Washington, D.C. 20549
ICL GROUP LTD.
ICL Group Ltd.
P.O. Box 20245
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
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 and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.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not superseded by documents or reports subsequently filed or furnished.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 Record Third Quarter 2022 Results
Company continues to grow specialties impact by
building on existing
momentum and targeting long-term leadership
opportunities
Tel Aviv, Israel, November 9, 2022 – ICL (NYSE: ICL) (TASE: ICL), a leading global specialty minerals company, today reported its financial results for the third quarter ended September 30, 2022. Consolidated sales of $2,519 million were up 41% year-over-year versus $1,790 million. Operating
income of $935 million was up 191% versus $321 million, while adjusted operating income of $928 million was up 195% versus $315 million. Net income of $633 million was up 181%, while adjusted net income of $628 million was up 192%. Adjusted
EBITDA of $1,049 million was up 139% versus $438 million. Adjusted EBITDA margin of 41.6% was up versus 24.5%. Earnings per share
of $0.49 were up 188% versus $0.17.
Once again, ICL’s focus on long-term specialties solutions benefitted the company, as did
additional upside from commodity prices, which began to ease following record-setting rates in the first half of the year.
“ICL delivered another quarter of record results, with record third quarter and year-to-date sales, operating income,
EBITDA, operating cash flow and net profit, as well as a new production record at our Dead Sea site and
year-to-date records for free cash flow and EPS. All three of our specialties businesses delivered record third quarter results, even with shifts in demand and continued global supply chain challenges,” said Raviv Zoller, president and CEO of ICL. “Our third quarter results reinforce our recent investor day message, which stressed our commitment to growing our leadership position across our differentiated businesses, as these represent significant long-term
opportunities for ICL to deliver sustainable shareholder value.”
ICL expects to be at the upper end of its previously issued guidance range, which called for full year adjusted EBITDA of between $3,800 million to $4,000 million, with between $1,500 million to
$1,600 million of this amount estimated to come from the company’s specialties focused businesses. (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 three and nine-month periods ended September 30, 2022 (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 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 2021 revenues totaled approximately $7 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.
[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.
Financial Figures and non-GAAP Financial Measures
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Adjusted operating income (1)
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Net income attributable to the shareholders of the Company
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Adjusted net income - shareholders of the Company (1)
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Diluted earnings per share (in dollars)
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Diluted adjusted earnings per share (in dollars) (2)
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Cash flows from operating activities
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Purchases of property, plant and equipment and intangible assets (3)
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(1) |
See “Adjustments to Reported Operating and Net income (non-GAAP)” below.
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(2) |
Commencing 2022, the Company’s adjusted EBITDA definition was updated. See the disclaimer below.
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(3) |
See “Condensed consolidated statements of cash flows (unaudited)” in the accompanying financial statements.
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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 adjust items 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 2022 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 2022 Results 4
Adjustments to Reported Operating and Net income (non-GAAP)
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Divestment related items and transaction costs from acquisitions (1)
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Dispute and other settlement expenses (2)
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Impairment and disposal of assets, provision for closure and restoration costs (3)
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Total adjustments to operating income
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Adjusted operating income
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Net income attributable to the shareholders of the Company
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Total adjustments to operating income
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Total tax adjustments (4)
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Total adjusted net income - shareholders of the Company
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(1) |
For 2022, reflects a capital gain related to the sale of an asset in Israel and related to the Company’s
divestment of a 50%-owned joint venture, Novetide. For 2021, reflects a capital gain related to the sale of an asset in Israel and the divestment of the Industrial Products segment's Zhapu site in China, partially offset by an earnout adjustment relating to a divestment in previous years, as well as transaction costs related to acquisitions in Brazil.
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(2) |
For 2021, reflects settlement costs related to the termination of a partnership between ICL Iberia and Nobian, as well as reimbursement of
arbitration costs related to a potash project in Ethiopia, which was partially offset by a reversal of a VAT provision following a court ruling in Brazil.
