Fertilizer and minerals producer Israel Chemicals (TASE: ICL: NYSE: ICL), controlled by Idan Ofer's Israel Corporation (TASE: ILCO), today published its financial statements for the first quarter of the year. The company reported revenue of NIS 1.4 billion, 7.7% more than in the first quarter of 2017. Israel Chemicals benefited in the first quarter from a $28 per ton increase in potash prices, compared with the corresponding quarter last year, when the price was $216 per ton, together with improvement in the quantities and sales prices for bromine and its derivatives and special phosphates. Gross profit was up 20.3% to $431 million in the quarter.
During the first quarter, Israel Chemicals completed the sale of its fire safety and oil additives business to the SK Capital fund, a private investment company specializing special materials, chemicals, and pharma business, for $1 billion. Completion of the deal generated an impressive $841 million capital gain, boosting Israel Chemicals' operating profit in the quarter to $985 million, compared with $116 million in the corresponding quarter in 2017.
Israel Chemicals' first quarter net profit amounted to $928 million, compared with $68 million in the first quarter of 2017. Adjusted operating profit (excluding the sale) grew 30% to $151 million, and adjusted net profit was up 56% to $106 million.
At the same time, Israel Chemicals' cash flow in the second quarter shrank to $36 million, compared with $159 million in the corresponding quarter last year, as a result of increased sales and production quantities, mostly of potash, which increased customers' balance and inventory and reduced the cash obtained from derivative deals by $34 million.
The sale of the fire safety and oil additives business reduced the company's debt by $768 million to $2.3 billion at the end of March this year.
Israel Chemicals reported that it sold 1,106 tons of potash in the first quarter, 9% more than in the corresponding quarter last year, following improvement of its sales activity in Spain, which became profitable in the first quarter, and at the company site in the UK, where Israel Chemicals substantially reduced its loss, compared with the first quarter of 2017.
Share price up 20% in six months
Following the improvement in its results, Israel Chemicals will distribute a $52 million dividend on June 20. The company's share responded to the company's results by climbing 1.6%, completing a rise of almost 20% over the past six months and boosting its market cap to NIS 21.3 billion.
Israel Chemicals acting CEO Asher Grinbaum is stepping down from his position, with his replacement, Raviv Zoller slated to take his place next week. The cost of Zoller's salary is likely to reach NIS 10.7 million annually, while his base salary will be NIS 2.4 million. He is also entitled to an annual performance-based bonus that will amount to NIS 2.5 million if the company achieves all of its targets. If Israel Chemicals' results exceed the stipulated targets, Zoller's bonus could be as much as NIS 3.75 million a year.
Zoller can also receive a special bonus of up to three months' salary (NIS 600 million) in he shows a special contribution, great effort, or a special landmark achieved in special or unusual business activity. In addition, Israel Chemicals will pay Zoller a NIS 4 million annual bonus: half in options and half in vested shares.
Grinbaum said, "The positive environment in the potash sector and growth in the special fertilizers segment in the essential minerals sector, in addition to value-based pricing in the special solutions sector. The first quarter results also reflect the company's strategic effort over the past two years, during which Israel Chemicals significantly improved its financial position, sold assets with little synergy, and reined in its debt."
Published by Globes [online], Israel business news - www.globes-online.com - on May 10, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018