UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2023
Commission File Number: 001-13742
ICL GROUP LTD.
(Exact name of registrant as specified in its charter)
ICL Group Ltd.
Millennium Tower
23 Aranha Street
P.O. Box 20245
Tel Aviv, 61202 Israel
(972-3) 684-4400
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
ICL GROUP LTD.
INCORPORATION BY REFERENCE
This report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form S-8 (Registration Number: 333-205518) of ICL
Group Ltd. and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished. In addition, this report on Form 6-K shall be deemed to be incorporated by
reference into the Israeli Shelf Prospectus of ICL Group Ltd. filed with the Israel Securities Authority and dated February 28, 2022 (Filing Number: 2022-02-019821) and to be a part thereof from the date on which this report is filed, to the extent
not superseded by documents or reports subsequently filed or furnished.
ICL GROUP LTD.
ICL Reports Third Quarter 2023 Results
Delivers sales of $1.9 billion, flat sequentially,
with adjusted EBITDA of $346 million,
diluted earnings per share of $0.11 and continued strong cash generation
Reaffirms full year adjusted EBITDA guidance
Tel Aviv, Israel, November 8, 2023 – ICL (NYSE: ICL) (TASE: ICL), a leading global specialty
minerals company, today reported its financial results for the third quarter ended September 30, 2023. Consolidated sales were $1.9 billion versus $2.5 billion, while operating income was $227 million versus $935 million in the third quarter of
last year. Operating cash flow was $407 million vs. $606 million, and adjusted EBITDA was $346 million versus $1,049 million.
“ICL delivered solid results, while continuing to target long-term growth and consistently strong cash generation, enhanced by efficiency initiatives.
While some competitive pressures remain in certain end-markets, demand recovery is on the horizon for our specialty businesses, and we are expecting a return to a more stabilized growth trajectory during 2024,” said Raviv Zoller, president and CEO
of ICL. “Despite the unprecedented October 7 attack on Israel, ICL operations there continue to function without significant disruption. While we have faced some headwinds, we remain committed to our customers, to our focused long-term growth
strategy and, before all else, to our employees, their families and the communities where we do business.”
The company reaffirmed its guidance for full year adjusted EBITDA, now expected at the middle of the previously announced range of between $1.6 billion
to $1.8 billion, with the company’s specialties focused businesses expected at approximately $0.7 billion. (1a)
Financial Results and Business Overview
This Financial Results and Business Overview is based on the Company’s
unaudited interim condensed consolidated financial statements as of and for the nine and three-month periods ended September 30, 2023 (hereinafter - Interim Financial Statements), and is
prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”, unless
otherwise stated. The Financial Results and Business Overview contains certain non‑IFRS financial measures and forward-looking statements, which are described in the “Financial Figures and non‑GAAP
Financial Measures” section and the “Forward-looking Statements” section, respectively.
About ICL
ICL Group Ltd. is a leading global specialty minerals company which
creates impactful solutions for humanity’s sustainability challenges in the food, agriculture, and industrial markets. ICL leverages its unique bromine, potash, and phosphate resources, its global professional workforce, and its sustainability
focused R&D and technological innovation capabilities, to drive the Company's growth across its end markets. ICL shares are dual listed on the New York Stock Exchange and the Tel Aviv Stock Exchange (NYSE and TASE: ICL). The Company employs more
than 12,500 people worldwide, and its 2022 revenues totaled approximately $10 billion. For more information, visit the Company's website at www.icl-group.com[1].
[1] The reference to our website is intended to be an inactive textual reference and the information on, or accessible through, our website is not intended to be part of this Form 6-K.
ICL Group Limited Q3 2023
Results 2
Financial Figures and non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income (1)
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to the Company's shareholders
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to the Company’s shareholders (1)
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
Diluted adjusted earnings per share (in dollars) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment and intangible assets (3)
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
See “Adjustments to Reported Operating and Net income (non-GAAP)” below.
|
|
(2) |
Commencing 2022, the Company’s adjusted EBITDA definition was updated. See the disclaimer below.
|
|
(3) |
See “Condensed consolidated statements of cash flows (unaudited)” in the accompanying financial statements.
|
We disclose in this quarterly report non-IFRS
financial measures titled adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share, and adjusted EBITDA. Our management uses adjusted operating income, adjusted net income
attributable to the Company’s shareholders, diluted adjusted earnings per share, and adjusted EBITDA to facilitate operating performance comparisons from period to period. We calculate our adjusted operating income by adjusting our operating income
to add certain items, as set forth in the reconciliation table under “Adjustments to reported operating, and net income (non-GAAP)” below. Certain of these items may recur. We calculate our adjusted net income attributable to the Company’s
shareholders by adjusting our net income attributable to the Company’s shareholders to add certain items, as set forth in the reconciliation table under “Adjustments to reported operating, and net income (non-GAAP)” below, excluding the total tax
impact of such adjustments. We calculate our diluted adjusted earnings per share by dividing adjusted net income by the weighted-average number of diluted ordinary shares outstanding. Our adjusted EBITDA is calculated as net income before financing
expenses, net, taxes on income, share in earnings of equity-accounted investees, depreciation and amortization, and certain adjustments presented in the reconciliation table under “Consolidated adjusted EBITDA, and diluted adjusted Earnings Per Share
for the periods of activity” below, which were adjusted for in calculating the adjusted operating income. Commencing with the year 2022, the Company’s “adjusted EBITDA” calculation is no longer adding back “minority and equity income, net". While
“minority and equity income, net” reflects the share of an equity investor in one of our owned operations, since adjusted EBITDA measures the Company’s performance as a whole, its operations and its ability to satisfy cash needs before profit is
allocated to the equity investor, management believes that adjusted EBITDA before deduction of such item is more reflective.
ICL Group Limited Q3 2023
Results 3
You should not view adjusted operating income,
adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share or adjusted EBITDA as a substitute for operating income or net income attributable to the Company’s shareholders determined in accordance with IFRS,
and you should note that our definitions of adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share, and adjusted EBITDA may differ from those used by other companies.
Additionally, other companies may use other measures to evaluate their performance, which may reduce the usefulness of our non-IFRS financial measures as tools for comparison. However, we believe adjusted operating income, adjusted net income
attributable to the Company’s shareholders, diluted adjusted earnings per share, and adjusted EBITDA provide useful information to both management, and investors by excluding certain items that management believes are not indicative of our ongoing
operations. Our management uses these non-IFRS measures to evaluate the Company's business strategies and management performance. We believe that these non‑IFRS measures provide useful information to investors because they improve the comparability
of our financial results between periods and provide for greater transparency of key measures used to evaluate our performance.
(1a) The Company only provides guidance on a
non-GAAP basis. The Company does not provide a reconciliation of forward-looking adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting, and quantifying certain amounts that are necessary for such
reconciliation, in particular, because special items such as restructuring, litigation, and other matters, used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis
with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material, and therefore could result in projected GAAP net income (loss) being
materially less than projected adjusted EBITDA (non-GAAP). The guidance speaks only as of the date hereof. We undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news
release or to reflect actual outcomes, unless required by law. Specialties focused businesses are represented by the Industrial Products, and Growing Solutions segments, and the specialties part of the Phosphate Solutions segment. We present EBITDA
from the phosphate specialties part of the Phosphate Solutions segment as we believe this information is useful to investors in reflecting the specialty portion of our business.
We present a discussion in the period-to-period
comparisons of the primary drivers of change in the Company’s results of operations. This discussion is based in part on management’s best estimates of the impact of the main trends on our businesses. We have based the following discussion on our
financial statements. You should read such discussion together with our financial statements.