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(3) |
For 2021, reflects the write-off of a pilot investment in Spain that did not materialize and an increase in restoration costs, offset by a
reversal of impairment due to the strengthening of phosphate prices.
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(4) |
For 2022, reflects tax expenses in respect of prior years following a settlement with Israeli’s Tax Authority regarding Israel's surplus profit
levy which outlines understandings for the calculation of the levy, including the measurement of fixed assets and the tax impact of adjustments made to operational income. For additional information, see Note 7 to the Company’s interim
Financial Statements. For 2021, the amount includes tax expenses related to the release of accumulated profits of the Company and certain Israeli subsidiaries that were exempt from tax until their distribution as a dividend, following a temporary provision to the Israeli Encouragement Law, as well as the tax impact of adjustments made to operational income.
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ICL Group Limited Q3 2022 Results 5
Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share
for the periods of activity
Calculation of adjusted EBITDA was made as follows:
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Less: Share in earnings of equity-accounted investees
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Depreciation and amortization
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Total adjusted EBITDA (2)
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(1) |
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
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(2) |
Commencing 2022, the Company’s adjusted EBITDA definition was updated, see the disclaimer above.
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Calculation of diluted adjusted earnings per share was made as
follows:
Net income attributable to the shareholders of the Company
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Adjusted net income - shareholders of the Company
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Weighted-average number of diluted ordinary shares outstanding (in thousands)
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Diluted adjusted earnings per share (in dollars) (2)
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(1) |
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
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(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).
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ICL Group Limited Q3 2022 Results 6
Events in the reporting period
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1. |
Limited export of fertilizers from Belarus, due to sanctions, and from Russia, following the war in Ukraine, resulted in a sharp increase in the
price of MOP in the first half of 2022.
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However, a build-up of stocks in the US and Brazil led to downward
pressure on potash and phosphate prices during the quarter.
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Global inflation has risen sharply, mainly due to an unprecedented series of supply side shocks, led by Russia’s invasion of Ukraine driving
energy prices to extraordinary levels.
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The increased cost of living as well as geopolitical tensions have led
to a mood of economic pessimism, uncertainty and tightening of global demand.
Central banks worldwide have reacted to inflationary pressures by
increasing interest rates. The US Federal Reserve raised interest rates throughout recent months and has boosted the value of the US dollar relative to other currencies.
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Extreme weather conditions in some regions and geopolitical tensions have pushed global grain stocks and food security toward decade lows.
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The duration of sanctions, as well as the current geopolitical unrest cannot be predicted, and it is difficult to assess their future impact on
ICL’s results and operations. The Company continuously reviews developments, making adjustments to minimize any adverse effects on the results of its activities.
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ICL Group Limited Q3 2022 Results 7
Consolidated Results Analysis
Results analysis for the period July – September 2022
* See "Adjustments to reported Operating and Net income (non-GAAP)"
above.
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Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of bromine and phosphorus-based
flame retardants, phosphate fertilizers, white phosphoric acid (WPA) and elemental bromine. This was partially offset by higher sales volumes of potash and specialty raw materials used for energy storage solutions.
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Price
- The positive impact on operating income primarily related to an increase of $362 in the potash price (CIF) per ton year-over-year, as well as to an
increase in the selling prices of phosphate fertilizers, specialty agriculture and FertilizerpluS products, white phosphoric acid (WPA), bromine-based flame retardants, phosphate-based food additives, bromine-based industrial solutions,
and salts.
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Exchange rates - The unfavorable impact on operating income was primarily related to the depreciation of the euro and the Chinese yuan
against the US dollar, which had a negative impact on sales that exceeded the positive impact on operational costs.
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Raw materials – The negative impact on operating income was primarily due to higher prices of sulphur, caustic soda and potassium hydroxide
(KOH) as well as higher costs of commodity fertilizers and raw materials used in production of industrial products.
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Energy – The negative impact on operating income was due to increased electricity and gas prices, mainly in Europe.
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Transportation – The negative impact on operating income resulted from increased marine and inland transportation costs.
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ICL Group Limited Q3 2022 Results 8
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Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs,
sales commissions and royalty payments.
