Fertilizers and minerals producer Israel Chemicals, controlled by Idan Ofer's Israel Corporation, today reported a $139 million profit in the first quarter of 2019, compared with a $928 million net profit in the first quarter of 2018, when the company had large one-time capital gains.
Adjusted net profit, excluding one-time items, totaled $150 million in the first quarter, 41% more than in the corresponding quarter last year. Profit per share was $0.12, $0.02 more than the average estimate by the analysts covering the company.
Israel Chemicals reported a 0.8% rise in sales to $1.42 billion in the quarter, while adjusted operating profit grew 59% to $241 million.
Israel Chemicals explains that the rise in profit resulted mainly from higher price for potash and bromine-based products, a rise in sales volume in the bromine value chain, better profit margins in the phosphates sector, streamlining, and lower costs.
Operating profit in bromine products sets a record
Israel Chemicals' profit on potash jumped 84% in the first quarter, despite an 8% fall in quantitative potash sales (92,000 tons) due to Israel Railways disruptions and the termination of potash production activity in the UK. The average potash price rose by $33, 13%, in the quarter, reaching $294 per tonne. Israel Chemicals' revenue from potash was up 9% to $384 million in the first quarter.
Revenue from Israel Chemicals' industrial (bromine-based) products grew 10.4% to $350 million. Operating profit in this sector set a new record with an operating profit margin of 28% of sales, compared with 21% in the first quarter of 2018.
Revenue from phosphate products inched up 0.8% to $537 million, and Israel Chemicals' profit margin in this sector rose from 5.3% in the first quarter last year to 6.5% in the first quarter of this year. The company attributed higher profit in the sector mainly to a positive effect of prices throughout most of the phosphate value chain, including higher prices for phosphate fertilizers and acids, salts, and phosphate-based food supplements.
Israel Chemicals' cash flow totaled $173 million in the first quarter of 2019, compared with $36 million in the corresponding quarter last year, as a result of a higher net profit (excluding capital gains), higher cash proceeds from deals in derivatives, and lower tax payments.
Israel Chemicals, managed by CEO Raviv Zoller, announced that it would distribute a $76 million dividend to its shareholders in June.
Israel Chemicals' share price responded to the reports with a 6% rise on a large turnover. The company's share price was up 20% last year, pushing its market cap up to NIS 24.5 billion.
Zoller said today, "We achieved a strong start to 2019, with significant profitability growth recorded in all of our three mineral value chains... I am confident that the strong start of 2019 puts us on track to achieve another year of solid performance."
Published by Globes, Israel business news - en.globes.co.il - on May 7, 2019
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