ICL Group Limited Q3 2023
Results 4
Adjustments to Reported Operating and Net income (non-GAAP)
|
|
|
|
|
|
Write-off of assets and provision for site closure (1)
|
|
|
|
|
|
Divestment related items and transaction costs from acquisitions (2)
|
|
|
|
|
|
Legal proceedings, dispute and other settlement expenses (3)
|
|
|
|
|
|
Total adjustments to operating income
|
|
|
|
|
|
Adjusted operating income
|
|
|
|
|
|
Net income attributable to the shareholders of the Company
|
|
|
|
|
|
Total adjustments to operating income
|
|
|
|
|
|
Total tax adjustments (4)
|
|
|
|
|
|
Total adjusted net income - shareholders of the Company
|
|
|
|
|
|
|
(1) |
For 2023, reflects a write-off of assets and closure costs resulting from the closure of the Company’s Summerville site in the US.
|
|
(2) |
For 2022, reflects a capital gain related to the sale of an asset in Israel and the Company’s divestment of a 50%-owned joint venture, Novetide.
|
|
(3) |
For 2022, reflects mainly the costs of a mediation settlement regarding the claims related to the Ashalim Stream incident.
|
|
(4) |
For 2023, reflects the tax impact of adjustments made to operating income. For 2022, reflects tax expenses in respect of prior years following a
settlement with Israel’s Tax Authority regarding Israel's surplus profit levy, which outlines understandings for the calculation of the levy, including the measurement of fixed assets,
as well as the tax impact of adjustments made to operating income.
|
ICL Group Limited Q3 2023
Results 5
Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share for
the periods of activity
Calculation of adjusted EBITDA was made as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Share in earnings of equity-accounted investees
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
Total adjusted EBITDA (2)
|
|
|
|
|
|
|
(1) |
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
|
|
(2) |
Commencing 2022, the Company’s adjusted EBITDA definition was updated, see the disclaimer above.
|
Calculation of diluted adjusted earnings per share was made as follows:
Net income attributable to Company's shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income - shareholders of the Company
|
|
|
|
|
|
Weighted-average number of diluted ordinary shares outstanding (in thousands)
|
|
|
|
|
|
Diluted adjusted earnings per share (in dollars) (2)
|
|
|
|
|
|
|
(1) |
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
|
|
(2) |
The diluted adjusted earnings per share are calculated as follows: dividing the adjusted net income attributable to the shareholders of the
Company by the weighted-average number of diluted ordinary shares outstanding (in thousands).
|
ICL Group Limited Q3 2023
Results 6
Events in the reporting period
In October 2023, the Israeli government declared a state of war following an attack on civilians at its southern border. The new security situation has
led to several challenges, including some disruptions in supply chains, a shortage of personnel due to mobilization for reserve duty, and fluctuations in foreign currency exchange rates relative to the Israeli shekel. The Company has taken measures
to ensure the safety of its employees and business partners, as well as the communities in which it operates, in order to minimize any potential impact on its business, including avoiding disruption of production in its facilities in Israel.
The current events and the security escalation in Israel have not had a material impact on the Company's business results. However, since the
developments related to the war situation, as well as its duration, are unpredictable, the Company has no ability to estimate the extent of the war’s potential impact on its future business and results. The Company continuously monitors the
developments and will take all necessary actions to minimize any negative consequences to its operations and assets.
ICL Group Limited Q3 2023
Results 7
Consolidated Results Analysis
Results analysis for the period July – September 2023
* See "Adjustments to reported Operating and Net income (non-GAAP)"
above.
|
- |
Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of potash, specialty agriculture
products, and phosphate fertilizers. This impact was partially offset by lower sales volumes of bromine and phosphorus-based flame retardants, specialty minerals products, salts and
phosphate-based food additives.
|
|
- |
Price – The negative impact on operating income was primarily related to a decrease of $355 in the price of potash (CIF) per tonne
year-over-year, as well as a decrease in selling prices of phosphate fertilizers and white phosphoric acid (WPA), specialty agriculture and FertilizerpluS products, bromine-based
flame retardants and bromine based industrial solutions.
|
|
- |
Exchange rates - The favorable impact on operating income was mainly due to the positive impact on sales resulting from the appreciation of
the average exchange rate of the euro and the Brazilian real against the US dollar, which was partially offset by a negative impact on operational costs resulting from the above mentioned appreciation, together with a positive impact due to the depreciation of the average exchange rate of the Israeli shekel against the US dollar.
|
|
- |
Raw materials – The positive impact on operating income was primarily due to lower costs of sulphur and commodity fertilizers.
|
|
- |
Energy – The positive impact on operating income was due to decreased electricity prices.
|
|
- |
Transportation – The positive impact on operating income was due to decreased marine and
inland transportation costs.
|
|
- |
Operating and other expenses – The negative impact on operating income was primarily due to higher maintenance and operational costs.
|
ICL Group Limited Q3 2023
Results 8
The following table sets forth sales by geographical regions based on
the location of the customers:
|
- |
Europe – The decrease in sales was primarily due to lower selling prices of potash, phosphate fertilizers, FertilizerpluS and specialty
agriculture products and white phosphoric acid (WPA), as well as lower sales volumes and selling prices of bromine-based flame retardants, salts, phosphate-based food additives and
bromine based industrial solutions. The decrease was partially offset by higher sales volumes of potash, phosphate fertilizers and FertilizerpluS products, together with a positive impact on sales resulting from the appreciation of the
average exchange rate of the euro against the US dollar.
|
|
- |
Asia – The decrease in sales was primarily due to lower selling prices and sales volumes of potash and bromine-based industrial solutions, as
well as lower selling prices of bromine-based flame retardants, phosphate fertilizers and specialty agriculture products. The decrease was partially offset by higher sales volumes of phosphate fertilizers, bromine-based flame retardants, and
specialty agriculture products.
|
|
- |
South America – The decrease in sales was primarily due to lower selling prices of potash, phosphate fertilizers, as well as specialty
agriculture and FertilizerpluS products, together with lower selling prices and sales volumes of WPA. This decrease was partially offset by higher sales volumes of potash, phosphate fertilizers, specialty agriculture and FertilizerpluS
products.
|
|
- |
North America – The decrease in sales was primarily due to lower selling prices and sales volumes of potash, phosphate fertilizers, bromine
and phosphorous-based flame retardants and magnesium, as well as lower selling prices of specialty agriculture products and clear brine fluids. The decrease was partially offset by higher sales volumes of clear brine fluids and specialty
agriculture products.
|
|
- |
Rest of the world – The decrease in sales was primarily due to lower selling prices of specialty agriculture products and potash, partially
offset by higher sales volumes of potash.
|
ICL Group Limited Q3 2023
Results 9
Financing expenses, net
Net financing expenses in the third quarter of 2023 amounted to $42
million, compared to $24 million in the corresponding quarter last year, an increase of $18 million. This change is mainly due to an increase of $10 million derived from net hedging transactions and exchange rate differences resulting from higher
depreciation of the Israeli shekel against the US dollar compared to the corresponding quarter, as well as higher interest expenses of $5 million due to increased market interest rates.
Tax expenses
In the third quarter of 2023, the Company’s reported tax expenses
amounted to $43 million, compared to $276 million in the corresponding quarter of last year, reflecting an effective tax rate of 23% and 30%, respectively. The Company’s relatively low effective tax rate for this quarter was mainly due to the
devaluation of the shekel against the US dollar and deferred taxes for carryforward losses related to the taxation of profits from natural resources.
ICL Group Limited Q3 2023
Results 10
Results analysis for the period January – September 2023
|
|
|
|
|
Total adjustments YTD 2022*
|
|
|
|
|
Adjusted YTD 2022 figures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and other expenses
|
|
|
|
|
Adjusted YTD 2023 figures
|
|
|
|
|
Total adjustments YTD 2023*
|
|
|
|
|
|
|
|
|
|
* See "Adjustments to reported operating and net
income (non-GAAP)" above.
|
- |
Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of bromine and phosphorus-based flame
retardants, elemental bromine, specialty minerals products, turf and ornamental products, white phosphoric acid (WPA) and salts. This was partially offset by higher sales volumes of potash, clear brine fluids and specialty agriculture
products.
|
|
- |
Price – The negative impact on operating income was primarily related to a decrease of $305 in the price of potash (CIF) per tonne
year-over-year, as well as to a decrease in selling prices of phosphate fertilizers, specialty agriculture and FertilizerpluS products, bromine and phosphorus-based flame retardants
and elemental bromine. This was partially offset by higher selling prices of phosphate-based food additives, and specialty minerals products, as well as turf and ornamental products.
|
|
- |
Exchange rates – The favorable impact on operating income was mainly due to the positive impact on operational costs resulting from the
depreciation of the average exchange rate of the Israeli shekel and the Chinese yuan against the US dollar, which exceeded their negative impact on sales.
|
|
- |
Raw materials – The positive impact on operating income was primarily due to lower prices of sulphur and commodity fertilizers. This impact
was partially offset by higher costs of raw materials used in the production of industrial products and caustic soda.
|
|
- |
Energy – The negative impact on operating income was due to an increase in electricity and gas prices, mainly in Europe and the US.
|
|
- |
Transportation – The positive impact on operating income was due to decreased marine transportation costs, partially offset by increased
inland transportation costs.
|
|
- |
Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs,
partially offset by lower royalty payments.
