A steady decline in potash and phosphate prices and the prolonged delay in the signing of potash supply contracts with customers in China adversely impacted the first quarter results of fertilizers and minerals company Israel Chemicals (NYSE: ICL) (TASE: ICL).
First quarter sales were $1.32 billion, 7% less than the $1.42 billion sales total in the first quarter of 2019, which the company said was mainly due to declines in potash and phosphate commodity prices.
Operating profit in the first quarter was $132, down 42% in comparison with an operating profit of $227 million in the first quarter of 2019.
Adjusted EBITDA was down 29% in comparison with the corresponding quarter, at $250 million. Israel Chemicals posted a net profit of $60 million, 57% less than in the corresponding quarter.
ICL president and CEO Raviv Zoller said, "The resilience of ICL's diversified business portfolio is reflected in the financial performance achieved even in difficult market conditions. In the first quarter of 2020, when potash and phosphate commodity prices fell to what we believe are cyclically low levels, our results were supported by record operating income in our Industrial Products segment and by strong sales of specialty phosphates. Our continued emphasis on a value-based strategy resulted in continued strong cash generation.
"The COVID-19 pandemic has created a new, unprecedented challenge that will affect our results in the short term. We are taking appropriate measures to further enhance our operational efficiency to mitigate the impact of the pandemic on our business, including new cross-segment cost efficiency initiatives. We believe ICL's strong financial position, diversified business and dominant position in key markets will also act as a buffer against expected market challenges and allow us to continue to pursue timely growth opportunities."
As a direct response to the Covid-19 pandemic, Israel Chemicals drew funds from its credit facilities to increase its cash and deposit balances. At the end of the first quarter, the company had total liquidity of $1.1 billion , including $524 million in cash and deposits and $590 million in unutilized credit facilities.
Published by Globes, Israel business news - en.globes.co.il - on May 12, 2020
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