporation Ltd., a public company traded on the TASE under the ticker: ILCO:TA. The State of Israel holds a Special State Share in ICL and in some of its subsidiaries, entitling the State the right
to safeguard the State of Israel vital interests.
The Company,
together with its subsidiaries, associated companies and joint ventures (hereinafter ‑ the Group or ICL), is a leading specialty minerals group that operates a unique, integrated business
model. The Company competitively extracts certain minerals as raw materials and utilizes processing and product formulation technologies to add value to customers in two main end-markets: agriculture and industrial (including food). ICL’s
products are used mainly in agriculture, electronics, food, fuel and gas exploration, water purification and desalination, construction, detergents, cosmetics, pharmaceuticals and automotive.
|
B. |
Events in the reporting period
|
The security situation in Israel since October 2023, when the Israeli
government declared a state of war in response to attacks on civilians, has posed several challenges. These include some disruptions in supply chains, a shortage of personnel due to mobilization for reserve duty, and fluctuations in foreign
currency exchange rates relative to the Israeli shekel.
Regional tensions involving Houthis attacks and threats on commercial
ships have intensified, leading to disruptions in shipping routes and commercial shipping arrangements, as well as increased shipping costs.
The Company has taken measures to ensure the safety of its employees and
business partners, as well as the communities in which it operates. Additionally, it has implemented supportive measures to accommodate employees who are called for reserve duty, to minimize any potential impact on its business, including avoidance
of disruption to production activities at its facilities in Israel.
The security situation in recent months has not had a material impact on
the Company's business results. However, as the developments related to the war, as well as its duration, are unpredictable, the Company is unable to estimate the extent of the war’s potential impact on its future business and results. The Company
continuously monitors developments and will take all necessary actions to minimize any negative consequences to its operations and assets.
ICL Group Limited Quarterly Report 39
Note 2 – Significant Accounting Policies
The Company's financial statements are prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (IASB) and the Company uses IFRS as its generally accepted accounting principles (“GAAP”).
The condensed consolidated interim financial statements were prepared
in accordance with IAS 34, “Interim Financial Reporting” and do not include all the information required in complete, annual financial statements. These condensed consolidated interim financial statements and notes are unaudited and should be
read together with the Company's audited financial statements included in its Annual Report on Form 20-F for the year ended December 31, 2023 (hereinafter – the Annual Financial Statements), as filed with the Securities and Exchange Commission
("SEC").
The accounting policies and assumptions used in preparation of these
condensed consolidated interim financial statements are consistent with those used in preparation of the Company's Annual Financial Statements and in the Company's opinion, include all
the adjustments necessary to fairly present such information. Interim results are not necessarily indicative of the Company's expected results for the entire year.
Reclassifications
The Company made a number of insignificant reclassifications in
comparative figures in order to adjust them to the manner of classification in the current financial statements. The said reclassifications have no effect on the total profit (loss).
Nonetheless, commencing with the second quarter of 2024, management
decided to reclassify interest received as cash flows from investing activities and interest paid as cash flows from financing activities, instead of under cash provided by operating activities. Management believes that the revised classification
provides a more comprehensive view of the financing cost and the nature of financing transactions. Comparative figures have been retrospectively adjusted in the statement of cash flows to reflect this policy change.
|
B. |
Amendments to standards and interpretations that have not yet been adopted
|
IFRS 18, presentation and
disclosure in the financial statements
This standard replaces the international accounting standard IAS 1 Presentation of financial statements. As part of the new disclosure requirements, companies will be required to present new defined subtotals in the statements of income: operating profit and profit before
financing and tax. In addition, income statement items will be classified into three defined categories: operating, investment and financing. The standard also includes a requirement to provide a separate disclosure in the financial statements
regarding the use of management-defined performance measures ("non-GAAP" measures), and specific instructions were added for the grouping and splitting of items in the financial statements and in the notes. IFRS 18 is effective for annual reporting
periods beginning on or after 1 January 2027, with an option for early adoption.