|
ICL Group Limited Q3 2023
Results 11
The following table sets forth sales by geographical regions based on
the location of the customers:
|
- |
Europe – The decrease in sales was primarily due to lower selling prices of potash, phosphate fertilizers, specialty agriculture and
FertilizerpluS products, as well as lower selling prices and sales volumes of bromine and phosphorous-based flame retardants, white phosphoric acid (WPA) and salts, together with lower sales volumes of Turf and Ornamental products, bromine
based industrial solutions and magnesium. This was partially offset by higher sales volumes of potash, phosphate fertilizers and FertilizerspluS products.
|
|
- |
Asia – The decrease in sales was primarily due to lower selling prices and sales volumes of potash, bromine-based flame retardant,
bromine-based industrial solutions, phosphate fertilizers, WPA and specialty raw materials used for energy storage solutions, as well as a decrease in sales volumes of FertilizerpluS products, and lower selling prices of specialty
agriculture products, together with a negative impact resulting from the depreciation of the average exchange rate of the Chinese yuan against the US dollar. The decrease was partially offset by higher sales volumes of specialty agriculture
products.
|
|
- |
South America – The decrease in sales was primarily due to lower selling prices and sales volumes of potash, as well as lower selling prices
of phosphate fertilizers, specialty agriculture and FertilizerpluS products, together with lower sales volumes of WPA. The decrease was partially offset by higher sales volumes of phosphate fertilizers, as well as specialty agriculture and
FertilizerpluS products.
|
|
- |
North America – The decrease in sales was primarily due to lower sales volumes and selling prices of bromine and phosphorous-based flame
retardants and specialty agriculture products, as well as lower selling prices of potash and phosphate fertilizers, together with lower sales volumes of magnesium, salts, phosphate-based food additives and Turf and Ornamental products. The
decrease was partially offset by higher sales volumes and selling prices of WPA, as well as higher sales volumes of potash and clear brine fluids, together with higher selling prices of phosphate-based food additives and salts.
|
|
- |
Rest of the world – The decrease in sales was primarily due to lower sales volumes and selling prices of potash, specialty agriculture
products, WPA and phosphate fertilizers, as well as lower sales volumes of FertilizerpluS product and bromine-based flame retardants.
|
ICL Group Limited Q3 2023
Results 12
Financing expenses, net
Net financing expenses for the nine-month period ended September 30,
2023, amounted to $135 million, compared to $72 million in the corresponding period last year, an increase of $63 million.
The main change is due to long-term employee benefits provisions and
lease revaluation income which decreased by $30 million, due to lower depreciation of the Israeli shekel against the dollar compared to the corresponding period. In addition, there was an increase of $10 million in losses from hedging transactions
and higher interest expenses of $11 million due to increased market interest rates.
Tax expenses
For the nine-month period ended September 30, 2023, the Company's
reported tax expenses amounted to $254 million, reflecting an effective tax rate of 30%.
ICL Group Limited Q3 2023
Results 13
Segment Information
Industrial Products
The Industrial Products segment produces bromine from a highly
concentrated solution in the Dead Sea and bromine‑based compounds at its facilities in Israel, the Netherlands and China. In addition, the segment produces several grades of salts, magnesium chloride, magnesia-based products, phosphorus-based products and functional fluids.
Results of operations
|
|
|
|
|
|
Sales to external customers
|
|
|
|
|
|
Sales to internal customers
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlights and business environment
|
• |
Elemental bromine sales decreased year-over-year due to lower bromine prices, as demand in several applications remained weak.
|
|
• |
Sales of bromine-based flame retardants decreased year-over-year, with lower prices and volumes, as demand in the electronics end-market remained
weak.
|
|
• |
Sales of phosphorus-based flame retardants decreased year-over-year, with lower volumes and prices, as demand in the construction end-market
remained soft.
|
|
• |
Sales of clear brine fluids grew versus the prior year on higher volumes, as oil and gas drilling activity increased in the Gulf of Mexico.
|
|
• |
Sales of specialty minerals decreased year-over-year, with lower sales of KCl due to lower
prices and increased competition, as well as lower sales of Magnesium Chloride due to the timing of pre-season sales in the US.
|
ICL Group Limited Q3 2023
Results 14
Results analysis for the period July – September 2023
|
- |
Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of bromine and phosphorus-based flame
retardants, as well as specialty minerals. This was partially offset by higher sales volumes of clear brine fluids and elemental bromine.
|
|
- |
Price – The negative impact on operating income was primarily due to lower selling prices of bromine and phosphorus-based flame retardants
and bromine based industrial solutions.
|
|
- |
Exchange rates – The favorable impact on operating income was mainly due to the positive impact on sales resulting from the appreciation of
the average exchange rate of the euro against the US dollar, as well as the positive impact on operational costs resulting from the depreciation of the average exchange rate of the Israeli shekel against the US dollar.
|
|
- |
Raw materials – The positive impact on operating income was due to a decrease in costs of raw materials.
|
|
- |
Transportation – The positive impact on operating income was due to a decrease in marine and inland transportation costs.
|
|
- |
Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs.
|
ICL Group Limited Q3 2023
Results 15
Results analysis for the period January – September 2023
|
- |
Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of bromine and phosphorus-based flame
retardants, elemental bromine and specialty minerals. This impact was partially offset by higher sales volumes of clear brine fluids.
|
|
- |
Price – The negative impact on operating income was due to lower selling prices of bromine and phosphorus-based flame retardants and
elemental bromine, partially offset by higher selling prices of specialty minerals.
|
|
- |
Exchange rates – The favorable impact on operating income was mainly due to the positive impact on operational costs resulting from the
depreciation of the average exchange rate of the Israeli shekel against the US dollar.
|
|
- |
Raw materials – The negative impact on operating income was due to increased costs of raw materials.
|
|
- |
Energy – The negative impact on operating income was due to higher prices of electricity and gas.
|
|
- |
Transportation – The positive impact on operating income was due to lower marine transportation costs.
|
|
- |
Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs.
|
ICL Group Limited Q3 2023
Results 16
Potash
The Potash segment produces and sells mainly potash, salts, magnesium
and electricity. Potash is produced in Israel using an evaporation process to extract potash from the Dead Sea at Sodom, and in Spain using conventional mining from an underground mine. The segment also produces and sells pure magnesium, magnesium
alloys and chlorine. In addition, the segment sells salt products produced at its potash site in Spain. The segment operates a power plant in Sodom which supplies electricity and steam to ICL facilities in Israel (surplus electricity is sold to
external customers).
Results of operations
|
|
|
|
|
|
Potash sales to external customers
|
|
|
|
|
|
Potash sales to internal customers
|
|
|
|
|
|
Other and eliminations (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potash price - CIF ($ per tonne)
|
|
|
|
|
|
|
(1) |
Primarily includes salt produced in Spain, metal magnesium-based products, chlorine,
and sales of excess electricity produced by ICL’s power plant at the Dead Sea in Israel.
|
Highlights and business environment
|
• |
ICL's potash price (CIF) per tonne of $342 in the quarter was 15% lower than the second quarter of 2023 and 51% lower year-over-year.
|
|
• |
The Grain Price Index decreased by 9.6% during the quarter due to decreased prices of corn, rice and wheat by 15.1%, 9.9% and 9%, respectively.
|
|
• |
The WASDE (World Agricultural Supply and Demand Estimates) report, published by the USDA in October 2023, showed a continued decrease in the
expected ratio of global inventories of grains to consumption to 27.3% for the 2023/24 agriculture year, compared to 27.7% for the 2022/23 agriculture year and 28.3% for the 2021/22 agriculture year.
|
ICL Group Limited Q3 2023
Results 17
Potash Segment information as of September 30, 2023 (Unaudited)
Additional segment information
Global potash market - average prices and imports:
|
|
|
|
|
|
|
Granular potash – Northwest Europe
|
CIF spot/contract
(€ per tonne)
|
|
|
|
|
|
Standard potash – Southeast Asia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources: CRU (Fertilizer Week Historical Price:
October 2023), FAI, Brazilian and Chinese customs data.
