Potash price hike boosts Israel Chemicals profit

Israel Chemicals Photo: Eyal Yizhar

The company's revenue grew 4% to $1.42 billion while profit was up 56%.

Fertilizers and minerals company Israel Chemicals (TASE: ICL: NYSE: ICL), controlled by Idan Ofer's Israel Corporation (TASE: ILCO</a, has reported a $158 million net profit in the second quarter of the year, 56% more than in the second quarter of 2018.

Israel Chemicals, managed by CEO Raviv Zoller, posted $1.42 billion in revenue in the quarter, 4% more than in the corresponding quarter last year, and a $240 million operating profit, 39.5% more than in the second quarter of 2018.

The improvement in Israel Chemicals' revenue and profits was due to an average increase of $23 per ton in sale prices of potash, phosphate fertilizers, acids, salts, and phosphate-based food supplements, compared with the corresponding quarter last year, as well as higher prices in most business lines in the industrial products sector.

Israel Chemicals also benefited from higher demand for its products, which contributed to higher quantitative sales of potash, phosphate fertilizers, elementary bromine, and bromine-based flame retardants. Furthermore, the company's energy costs fell following the operation of the new power plant in Sdom in the second half of 2018.

The share price of Israel Chemicals, which is listed on both the New York Stock Exchange and the Tel Aviv Stock Exchange (TASE), responded to the company's reports with a 4% jump on the TASE. The company's share price has climbed 12% in the past year, pushing its market cap up to NIS 24.5 billion.

Sales by Israel Chemicals' potash division totaled $432 million in the quarter, 25% more than in the second quarter of last year. The division's operating profit jumped 87% to $105 million as a result of a 14% increase in quantitative potash sales, which totaled 1.25 million tons, and a 9% rise in the average sale price, from $266 per ton in the second quarter of last year to $289 per ton in the second quarter of 2019.

At the same time, Israel Chemicals said that potash prices dipped slightly at the end of the second quarter of 2019, due to declining demand in Brazil, a drop in soybean prices, bad weather in the US that affecting the use of fertilizers, and lower palm oil prices in Southeast Asia.

Sales of bromine-base products totaled $336 million in the second quarter, up 1.8%, compared with the corresponding quarter last year. Operating profit in this sector was $93 million, 28% of sales, compared with 24% of sales in the second quarter of 2018.

Israel Chemicals' sales in the phosphate solutions sector amounted to $518 million in the second quarter, down 4.2%, compared with the second quarter last year. Operating profit in the sector grew 0.3% to $32 million. The company's revenue in the innovative agricultural solutions sector was down 4.7% to $202 million, and its operating profit was $12 million, 25% less than the corresponding quarter last year.

Cash flow from current activity totaled $239 million in the second quarter, $75 million more than in the second quarter of 2018.

Israel Chemicals announced that it would distribute a $74 million dividend to its shareholders in September. Zoller said, "Our business model, based on our leading position in important markets, helped us overcome challenging weather in some of our target markets. Our strategic initiatives for strengthening the value chain continue to bear fruit."

Published by Globes, Israel business news - en.globes.co.il - on July 31, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Israel Chemicals Photo: Eyal Yizhar
Israel Chemicals Photo: Eyal Yizhar
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