Note 3 - Operating Segments
1. Information on operating segments
ICL is a global specialty minerals company operating bromine, potash and phosphate mineral value chains in a unique, integrated business model. Our operations are organized under four segments: Industrial Products, Potash, Phosphate Solutions and
Growing Solutions.
Industrial Products – The
Industrial Products segment produces bromine derived from a solution that is a by‑product of the potash production process in Sodom, Israel, as well as bromine‑based compounds. Industrial Products uses most of the bromine it produces for its own
production of bromine compounds at its production sites in Israel, the Netherlands and China. In addition, the Industrial Products segment produces several grades of salt, magnesium chloride and some other specialty mineral products. Industrial
Products is also engaged in the production and marketing of phosphorous-based flame retardants and additional phosphorus‑based products.
Potash – The Potash segment
produces and sells primarily potash, salt, magnesium, as well as electricity. Potash is produced in Israel and Spain using an evaporation process
to extract potash from the Dead Sea in Israel, and from conventional mining of an underground mine in Spain. The segment also produces and sells pure magnesium and magnesium alloys, as
well as chlorine and sylvinite. In addition, the segment sells salt products produced at its potash site in Spain. The Company operates a power plant in Sodom which supplies electricity to ICL companies in Israel (as well as surplus electricity
to external customers) and steam to all facilities at the Sodom site.
Phosphate Solutions – The
Phosphate Solutions segment is based on a phosphate value chain which uses phosphate commodity products, such as phosphate rock and fertilizer-grade phosphoric acid (“green phosphoric acid”), to produce specialty products with higher added value.
The segment also produces and markets phosphate-based fertilizers. Phosphate rock is mined and processed from open pit mines, three of which are located in the Negev Desert in Israel,
while the fourth is situated in Yunnan province in China. Sulphuric acid, green phosphoric acid and phosphate fertilizers are also produced in the facilities in Israel and China.
The Phosphate Solutions segment manufactures pure phosphoric acid by
purifying green phosphoric acid. Pure phosphoric acid and green phosphoric acid are used to manufacture downstream products with high added value, such as phosphate salts and acids, for a wide range of food and industrial applications. Phosphate
salts and acids are used in various industrial end markets such as oral care, cleaning products, paints and coatings, energy storage solutions, water treatment, asphalt modification, construction, metal treatment and more. The segment's products
for the food industry include functional food ingredients and phosphate additives which provide texture and stability solutions for processed meat, meat alternatives, poultry, seafood, dairy products, beverages and baked goods. In addition, the segment supplies pure phosphoric acid to ICL’s specialty fertilizers business.
ICL Group Limited Quarterly Report 41
Note 3 - Operating Segments (cont’d)
1. Information on operating segments (cont’d)
Growing Solutions – The
Growing Solutions segment aims to achieve global leadership in plant nutrition markets by enhancing its positions in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, fertilizers and FertilizerpluS,
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 consists 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.
The Growing Solutions segment develops, manufactures, markets and
sells its products globally, mainly in South America, Europe, Asia, North America and Israel. It produces water soluble specialty fertilizers in Belgium, Israel and Spain, organic, ornamental horticulture, turf and landscaping products in the UK
and the Netherlands, liquid fertilizers in Israel, Spain and China, straights soluble fertilizers in China and Israel, controlled release fertilizers in the Netherlands, Brazil and the US, FertilizerpluS products in the UK, the Netherlands and
Germany, as well as secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants in Brazil.
Other Activities – Other
business activities include, among other things, ICL’s innovative arm which promotes innovation, developing new products and services, as well as digital platforms and technological
solutions for farmers and agronomists. This category includes Growers and Agmatix, innovative start-ups that are developing agricultural data processing and analysis capabilities for the future of agriculture. In alignment with the Company’s
efficiency plan, which includes a change of reporting responsibilities as of January 2024, the results of a non-phosphate related business were allocated from the Phosphate Solutions segment to Other Activities. Comparative figures have been
restated to reflect the organizational change in the reportable segments. These activities are not presented as reportable segments as they do not meet the required quantitative thresholds.