Potash – Production and Sales
|
|
|
|
|
|
Total sales (including internal sales)
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter 2023
|
- |
Production – Production was 62 thousand tonnes lower year-over-year, mainly due to operational challenges.
|
|
- |
Sales – The quantity of potash sold was 146 thousand tonnes higher year-over-year mainly due to increased sales volumes to Europe, China, and
Brazil, partially offset by lower sales volumes to India and the US.
|
1-9/2023
|
- |
Production – Production was 186 thousand tonnes lower year-over-year, mainly due to operational challenges such as weather conditions in the Dead Sea and on-going geologic constraints in Spain.
|
|
- |
Sales – The quantity of potash sold was 73 thousand tonnes higher year-over-year, mainly due to increased sales volumes to Europe and China,
partially offset by lower sales volumes to India and Brazil.
|
ICL Group Limited Q3 2023
Results 18
Results analysis for the period July – September 2023
|
- |
Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of potash to Brazil, Europe and
China, partially offset by lower sales volumes to India and the US.
|
|
- |
Price – The negative impact on operating income resulted primarily from a decrease of $355 in the potash price (CIF) per tonne
year-over-year.
|
|
- |
Exchange rates– The favorable impact on operating income was due to a positive impact on sales resulting from the appreciation of the average
exchange rate of the euro and the British pound against the US dollar, as well as a positive impact on operational costs resulting from the depreciation of the average exchange rate of the Israeli shekel against the US dollar.
|
|
- |
Energy – The positive impact on operating income was primarily due to a decrease in electricity and gas prices.
|
|
- |
Transportation – The positive impact on operating income was due to a decrease in marine costs, partially offset by higher inland
transportation costs.
|
|
- |
Operating and other expenses– The negative impact on operating income was primarily related to higher maintenance and operational costs.
|
ICL Group Limited Q3 2023
Results 19
Potash Segment information as of September 30, 2023 (Unaudited)
Results analysis for the period January – September 2023
|
- |
Quantity – The positive impact on operating income was primarily related to higher sales volumes of potash to Europe and China, partially
offset by lower sales volumes to India and Brazil.
|
|
- |
Price – The negative impact on operating income resulted primarily from a decrease of $305 in the potash price (CIF) per tonne compared to
the corresponding period last year.
|
|
- |
Exchange rates – The favorable impact on operating income was due to a positive impact on operational costs resulting from the depreciation
of the average exchange rate of the Israeli shekel against the US dollar. This was partially offset by a negative impact on sales resulting from the depreciation of the average exchange rate of the British pound against the US dollar.
|
|
- |
Energy – The positive impact on operating income was primarily due to a decrease in electricity and gas prices.
|
|
- |
Transportation – The positive impact on operating income was due to lower marine costs, partially offset by higher inland transportation
costs.
|
|
- |
Operating and other expenses – The negative impact on operating income was due to higher maintenance and operational costs, as well as higher
marketing costs.
|
ICL Group Limited Q3 2023
Results 20
Potash Segment information as of September 30, 2023 (Unaudited)
Phosphate Solutions
The Phosphate Solutions segment operates ICL's phosphate value chain and
uses phosphate rock and fertilizer-grade phosphoric acid to produce phosphate-based specialty products with higher added value, as well as to produce and sell phosphate-based fertilizers.
Phosphate specialties sales of $364 million and operating income of $42
million in the third quarter of 2023 were approximately 20% and 57% lower, respectively, compared to the third quarter of 2022. The decrease in operating income was driven mainly by lower selling prices and sales volumes, higher costs of raw
materials, as well as higher energy and other production costs.
Sales of phosphate commodities amounted to $256 million, approximately
18% lower than in the third quarter of 2022. Operating income of $27 million decreased year-over-year by $68 million, primarily due to lower prices, partially offset by higher quantities sold and lower costs of raw materials, mainly sulphur.
Results of operations
|
|
|
|
|
|
Sales to external customers
|
|
|
|
|
|
Sales to internal customers
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization*
|
|
|
|
|
|
|
|
|
|
|
|
Phosphate specialties EBITDA
|
|
|
|
|
|
Phosphate commodities EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
* For Q3 2023, comprised of $13 million in
phosphate specialties and $35 million in phosphate commodities. For Q3 2022, comprised of $13 million in phosphate specialties and $33 million in phosphate commodities.
ICL Group Limited Q3 2023
Results 21
Significant Highlights
|
• |
In the third quarter, continued destocking initiatives and overcapacity in the market resulted in a supply surplus, negatively impacting sales
prices and volumes. In addition, higher raw material and production costs, compared to the third quarter of 2022, affected the specialty phosphates business.
|
|
• |
Sales of Food Specialties were lower year-over-year, driven by reduced volumes in Europe and the Americas because of a slower than expected recovery
in the consumer food end-markets, as well as customers destocking initiatives. Likewise, industrial salts sales decreased year-over-year, with lower volumes and prices in key markets.
|
|
• |
Sales of white phosphoric acid (WPA) decreased year-over-year as higher volumes, mainly in Europe, were unable to offset the decreased selling
prices.
|
|
• |
In August, the company broke ground on its battery materials manufacturing plant in St. Louis. The $400 million facility is expected to be the first
large-scale lithium iron phosphate production plant in the US and to be operational in 2025.
|
|
• |
The downward pricing trend which has prevailed for much of the past year, eased in the third quarter of 2023, with key phosphate fertilizer
benchmarks rising by up to 34% during the quarter.
|
|
o |
In India, DAP prices increased by $145/t from the end of previous quarter to $600/t. Imports remained firm due to good affordability.
|
|
o |
US phosphate imports remained firm during the quarter, owing to a very large corn crop, and the resulting need to re-stock depleted inventories.
This contributed to a rise of DAP and MAP FOB NOLA prices during the quarter by $87/t and $174/t, respectively.
|
|
o |
In Brazil, MAP prices were 24% higher throughout the third quarter, reaching $533/t at the end of September. Due to weather conditions, the import
window for soy planting was delayed. This has kept demand firm, to date, through the second half of 2023.
|
|
o |
In China, the autumn campaign turned out to be stronger than expected, which raised local prices by 15% during the quarter and limited availability
for exports.
|
|
• |
Indian phosphoric acid price is negotiated on a quarterly basis. The third quarter price was agreed at $850/t P2O5, down $120/t from the second
quarter. For the fourth quarter, the price was agreed at $985/t, reflecting a sharp increase in DAP prices in August and September.
|
|
• |
Spot sulphur FOB Middle East recovered to $108/t at the end of September, from $63/t at the end of the second quarter, due to firm demand from the
phosphate industry and higher oil prices.
|
ICL Group Limited Q3 2023
Results 22
Additional segment information
Global phosphate commodities market - average prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CPT Brazil inland 18-20% P2O5 Bulk Spot
|
|
|
|
|
|
|
Bulk FOB Adnoc monthly Bulk contract
|
|
|
|
|
|
Source: CRU (Fertilizer Week Historical Prices,
October 2023).
Results analysis for the period July – September 2023
|
- |
Quantity – The positive impact on operating income was primarily related to higher sales volumes of phosphate fertilizers, partially offset
by lower sales volumes of salts, phosphate-based food additives and white phosphoric acid (WPA).
|
|
- |
Price – The negative impact on operating income was primarily due to lower selling prices of phosphate fertilizers, WPA, specialty raw
materials used for energy storage solutions and salts. This was partially offset by higher selling prices of phosphate-based food additives.
|
|
- |
Exchange rates – The favorable impact on operating income was mainly due to the positive impact on operational costs resulting from the
depreciation of the average exchange rate of the Israeli shekel and the Chinese yuan against the US dollar, as well as positive impact on sales due to the appreciation of the average exchange rate of the euro against the US dollar.
|
|
- |
Raw materials – The positive impact on operating income was mainly due to the lower cost of sulphur.
|
|
- |
Transportation – The positive impact on operating income was due to lower marine and inland transportation costs.
|
ICL Group Limited Q3 2023
Results 23
Results analysis for the period January – September 2023
|
- |
Quantity – The negative impact on operating income was due to lower sales volumes of white phosphoric acid (WPA), salts and phosphate-based
food additives. This was partially offset by higher sales volumes of phosphate fertilizers.
|
|
- |
Price – The negative impact on operating income was primarily related to lower selling prices of phosphate fertilizers, WPA and specialty raw
materials used for energy storage solutions. This was partially offset mainly by higher selling prices of phosphate-based food additives.
|
|
- |
Exchange rates – The favorable impact on operating income was mainly related to the positive impact on operational costs resulting from the
depreciation of the average exchange rate of the Chinese yuan and the Israeli shekel against the US dollar, which exceeded the negative impact on sales resulting from the depreciation of the average exchange rate of the Chinese yuan against
the US dollar.
|
|
- |
Raw materials –The positive impact on operating income was due to the lower cost of sulphur, partially offset by higher costs of caustic soda
and potassium hydroxide (KOH).
|
|
- |
Energy – The negative impact on operating income was due to increased electricity and gas prices, mainly in Europe and the US.
|
|
- |
Transportation – The positive impact on operating income was due to lower marine and inland costs.
|
|
- |
Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs, as
well as higher royalties' payments.
|
ICL Group Limited Q3 2023
Results 24
Growing Solutions
The Growing Solutions segment aims to achieve global leadership in plant
nutrition by enhancing its position in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, fertilizers and FertilizerpluS, and by targeting high-growth markets such as Brazil, India, and China. The segment also
looks to leverage its unique R&D capabilities, substantial agronomic experience, global footprint, backward integration to potash, phosphate and polysulphate and its chemistry know-how, as well as its ability to integrate and generate synergies
from acquired businesses. ICL is continuously working to expand its broad portfolio of specialty plant nutrition, plant stimulation and plant health solutions, which consist of enhanced efficiency and controlled release fertilizers (CRF),
water-soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid), FertilizerpluS, soil and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.