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The following table sets forth sales by geographical regions based on
the location of the customers:
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Asia
– The increase primarily relates to higher selling prices and sales volumes of potash and specialty raw materials used for energy storage solutions, as well as higher selling prices of bromine-based flame retardants and an increase in
sales volumes of specialty agriculture and FertilizerpluS products and clear brine fluids. The increase was partially offset by a
decrease in sales volumes of bromine-based flame retardants and phosphate fertilizers.
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Europe – The increase primarily relates to higher selling prices of potash, white phosphoric acid (WPA), phosphate fertilizers, specialty
agriculture and FertilzerpluS products, phosphate-based food additives and bromine-based flame retardants. The increase was partially offset by lower sales volumes of phosphate fertilizers, WPA, phosphorous-based flame retardants and
potash, as well as unfavorable impact of the depreciation of the average exchange rate of the euro against the US dollar.
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South America – The increase primarily relates to higher selling prices of potash, phosphate fertilizers and WPA, as well as higher sales
volumes of specialty agriculture products. The increase was partially offset by a decrease in sales volumes of potash, clear brine fluids and WPA, as well as lower selling prices of specialty agriculture products.
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North America – The increase primarily relates to higher selling prices and sales volumes of potash, phosphate fertilizers and
bromine-based flame retardants, as well as higher selling prices of phosphate-based food additives and phosphorus-based flame retardants.
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Rest of the world – The increase in sales was primarily related to higher sales volumes and selling prices of potash.
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Financing expenses, net
Net financing expenses in the third quarter of 2022 amounted to $24
million compared to $34 million in the corresponding quarter last year, a decrease of $10 million.
The main change is due to provisions for long-term employee benefits
and lease revaluation income, which increased by $10 million due to depreciation of the Israeli shekel against the US dollar compared to an appreciation in the corresponding quarter.
Tax expenses
In the third quarter of 2022, the Company’s reported tax expenses
amounted to $276 million, compared to $45 million in the corresponding quarter last year, reflecting an effective tax rate of 30% and 16%, respectively. The Company’s relatively high effective tax rate for this quarter was mainly due to the
surplus profit levy. The Company's relatively low tax rate in the corresponding quarter resulted primarily from higher profit deriving from tax jurisdictions with lower effective tax
rates.
ICL Group Limited Q3 2022 Results 10
Results analysis for the period January – September 2022
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Total adjustments YTD 2021*
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Adjusted YTD 2021 figures
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New Brazilian Business' contribution
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Operating and other expenses
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Adjusted YTD 2022 figures
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Total adjustments YTD 2022*
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* See "Adjustments to reported operating and net
income (non-GAAP)" above.
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New Brazilian businesses' contribution – In July 2021, the Company completed the acquisition of the South American Plant Nutrition business
of ADS.
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Quantity
– The negative impact on operating income was primarily related to a decrease in sales volumes of bromine and phosphorus-based flame retardant
and bromine-based industrial solutions. This decrease was partially offset by higher sales volumes of acids, potash and specialty raw materials used for energy storage solutions.
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Price
– The positive impact on operating income was primarily related to an increase of $416 in the potash price (CIF) per ton year-over-year, as well as an increase
in the selling prices of specialty agriculture and FertilizerpluS products, phosphate fertilizers, WPA, bromine and phosphorous-based flame retardants, bromine-based industrial solutions and salts.
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Exchange rates - The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro and the Chinese yuan against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
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Raw materials – The negative impact on operating income was primarily due to higher prices of sulphur, caustic soda and potassium hydroxide
(KOH), as well as higher costs of commodity fertilizers and raw materials used in the production of industrial products.
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Energy - The negative impact on operating income was due to an increase in electricity and gas prices, mainly in Europe and North America.
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Transportation – The negative impact on operating income resulted from increased marine and inland transportation costs, mainly in Europe.
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ICL Group Limited Q3 2022 Results 11
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Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs, sales commissions
and royalty payments.