2. Segment capital investments
Capital investments made by the segments for each of the reporting
periods include mainly property, plant and equipment as well as intangible assets acquired in the ordinary course of business and as part of business combinations.
ICL Group Limited Quarterly Report 42
Note 3 - Operating Segments (cont’d)
3. Inter–segment transfers and unallocated income (expenses)
Segment revenue, expenses and results include inter-segment transfers, which are based on transactions prices in the ordinary course of business. This is aligned with reports that are regularly reviewed by the Chief Operating Decision Maker. Inter-segment
transfers are eliminated as part of the financial statements' consolidation process.
Segment profit is measured based on operating income, without the
allocation of certain expenses to the operating segments, as presented in the reports regularly reviewed by the Chief Operating Decision Maker. Management believes that it is the most relevant measure for the assessment of such results.
Note 3 - Operating Segments (cont’d)
B. Operating segment data
For the three-month period ended June 30, 2024
|
|
|
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|
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|
|
| |
|
|
|
|
|
|
|
Sales to external parties
|
|
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|
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|
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|
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| |
|
|
|
|
|
|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Other expenses not allocated to the segments
|
|
|
|
|
|
|
|
|
|
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| |
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|
| |
|
|
|
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|
|
Income before income taxes
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures as part of business combination
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly Report 44
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the three-month period ended June 30, 2023
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Sales to external parties
|
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|
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| |
|
|
|
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|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Other expenses not allocated to the segments
|
|
|
|
|
|
|
|
|
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|
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| |
|
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|
|
Income before income taxes
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly Report 45
Note 3 - Operating Segments (cont’d)
B. Operating segment data (cont'd)
For the six-month period ended June 30, 2024
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Sales to external parties
|
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| |
|
|
|
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|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Other expenses not allocated to the segments
|
|
|
|
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Income before income taxes
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Depreciation and amortization
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Capital expenditures as part of business combination
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ICL Group Limited Quarterly Report 46
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the six-month period ended June 30, 2023
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Sales to external parties
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Segment operating income (loss)
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Other expenses not allocated to the segments
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Income before income taxes
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Depreciation and amortization
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ICL Group Limited Quarterly Report 47
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the year ended December 31, 2023
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Sales to external parties
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Segment operating income (loss)
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Other expenses not allocated to the segments
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Share in earnings of equity-accounted investees
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Income before income taxes
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Depreciation and amortization
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ICL Group Limited Quarterly Report 48
Note 3 - Operating Segments (cont'd)
C. Information based on geographical location
The following table presents the distribution of the operating segments sales by
geographical location of the customer:
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millions
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% of
sales
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millions
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sales
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millions
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sales
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Note 3 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following tables present the distribution of the operating segments sales by
geographical location of the customer:
For the three-month period ended June 30, 2024
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For the three-month period ended June 30, 2023
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ICL Group Limited Quarterly Report 50
Note 3 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following tables present the distribution of the operating segments sales by
geographical location of the customer:
For the six-month period ended June 30, 2024
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For the six-month period ended June 30, 2023
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ICL Group Limited Quarterly Report 51
Note 3 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following table presents the distribution of the operating segments sales by
geographical location of the customer:
For the year ended December 31, 2023
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Note 4 – Loans, Financial Instruments and Risk Management
A. Fair value of financial instruments
The carrying amounts in the financial statements of certain financial
assets and financial liabilities, including cash and cash equivalents, investments, short-term deposits and loans, receivables and other debit balances, long-term investments and receivables, short-term credit, payables and other credit balances,
long-term loans bearing variable interest and other liabilities, and derivative financial instruments, correspond to or approximate their fair value.