Results of operations
|
|
|
|
|
|
Sales to external customers
|
|
|
|
|
|
Sales to internal customers
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlights and business environment
|
• |
FertilizerpluS: Sales decreased year-over-year as higher volumes did not offset lower prices.
|
|
• |
Specialty Agriculture (SA): Sales decreased year-over-year, due to lower prices, partially offset by an increase in volumes, mainly in
MicroNutriants, controlled released fertilizers, straight fertilizers and liquid fertilizers.
|
|
• |
Turf and Ornamental (T&O): Sales decreased year-over-year, with ornamental horticulture sales decreasing, while turf sales remained stable.
|
|
• |
ICL Boulby: The production of Polysulphate increased by 13% year-over-year, with production reaching 245 thousand tonnes.
|
ICL Group Limited Q3 2023
Results 25
Growing Solutions Segment information as of September 30, 2023 (Unaudited)
Results analysis for the period July – September 2023
|
- |
Quantity – The positive impact on operating income was primarily due to higher sales volumes of specialty agriculture and FertilizerpluS
products.
|
|
- |
Price – The negative impact on operating income was primarily due to lower selling prices across most product lines, mainly specialty
agriculture and FertilizerpluS products.
|
|
- |
Exchange rates – The minor favorable impact on operating income was primarily due to the positive impact on sales resulting from the
appreciation of the average exchange rate of the euro and the Brazilian real against the US dollar, which exceeded their negative impact on operational costs.
|
|
- |
Raw materials – The positive impact on operating income was primarily related to lower costs of commodity fertilizers and ammonia.
|
|
- |
Operating and other expenses – The positive impact on operating income was primarily related to lower sales commissions and operational costs.
|
ICL Group Limited Q3 2023
Results 26
Growing Solutions Segment information as of September 30, 2023 (Unaudited)
Results analysis for the period January – September 2023
|
- |
Quantity – The positive impact on operating income was mainly due to an increase in sales volumes of specialty agriculture. This was partially offset by a decrease in sales volumes of Turf and Ornamental products as well as FertilizerpluS products.
|
|
- |
Price – The negative impact on operating income was due to lower selling prices across most business lines, mainly specialty agriculture and
FertilizerpluS products. This was partially offset by higher selling prices of Turf and Ornamental products.
|
|
- |
Exchange rate – The unfavorable impact on operating income was mainly due to the negative impact on operational costs resulting from the
appreciation of the average exchange rate of the Brazilian real and the euro against the US dollar, as well as the negative impact on sales due to the depreciation of the average exchange rate of the Israeli shekel and the Chinese yuan
against the US dollar.
|
|
- |
Raw materials – The positive impact on operating income was primarily related to lower costs of commodity fertilizers and ammonia.
|
|
- |
Operating and other expenses – The negative impact on operating income was mainly related to higher maintenance and operational costs.
|
ICL Group Limited Q3 2023
Results 27
Liquidity and Capital Resources
Net cash provided by operating activities
In the quarter,
cash flow provided by operating activities amounted to $407 million, compared to $606 million in the corresponding quarter last year. This decrease was mainly due to stronger operating results in the corresponding quarter last year, partially offset
by reduced working capital.
Net cash used in investing activities
In the quarter, net cash used in investing activities amounted to $189
million, compared to $176 million in the corresponding quarter last year. This increase was mainly due to higher investments in property, plant and equipment during the current quarter.
Net cash used in financing activities
In the quarter, net cash used in financing activities amounted to $278
million, compared to $337 million in the corresponding quarter last year. This reduction was mainly due to lower dividend payments.
In March 2023, the Company repaid, as scheduled, NIS 392 million
(approximately $108 million) of its Series E Bond.
As of September 30, 2023, ICL’s net financial liabilities amounted to
$2,107 million, a decrease of $209 million compared to December 31, 2022.
Sustainability-linked Revolving Credit Facility (RCF)
In April 2023, the Company entered into a Sustainability-Linked
Revolving Credit Facility Agreement made between ICL Finance B.V. and a consortium of twelve international banks for a $1,550 million credit facility. The Sustainability-Linked RCF replaced a previous revolving credit facility that was entered into
in 2015, as amended and extended in 2018, and which was due to expire in 2025.
As of September 30, 2023, the Company had utilized $360 million of the
credit facility. For further information, please see Note 5 to the Company’s Interim Financial Statements.
Securitization
The total amount of the Company's committed securitization facility
framework is $300 million with an additional $100 million uncommitted. As of September 30, 2023, ICL had utilized approximately $177 million of the facility’s framework.
ICL Group Limited Q3 2023
Results 28
Ratings and financial covenants
Fitch Ratings
In June 2023, Fitch Ratings reaffirmed the Company’s long-term issuer
default rating and senior unsecured rating at 'BBB-'. The outlook on the long-term issuer default rating is stable.
S&P Ratings
In July 2023, the S&P credit rating agency reaffirmed the Company’s
international credit rating and senior unsecured rating of 'BBB-'. In addition, the S&P Maalot credit rating agency reaffirmed the Company’s credit rating of 'ilAA' with a stable rating outlook.
Financial covenants
As of September 30, 2023, the Company was in compliance with all of its
financial covenants stipulated in its financing agreements.
Critical Accounting Estimates
In the nine and three month periods ended September 30, 2023, there were
no material changes in the critical accounting estimates previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2022.
Board of Directors and Senior Management Updates
Subsequent to the date of this report, on September 19, 2023, the
Company’s Board of Directors approved the appointment of Mr. Uri Perelman as EVP, ICL Chief Business Development Officer, effective as of December 8, 2023. Mr. Perelman will be considered an executive officer of the Company and a member of the
Company’s Global Executive Committee (GEC).
In the nine and three month periods ended September 30, 2023, there were
no material changes in the risk factors previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2022.
Quantitative and Qualitative Exposures stemming from Market Risks
Reference is made to “Item 11 – Quantitative and Qualitative Disclosures
about Market Risks” in our Annual Report on Form 20-F for the year ended December 31, 2022.
ICL Group Limited Q3 2023
Results 29
Applications of derivative actions
|
1. |
In July 2023, the Company was served with a motion for discovery of documents, filed with the Tel Aviv District Court, by a shareholder of the
Company (hereinafter – the Applicant), as a preliminary proceeding in preparation for the possible filing of a comprehensive derivative action against officers of the Company who, according to the Applicant, allegedly caused damages to the
Company in the minimum amount of about $202 million plus linkage and interest, as a result of the decision to purchase Allana Potash in Ethiopia. Considering the early stage of the proceeding, it is difficult to estimate its outcome. In any
event, no material impact is expected on the Company's financial results.
|
|
2. |
Note 18 to the Annual Financial Statements provides disclosure regarding a motion for discovery of documents filed by a shareholder of the Company
as a preliminary proceeding for a possible application of a derivative action against officers of the Company as a result of the Ashalim incident. In March 2023, the shareholder submitted a request to withdraw from the procedural arrangement,
according to which the legal proceedings will be delayed until the relevant investigation's materials are provided to the Company, and to establish a new schedule for the resumption of the proceedings. The Company submitted its opposition to
the request. The court approved further delay of the legal proceedings until November 30, 2023. Considering the proceedings are in an early stage and even suspended, it is difficult to estimate their outcome. In any event, no material impact
is expected on the Company's financial results.
|
For further information regarding legal proceedings and other
contingencies, see Note 7 to the Company's Interim Financial Statements.
Forward-looking Statements
This announcement contains statements that
constitute “forward‑looking statements”, many of which can be identified by the use of forward‑looking words such as “anticipate”, “believe”, “could”, “expect”, “should”, “plan”, “intend”, “estimate”, “strive”, “forecast”, “targets” and “potential”,
among others. The Company is relying on the safe harbor provided in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in making such forward-looking statements.
