The coronavirus pandemic has had a severe impact on the second quarter results of Israel fertilizers and chemicals company ICL Group (TAE: ICL; NYSE: ICL) (formerly Israel Chemicals).
In its results released today, the company reports a 16% decline in revenue in comparison with the second quarter of 2019, to $1.2 billion, because of a fall in basic commodity prices and in demand for bromine compounds. The company switched to an operating loss of $169 million, which compares with an operating profit of $240 million in the corresponding quarter. The bottom line for the second quarter of this year is a net loss of $168 million, which compares with a net profit of $158 million in the corresponding quarter.
ICL posted provisions totaling $297 million in the second quarter for cessation of the sale of phosphate rock from Israel, which has become unprofitable, and for expedited consolidation of production activity and further streamlining of its potash activity in Spain, cutting the workforce by about 250, chiefly through early retirement.
Adjusted operating profit (excluding one-time provisions) was $128 million in the second quarter of 2020, 44% less than in the corresponding quarter. The average price of potash in the second quarter of this year was $226, 22% lower than in the corresponding quarter.
In the first half-year, ICL posted an 11% decline in revenue in comparison with the first half of 2019, to $2.5 billion, and an operating loss of $37 million, versus an operating profit of $467 million in the corresponding period of 2019. The net loss in the first half of 2020 was $108 million, which compares with a net profit of $297 million in the corresponding period. Despite the losses, the company declared a dividend of $0.028 per share, or $36 million in total.
ICL said that most of its plants worldwide continued to operate normally during the first half of 2020, but that demand for some of its industrial products fell because of the coronavirus pandemic, which caused a drop in activity especially in the automotive, electronics and construction industries.
ICL sees a continuing adverse effect on its results in the second half of 2020, and says that it will continued to adjust its business to a global economy in the shadow of Covid-19.
ICL's share price has fallen 34% since the beginning of the year, and its market cap has shrunk to NIS 13.5 billion.
ICL CEO Raviv Zoller said, "Although the coronavirus pandemic will probably continue to affect the company's results in the coming months, we are well positioned in our target markets and continue to strengthen our varied special products offering by leveraging our innovation capabilities, our accumulated know-how, and our wide distribution network in the main target markets."
Published by Globes, Israel business news - en.globes.co.il - on July 29, 2020
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