The following table details the carrying amount and fair value of
financial instrument groups presented in the financial statements not in accordance with their fair value:
Loans bearing fixed interest
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Debentures bearing fixed interest
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The following table presents an analysis of the financial instruments
measured in fair value, using the valuation method.
The following level was defined:
Level 2: Observed data (directly or indirectly).
Derivatives used for economic hedge, net
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Derivatives designated as cash flow hedge, net
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C. Foreign currency risks
The Company is exposed to changes in the exchange rate of the Israeli
shekel against the US dollar in respect of principal and interest in certain debentures, loans, labor costs and other operating expenses. The Company's risk management strategy is to hedge the changes in cash flow deriving from liabilities, labor costs and other operational costs denominated in shekels by using derivatives. These exposures are hedged from time to time, according to the assessment of exposure and inherent risks
against which the Company elects to hedge, in accordance with the Company's risk management strategy.
Note 5 – Long Term Compensation Plans and Dividend Distributions
|
A. |
Share based payments - non-marketable options
|
On April 3, 2024, and April 4, 2024, the Company’s HR &
Compensation Committee and the Board of Directors, respectively, approved a new triennial equity grant for the years 2024-2026 in the form of about 12 million non-marketable and non-transferable options for no consideration, under the amended
2014 Equity Compensation Plan, to officers and senior managers. The vesting period of the options will be in three equal tranches, upon the lapse of 12 months, 24 months, and 36 months from the grant date. The fair value at the grant date was
about $15 million.
|
B. |
Dividend distributions
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Decision date for dividend distribution by the Board of Directors
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Actual date of dividend distribution
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Distributed amount
($ millions)
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* The dividend will be distributed on
September 18, 2024, with a record date for eligibility of September 4, 2024.
ICL Group Limited Quarterly Report 54
Note 6 – Provisions, Contingencies and Other Matters
|
1. |
As part of the Company’s goal to expand its Growing Solutions’ products offerings, in July 2024, the Company completed the acquisition of Custom
Ag Formulators (hereinafter - CAF), a North American provider of customized agriculture formulations and products for growers, for a total consideration of $60 million, including a performance based earnout of up to $10 million. CAF
offers a diverse assortment of liquid adjuvants and enhanced nutrients, as well as various other specialty products.
|
|
2. |
Further to Note 18 to the Annual Financial Statements regarding an application for certification of a class action with respect to the manner in
which the IT (the Harmonization) project was managed and terminated, in May 2024, the District Court issued a verdict approving the settlement agreement between the parties for a non-material amount, fully covered by insurance and in July
2024, granted it the force of a judgement.
|
|
3. |
Note 18 to the Annual Financial Statements provides disclosure regarding the unexpected flow of brine discovered above ground at the outskirts of
an alluvial fan area, and the Company’s efforts to provide a solution fully coordinated with the Ministry of Environmental Protection (MOE). To the best of the Company’s knowledge, the Green Police has initiated an investigation. The
Company is in discussions with the MOE regarding its outstanding requirements.
|
|
4. |
Note 18 to the Annual Financial Statements provides disclosure regarding the approval of a class action concerning a limited class constituting
visitors at the Bokek stream, following the application for certification of a class action filed against Rotem Israel Ltd. and Periclase, for environmental hazards which were allegedly the result of the leakage of wastewater to the
groundwater aquifer in the vicinity of the Bokek stream which began in the 1970s, while the Company was government owned. In April 2024 the court ordered the State to submit its response following the plaintiffs’ request to discuss
temporary relief measures. During a hearing in June 2024, an additional proposal for mediation was raised and is currently under review by the parties.
|
Since the judgement of the Supreme Court mainly addressed preliminary
questions, without discussion of the respondent’s responsibility and the amount of the damage, and even explicitly stated that certain questions remained open in the judgement of the district court, and were not decided on by the Supreme Court,
it is difficult to estimate the proceeding’s outcome. No provision has been recorded in the Company’s financial statements.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.