Israel Chemicals Ltd. (TASE: ICL) today revealed a new strategy, which includes a possible dual listing on a major foreign stock exchange, and set generalized financial guidelines, after reporting lower revenue and profits for the second quarter of 2013.
Revenue fell 7.2% to $1.77 billion for the second quarter from $1.91 billion for the corresponding quarter of 2012, and net profit fell 22.5% to $316 million from $408 million. The company attributed the decline to lower prices for potash and phosphate fertilizers and lower sales and prices of flame retardants and water treatment biocides. These factors were partly offset by lower raw material and energy costs, and the consolidation of acquired companies.
Israel Chemicals unveiled its "Next Step Forward" to focus on core markets and improve operational excellence. The company will focus on three primary minerals and three end-markets: agriculture, food and engineered materials. It also plans to globalize to get closer to its strategic markets, pursue a dual listing of securities on a major international stock exchange, and either buy back shares or distribute a one-time dividend of up to $500 million.
Commenting on Uralkali JSC's (LSE: URKA) announcement in July that it was quitting the Russian potash cartel and its forecast that prices would fall to $300 per ton, Israel Chemicals said, "This announcement creates uncertainty about potash prices and increases the risk of a drop in prices in the short term. But the long-term market trend points to higher demand, which will boost prices."
Israel Chemicals chairman Nir Gilad said that the new strategy aimed at achieving significant growth driven by fundamental global trends. "Israel Chemicals board instructed management to formulate a new strategy aimed at balancing the company's sources of income, increasing and diversifying its sources of specialty minerals, broadening its global activities, utilizing growth engines in international markets, enhancing efficiency and savings, and reducing exposure to the uncertainty of Israel’s business and regulatory environments."
Israel Chemicals CEO Stephan Borgas said that the company's advantages included its vertically integrated activities, global presence, balanced and varied product portfolio in three promising and growing markets, and "an Israeli DNA characterized by courage, determination, creativity and openness." He added, "The new strategy addresses our most critical challenges, including expansion of our mineral resources; insufficient competitiveness in the phosphate chain; strengthening innovation and expanding our emerging market footprint. At the same time, by establishing the newly created Global Institutional & Community Relations Group, Israel Chemicals will connect in a closer fashion with its environment around the world."
“Even with current challenging market developments, Israel Chemicals continues to believe in the potash market, both in the short term and in the long term, and will therefore explore options for increasing its potash production, both in its existing mines and in new locations around the world. In addition we will focus our activity in the areas of agriculture and food by increasing our phosphate operations, while simultaneously increasing our position in markets for bromine, phosphorus and phosphate based engineered materials," concluded Borgas.
Israel Chemicals' board of directors approved a $221 million dividend, which will be distributed on September 16.
Published by Globes [online], Israel business news - www.globes-online.com - on August 7, 2013
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