Forward‑looking statements appear in a number of
places in this announcement and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward‑looking statements are based on our management’s beliefs and assumptions and on information currently available
to our management. Such statements are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward‑looking statements due to various factors, including, but not limited to:
ICL Group Limited Q3 2023
Results 30
Loss or impairment of business licenses or mineral
extractions permits or concessions; volatility of supply and demand and the impact of competition; the difference between actual reserves and our reserve estimates; natural disasters and cost of compliance with environmental regulatory legislative
and licensing restrictions including laws and regulation related to, and physical impacts of climate change and greenhouse gas emissions; failure to "harvest" salt which could lead to accumulation of salt at the bottom of the evaporation Pond 5 in
the Dead Sea; litigation, arbitration and regulatory proceedings; disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; changes in exchange rates or prices compared to those
we are currently experiencing; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; pandemics may create disruptions, impacting our sales,
operations, supply chain and customers; delays in termination of engagements with contractors and/or governmental obligations; the inflow of significant amounts of water into the Dead Sea which could adversely affect production at our plants; labor
disputes, slowdowns and strikes involving our employees; pension and health insurance liabilities; changes to governmental incentive programs or tax benefits, creation of new fiscal or tax related legislation; and/or higher tax liabilities; changes
in our evaluations and estimates, which serve as a basis for the recognition and manner of measurement of assets and liabilities; failure to integrate or realize expected benefits from mergers and acquisitions, organizational restructuring and joint
ventures; currency rate fluctuations; rising interest rates; government examinations or investigations; information technology systems or breaches of our, or our service providers', data security; failure to retain and/or recruit key personnel;
inability to realize expected benefits from our cost reduction program according to the expected timetable; inability to access capital markets on favorable terms; cyclicality of our businesses; The Company is exposed to risks relating to its current
and future activity in emerging markets; changes in demand for our fertilizer products due to a decline in agricultural product prices, lack of available credit, weather conditions, government policies or other factors beyond our control; disruption
of our, or our service providers', sales of our magnesium products being affected by various factors that are not within our control; our ability to secure approvals and permits from the authorities in Israel to continue our phosphate mining
operations in Rotem Amfert Israel; volatility or crises in the financial markets; hazards inherent to mining and chemical manufacturing; the failure to ensure the safety of our workers and processes; exposure to third party and product liability
claims; product recalls or other liability claims as a result of food safety and food-borne illness concerns; insufficiency of insurance coverage; war or acts of terror and/or political, economic and military instability in Israel and its region,
including the current state of war declared in Israel and any resulting disruptions to our supply and production chains; filing of class actions and derivative actions against the Company, its executives and Board members; closing of transactions,
mergers and acquisitions; and other risk factors discussed under ”Item 3 - Key Information— D. Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission (the
“SEC”) on February 28, 2023 (the “Annual Report”).
Forward‑looking statements speak only as of the date
they are made, and, except as otherwise required by law, we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements, targets or goals in order to
reflect later events or circumstances or to reflect the occurrence of unanticipated events. Investors are cautioned to consider these risk and uncertainties and to not place undue reliance on such information. Forward-looking statements should not be
read as a guarantee of future performance or results and are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward-looking statements.
This report for the third quarter of 2023 (the “Quarterly Report”) should
be read in conjunction with the Annual Report and the report for the first and second quarters of 2023 published by the Company (the "prior quarterly report"),
including the description of events occurring subsequent to the date of the statement of financial position, as filed with the US SEC.
Condensed Consolidated Statements of Financial Position as of (Unaudited)
|
|
|
|
Cash and cash equivalents
|
|
|
|
Short-term investments and deposits
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and debentures
|
|
|
|
|
|
|
|
Long-term employee liabilities
|
|
|
|
Long-term provisions and accruals
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity
|
|
|
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited
Quarterly Report 33
Condensed Consolidated Statements of Income (Unaudited)
(In millions except per share data)
|
For the three-month period ended
September 30
|
For the nine-month period ended September 30
|
For the year ended December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, transport and marketing expenses
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
|
|
Research and development expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share in earnings of equity-accounted investees
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes on income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to the non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to the shareholders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to the shareholders of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of ordinary shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial
statements.
ICL Group Limited
Quarterly Report 34
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
|
For the three-month period ended
|
For the nine-month period ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of other comprehensive income that will be reclassified subsequently to net income
|
|
|
|
|
|
Foreign currency translation differences
|
|
|
|
|
|
Change in fair value of cash flow hedges transferred to the statement of income
|
|
|
|
|
|
Effective portion of the change in fair value of cash flow hedges
|
|
|
|
|
|
Tax relating to items that will be reclassified subsequently to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of other comprehensive income that will not be reclassified to net income
|
|
|
|
|
|
Actuarial gains from defined benefit plans
|
|
|
|
|
|
Tax relating to items that will not be reclassified to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to the non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to the shareholders of the Company
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited
Quarterly Report 35
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
For the three-month period ended
|
For the nine-month period ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
Exchange rate, interest and derivative, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in trade receivables
|
|
|
|
|
|
|
|
|
|
|
|
Change in other receivables
|
|
|
|
|
|
|
|
|
|
|
|
Net change in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid, net of refund
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Proceeds (payments) from deposits, net
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment and intangible assets
|
|
|
|
|
|
Proceeds from divestiture of assets and businesses, net of transaction expenses
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Dividends paid to the Company's shareholders
|
|
|
|
|
|
Receipt of long-term debt
|
|
|
|
|
|
Repayments of long-term debt
|
|
|
|
|
|
Receipts (repayments) of short-term debt
|
|
|
|
|
|
Receipts from transactions in derivatives
|
|
|
|
|
|
Dividend paid to the non-controlling interests
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
|
|
|
Cash and cash equivalents as of the beginning of the period
|
|
|
|
|
|
Net effect of currency translation on cash and cash equivalents
|
|
|
|
|
|
Cash and cash equivalents as of the end of the period
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Quarterly
Report 36
Condensed Consolidated Statements of Changes in Equity (Unaudited)
|
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
|
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
|
|
|
|
For the three-month period ended September 30, 2023
|
|
|
|
|
|
|
|
|
|
Balance as of July 1, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
|
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
|
|
|
|
For the three-month period ended September 30, 2022
|
|
|
|
|
|
|
|
|
|
Balance as of July 1, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2022
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Quarterly
Report 37
Condensed Consolidated Statements of Changes in Equity (Unaudited) (cont'd)
|
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
|
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
|
|
|
|
For the nine-month period ended September 30, 2023
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
|
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
|
|
|
|
For the nine-month period ended September 30, 2022
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2022
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Quarterly
Report 38
Condensed Consolidated Statements of Changes in Equity (Unaudited) (cont'd)
|
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
|
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
|
|
|
|
For the year ended December 31, 2022
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2022
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Quarterly
Report 39
ICL Group Ltd. (hereinafter – the Company), is a company incorporated
and domiciled in Israel. The Company's shares are traded on both the Tel-Aviv Stock Exchange (TASE) and the New York Stock Exchange (NYSE) under the ticker: ICL. The address of the Company’s registered headquarters is 23 Aranha St., Tel Aviv,
Israel. The Company is a subsidiary of Israel Corporation Ltd., a public company traded on the TASE under the ticker: ILCO:TA. The State of Israel holds a Special State Share in ICL and in some of its subsidiaries, entitling the State the right to
safeguard the State of Israel vital interests.
The Company,
together with its subsidiaries, associated companies and joint ventures (hereinafter ‑ the Group or ICL), is a leading specialty minerals group that operates a unique, integrated business
model. The Company competitively extracts certain minerals as raw materials and utilizes processing and product formulation technologies to add value to customers in two main end-markets: agriculture and industrial (including food). ICL’s products
are used mainly in agriculture, electronics, food, fuel and gas exploration, water purification and desalination, construction, detergents, cosmetics, pharmaceuticals and automotive.
|
B. |
Events in the reporting period
|
In October 2023, the Israeli government declared a state of war
following an attack on civilians at its southern border. The new security situation has led to several challenges, including some disruptions in supply chains, a shortage of personnel due to mobilization for reserve duty, and fluctuations in
foreign currency exchange rates relative to the Israeli shekel. The Company has taken measures to ensure the safety of its employees and business partners, as well as the communities in which it operates, in order to minimize any potential impact
on its business, including avoiding disruption of production in its facilities in Israel.
The current events and the security escalation in Israel have not
had a material impact on the Company's business results. However, since the developments related to the war situation, as well as its duration, are unpredictable, the Company has no ability to estimate the extent of the war’s potential impact on
its future business and results. The Company continuously monitors the developments and will take all necessary actions to minimize any negative consequences to its operations and assets.
Note 2 – Significant Accounting Policies
The Company's financial statements are prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (IASB) and the Company uses IFRS as its generally accepted accounting principles (“GAAP”).
The condensed consolidated interim financial statements were prepared
in accordance with IAS 34, “Interim Financial Reporting” and do not include all the information required in complete, annual financial statements. These condensed consolidated interim financial statements and notes are unaudited and should be read
together with the Company's audited financial statements included in its Annual Report on Form 20-F for the year ended December 31, 2022 (hereinafter – the Annual Financial Statements), as filed with the Securities and Exchange Commission ("SEC").
The accounting policies and assumptions used in preparation of these
condensed consolidated interim financial statements are consistent with those used in preparation of the Company's Annual Financial Statements and in the Company's opinion, include all the
adjustments necessary to fairly present such information. Interim results are not necessarily indicative of the Company's expected results for the entire year.
Reclassifications
The Company made a number of insignificant reclassifications in
comparative figures in order to adjust them to the manner of classification in the current financial statements. The said reclassifications have no effect on the total profit (loss).
ICL Group Limited Quarterly
Report 40
Note 3 - Operating Segments
1. Information on operating segments
ICL is a global specialty minerals company operating bromine, potash and phosphate mineral value chains in a unique, integrated business model. Our operations are organized under four segments: Industrial Products, Potash, Phosphate Solutions and
Growing Solutions.
Industrial Products – The
Industrial Products segment produces bromine derived from a solution that is a by‑product of the potash production process in Sodom, Israel, as well as bromine‑based compounds. Industrial Products uses most of the bromine it produces for its own
production of bromine compounds at its production sites in Israel, the Netherlands and China. In addition, the Industrial Products segment produces several grades of salt, magnesium chloride and some other specialty mineral products. Industrial
Products is also engaged in the production and marketing of phosphorous-based flame retardants and additional phosphorus‑based products.
Potash – The Potash segment
produces and sells primarily potash, salt, magnesium, as well as electricity. Potash is produced in Israel and Spain using an evaporation process to
extract potash from the Dead Sea in Israel, and from conventional mining of an underground mine in Spain. The segment also produces and sells pure magnesium and magnesium alloys, as well
as chlorine and sylvinite. In addition, the segment sells salt products produced at its potash site in Spain. The Company operates a power plant in Sodom which supplies electricity to ICL companies in Israel (as well as surplus electricity to
external customers) and steam to all facilities at the Sodom site.
Phosphate Solutions – The
Phosphate Solutions segment is based on a phosphate value chain which uses phosphate commodity products, such as phosphate rock and fertilizer-grade phosphoric acid (“green phosphoric acid”), to produce specialty products with higher added value.
The segment also produces and markets phosphate-based fertilizers. Phosphate rock is mined and processed from open pit mines, three of which are located in the Negev Desert in Israel,
while the fourth is situated in Yunnan province in China. Sulphuric acid, green phosphoric acid and phosphate fertilizers are also produced in the facilities in Israel and China.
The Phosphate Solutions segment manufactures pure phosphoric acid by
purifying green phosphoric acid. Pure phosphoric acid and green phosphoric acid are used to manufacture downstream products with high added value, such as phosphate salts and acids, for a wide range of food and industrial applications. Phosphate
salts and acids are used in various industrial end markets such as oral care, cleaning products, paints and coatings, energy storage solutions, water treatment, asphalt modification, construction, metal treatment and more. The segment's products
for the food industry include functional food ingredients and phosphate additives which provide texture and stability solutions for processed meat, meat alternatives, poultry, seafood, dairy products, beverages and baked goods. In addition, the segment supplies pure phosphoric acid to ICL’s specialty fertilizers business and produces organic milk components and whey proteins for the food ingredients industry.
ICL Group Limited Quarterly
Report 41
Note 3 - Operating Segments (cont’d)
1. Information on operating segments (cont’d)
Growing Solutions – The
Growing Solutions segment aims to achieve global leadership in plant nutrition markets by enhancing its positions in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, fertilizers and FertilizerpluS, targeting
high-growth markets such as Brazil, India and China. The segment also looks to leverage its unique R&D capabilities, substantial agronomic experience, global footprint, backward integration to potash, phosphate and polysulphate and its
chemistry know-how, as well as its ability to integrate and generate synergies from acquired businesses.
ICL is continuously working to expand its broad portfolio of specialty
plant nutrition, plant stimulation and plant health solutions, which consists of enhanced efficiency and controlled release fertilizers (CRF), water-soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid), FertilizerpluS, soil
and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.
The Growing Solutions segment develops, manufactures, markets and
sells its products globally, mainly in South America, Europe, Asia, North America and Israel. It produces water soluble specialty fertilizers in Belgium, Israel and Spain, organic, ornamental horticulture, turf and landscaping products in the UK
and the Netherlands, liquid fertilizers in Israel, Spain and China, straights soluble fertilizers in China and Israel, controlled release fertilizers in the Netherlands, Brazil and the United States, FertilizerpluS products in the UK, the
Netherlands and Germany, as well as secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants in Brazil.
Other Activities – Other
business activities include, among other things, ICL’s innovative arm, promoting innovation, developing new products and services, as well as digital platforms and technological solutions
for farmers and agronomists. This category includes Growers and Agmatix, innovative start-ups that are developing agricultural data processing and analysis capabilities for the future of agriculture. These activities are not presented as reportable
segments as they do not meet the required quantitative thresholds.
2. Segment capital investments
Capital investments made by the segments for each of the reporting
periods include mainly property, plant and equipment as well as intangible assets acquired in the ordinary course of business and as part of business combinations.
3. Inter–segment transfers and unallocated income (expenses)
Segment revenue, expenses and results include inter-segment transfers, which are based on transactions prices in the ordinary course of business. This is aligned with reports that are regularly reviewed by the Chief Operating Decision Maker. Inter-segment
transfers are eliminated as part of the financial statements' consolidation process.
Segment profit is measured based on operating income, without the
allocation of certain expenses to the operating segments, as presented in the reports regularly reviewed by the Chief Operating Decision Maker. Management believes that it is the most relevant measure for the assessment of such results.
ICL Group Limited Quarterly
Report 42
Note 3 - Operating Segments (cont’d)
B. Operating segment data
For the three-month period ended September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Other expense not allocated to the segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly
Report 43
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the three-month period ended September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Other income not allocated to the segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly
Report 44
Note 3 - Operating Segments (cont’d)
B. Operating segment data (cont'd)
For the nine-month period ended September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Other expense not allocated to the segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly
Report 45
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the nine-month period ended September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Other income not allocated to the segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly
Report 46
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the year ended December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Other income not allocated to the segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share in earnings of equity-accounted investees
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly
Report 47
Note 3 - Operating Segments (cont'd)
C. Information based on geographical location
The following table presents the distribution of the operating segments sales by
geographical location of the customer:
|
|
|
|
|
|
|
|
|
|
|
|
% of
sales
|
millions
|
% of
sales
|
millions
|
% of
sales
|
ICL Group Limited Quarterly
Report 48
Note 3 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following tables present the distribution of the operating segments sales by
geographical location of the customer:
For the three-month period ended
September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three-month period ended
September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly
Report 49
Note 3 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following tables present the distribution of the operating segments sales by
geographical location of the customer:
For the nine-month period ended
September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine-month period ended
September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly
Report 50
Note 3 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following table presents the distribution of the operating segments sales by
geographical location of the customer:
For the year ended December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICL Group Limited Quarterly
Report 51
Note 4 - Intangible Assets
A. Intangible assets with an indefinite useful life
Goodwill and intangible assets with an indefinite lifespan are not
amortized on a systematic basis but, rather, are examined at least once a year for impairment.
Goodwill is not monitored for internal reporting purposes and,
accordingly, it is allocated to the Company’s operating segments. The impairment test of the carrying amount of goodwill is conducted accordingly.
For impairment testing purpose, the trademarks with indefinite useful
life were allocated to the cash-generating units, which represent the lowest level within the Company.
The carrying amounts of intangible assets with an indefinite useful
life are as follows:
B. Annual impairment test
The Company conducted its annual impairment test of goodwill and did
not identify any impairment. The recoverable amount of the operating segments was determined based on their value in use, which is based on internal valuation of the discounted future cash flows generated from the continuing operations of the
operating segments.
The future cash flow of each operating segment was based on the
segment approved five-year plan, which includes segment estimations for revenues, operating income and other factors, such as working capital and capital expenditures. The segments' projections were based, among other things, on the assumed sales
volume growth rates according to long-term expectations, internal selling prices and raw materials prices based on external data sources, when applicable and relevant.
The key assumptions used to calculate the operating segments'
recoverable amounts are a nominal after‑tax discount rate of 10.6% and a long‑term growth rate of 2.6%, reflecting the industries and markets in which the Company is engaged.
ICL Group Limited Quarterly
Report 52
Note 5 – Loans, Financial Instruments and Risk Management
A. Fair value of financial instruments
The carrying amounts in the financial statements of certain financial
assets and financial liabilities, including cash and cash equivalents, investments, short-term deposits and loans, receivables and other debit balances, long-term investments and receivables, short-term credit, payables and other credit balances,
long-term loans bearing variable interest and other liabilities, and derivative financial instruments, correspond to or approximate their fair value.
The following table details the carrying amount and fair value of
financial instrument groups presented in the financial statements not in accordance with their fair value:
Loans bearing fixed interest
|
|
|
|
|
|
|
Debentures bearing fixed interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents an analysis of the financial instruments
measured in fair value, using the valuation method.
The following level was defined:
Level 2: Observed data (directly or indirectly).
Derivatives used for economic hedge, net
|
|
|
|
Derivatives designated as cash flow hedge, net
|
|
|
|
|
|
|
|
C. Foreign currency risks
The Company is exposed to changes in the exchange rate of the Israeli
shekel against the US dollar in respect of principal and interest in certain debentures, loans, labor costs and other operating expenses. The Company's risk management strategy is to hedge the changes in cash flow deriving from liabilities, labor costs and other operational costs denominated in shekels by using derivatives. These exposures are hedged from time to time, according to the assessment of exposure and inherent risks
against which the Company elects to hedge, in accordance with the Company's risk management strategy.
ICL Group Limited Quarterly
Report 53
Notes to the condensed consolidated interim financial statements as of September 30,
2023 (Unaudited)
Note 5 – Loans, Financial Instruments and Risk Management (cont'd)
D. Revolving Credit Facility Agreement
In April 2023, the Company entered into a Sustainability-Linked
Revolving Credit Facility Agreement made between its subsidiary ICL Finance B.V. and a consortium of twelve international banks for $1,550 million (hereinafter - the Sustainability-Linked RCF). The Sustainability-Linked RCF is guaranteed by ICL and
replaced a previous revolving credit facility that was entered into in 2015, as amended and extended in 2018, and which was due to expire in 2025.
The Sustainability-Linked RCF is for a period of five years and
includes lenders’ options to extend it by two periods of one-year each. The pricing structure of the new RCF is not materially different from ICL’s previous credit facility, and it is adapted to a SOFR/EURIBOR based pricing mechanism as follows:
The Sustainability-Linked RCF includes customary undertakings and
representations, including, among other things, a cross-default mechanism, a negative pledge and financial covenants, similar to all of ICL’s loans. In line with ICL’s strategic commitment to sustainability, the Sustainability-Linked RCF follows
ICL’s initial Sustainability-Linked Term Loan dated September 2021. The Sustainability-Linked RCF includes three Key Performance Indicators (KPIs) which have been designed to align with ICL’s sustainability goals: a reduction in Absolute Scope 1
& 2 GHG Emissions; an increase in the percentage of female representation among senior ICL management; and an increase in the number of valid TfS (Together for Sustainability initiative) scorecards obtained for ICL Group suppliers. Each of
these goals will be assessed regularly during the term of the Sustainability-Linked RCF through third-party verification of ICL’s performance in these areas. As of September 30, 2023, the
Company had utilized $360 million of the credit facility.
Note 6 –Dividend Distributions
Decision date for dividend distribution by the Board of Directors
|
Actual date of dividend distribution
|
Distributed amount
($ millions)
|
|
* The dividend will be distributed on
December 20, 2023, with a record date for eligibility of December 5, 2023.
ICL Group Limited Quarterly
Report 54
Notes to the condensed consolidated interim financial statements as of September 30,
2023 (Unaudited)
Note 7 – Provisions, Contingencies and Other Matters
|
1. |
Note 18 to the Annual Financial Statements provides disclosure regarding an appeal filed
with Israel's Supreme Court against the Be'er Sheva District Court's decision to dismiss with prejudice the application for certification of a class action against Rotem Israel Ltd. and Periclase, for environmental hazards which were
allegedly the result of the leakage of wastewater to the groundwater aquifer in the vicinity of the Bokek stream which began in the 1970s, while the Company was government owned. On October 12, 2023, Israel's Supreme Court rendered its ruling
in the appeal, dismissing the plaintiffs claim regarding property rights, and therefore dismissing the application for certification of the entire public of the State of Israel, yet accepted the appeal with regards to the statute of
limitations claim, and ruled that application for certification is approved only regarding the limited class constituting visitors of the Bokek stream. In accordance therewith, the application for certification of the limited group only shall
be reviewed by the District Court. Since the claim, in its limited form, will be reviewed at the District Court and considering the preliminary stage of this proceeding, it is difficult to estimate its outcome. No provision has been recorded
in the Company's financial statements.
|
|
2. |
In September 2023, a request for approval of a derivative claim was submitted to the District Court in Tel Aviv by Yuval Yarin Dead Sea Ltd. (which
owns 50% of the rights of the Ein Gedi SEA OF SPA Association (hereinafter - the Association)), against the Association, Kibbutz Ein Gedi, Dead Sea Works Ltd, the State of Israel, and the Tamar Regional Council. The basis of the claim is the
damage allegedly caused to the Association's spa complex, estimated to be worth tens of millions of shekels, due to the pumping of sea water from the northern basin of the Dead Sea, which contributed to the receding sea level. Considering the
preliminary stage of the proceeding, it is difficult to estimate its outcome. No provision has been recorded in the Company's financial statements.
|
|
3. |
In 2021, a decision was rendered by the Israel Water Authority, despite the Company's objection, that the Company's status should be changed to a
"Consumer-Producer", as defined in the Water Law, beginning with the Water Authority's production license, issued to the Company for 2021. The main implication of this change is an increase in water fees of about $3 million per year for water
from drillings outside of the concession area. The Company filed an appeal with the Court of Water Affairs against the said decision which was rejected in September 2023. The Company is considering appealing the decision to the Supreme Court.
|
Concurrently, in 2022, the Movement for the Quality of Government in
Israel filed an appeal in which the Court of Water Affairs was petitioned to compel the Water Authority to apply the change in classification of the Company as early as 2018, despite the above mentioned decision. In the Company's estimation, it is
more likely than not that this appeal will be rejected.
|
4. |
The Company conducted an evaluation of the expected remaining useful life of Property, Plant and Equipment at its facilities in Israel. This
evaluation was based on the Company's accumulated experience, ongoing maintenance practices and operational history of these facilities. The findings of this assessment, which was concluded in the third quarter, revealed that, due to the
increasing adoption of new technologies and the implementation of operational excellence processes, the expected lifespan of certain Property, Plant, and Equipment exceeded their previously estimated useful life. As a result, the estimated
useful life of the said assets was extended by 2‑5 years, effective from January 2023. The impact of this adjustment on the first nine months of 2023, is a reduction in depreciation expenses, of which $13 million was reflected in operating
results, and $3 million was recorded as part of changes in inventory value.
|
|
5. |
Further to Note 18 to the Annual Financial Statements, regarding the settlement agreement signed in connection with the Ashalim incident, in May
2023, a District Court in Israel approved the settlement agreement, while dismissing a submitted objection and granted it the force of a judgment, effectively concluding the proceedings. In July 2023, an appeal was filed against the
District Court's ruling, claiming, among other things, that this agreement is allegedly unreasonable. In the Company's estimation, it is more likely than not that the appeal will be rejected.
|
|
6. |
Further to Note 18 to the Annual Financial Statements, regarding Energean's continued delays in supply of natural gas (NG), in April 2023,
Energean announced it entered commercial production, following which full supply of NG is now being obtained from Energean. The Company intends to exercise all of its legal rights in connection with Energean's past delays.
|
ICL Group Limited Quarterly
Report 55
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
ICL Group Ltd.
|
|
|
|
By:
|
/s/ Aviram Lahav
|
|
|
Name:
|
Aviram Lahav
|
|
|
Title:
|
Chief Financial Officer
|
|
ICL Group Ltd.
|
|
|
|
By:
|
/s/ Aya Landman
|
|
|
Name:
|
Aya Landman
|
|
|
Title:
|
VP, Chief Compliance Officer & Corporate Secretary
|
Date: November 8, 2023