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The following table sets forth sales by geographical regions based on
the location of the customers:
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Asia – The increase primarily relates to higher sales volumes and selling prices of potash, specialty raw materials used for energy storage
solutions, bromine-based industrial solutions products, specialty agriculture and FertlizerpluS products, as well as an increase in the selling prices of bromine-based flame retardants and phosphate fertilizers. The increase was partially
offset by a decrease in sales volumes of bromine-based flame retardants.
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Europe – The increase primarily relates to higher selling prices of potash, WPA, phosphate fertilizers and bromine and phosphorous-based
flame retardants, together with an increase in selling prices and sales volumes of specialty agriculture and FertilizerpluS products, industrial salts and phosphate-based food additives. The increase was partially offset by lower sales
volumes of potash, phosphorous-based flame retardants and by an unfavorable impact of the depreciation of the average exchange rate of the euro against the US dollar.
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South America – The increase primarily relates to higher sales volumes and selling prices of potash, specialty agriculture and
FertilizerpluS products, as well as higher selling prices of phosphate fertilizers and WPA. This increase was partially offset by a decrease in sales volumes of clear brine fluids and WPA.
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North America – The increase primarily relates to higher selling prices of potash, phosphate fertilizers, WPA, phosphate-based food
additives and phosphorus-based flame retardants. The increase was partially offset by a decrease in sales volumes of potash and phosphorus-based flame retardants.
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Rest of the world – The increase primarily relates to higher selling prices and sales volumes of potash, specialty agriculture products and
WPA.
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ICL Group Limited Q3 2022 Results 12
Financing expenses, net
Net financing expenses in the nine-month period ended September 30,
2022, amounted to $72 million compared to $84 million in the corresponding period last year, a decrease of $12 million.
The main change is due to provisions for long-term employee benefits
and lease revaluation income, which increased by $59 million due to higher depreciation of the Israeli shekel against the US dollar compared to the corresponding period. This was partially offset, for the same reason, by an increase of $40 million
in losses from hedging transactions, as well as a $9 million decrease in capitalized interest income.
Tax expenses
For the nine-month period ended September 30, 2022, the Company's
reported tax expenses that amounted to $1,027 million, reflecting a settlement agreement with the Israel Tax Authority regarding the surplus profit levy. Following the settlement agreement, the Company recorded tax expenses in respect of prior
years in the amount of $188 million. The tax expenses for the period, excluding the said prior years expenses, amounted to $839 million compared to $132 million in the corresponding period last year, reflecting an effective tax rate of 29% and 20%,
respectively. The Company’s relatively higher effective tax rate was the result of tax expenses relating to the surplus profit levy for the current period and higher profit deriving from tax jurisdictions with higher effective tax rates.
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 salts, magnesium chloride, magnesia-based products, phosphorus-based, products and functional fluids.
Results of operations
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Sales to external customers
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Sales to internal customers
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Depreciation and amortization
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Highlights and business environment
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Sales of elemental bromine were at the same level year-over-year. Lower volume driven by a slowdown in bromine-based flame retardants demand was
offset by higher prices.
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Sales of bromine-based flame retardants were slightly higher year-over-year mainly due to higher prices in most markets, partially offset by
softening demand in the electronics sector.
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Phosphorus-based flame retardants’ sales decreased year-over-year, mainly due to resumption of production and exports by Chinese manufacturers.
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High oil and gas prices led to higher year-over-year demand for clear brine fluids for increased drilling activities, mainly in the Middle East.
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Sales of Dead Sea salts increased year-over-year due to higher pricing, mainly of industrial KCl for the oil drilling market.
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ICL Group Limited Q3 2022 Results 14
Results analysis for the period July – September 2022
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Quantity – The negative impact on operating income was primarily related to decreased sales volumes of bromine and phosphorus-based flame
retardants and elemental bromine.
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Price – The positive impact on operating income was mainly due to higher selling prices of bromine-based flame retardants and bromine-based
industrial solutions.
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Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro against the US dollar which had a negative impact on sales that exceeded the positive impact on operational costs.
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Raw materials – The negative impact on operating income was primarily due to increased prices of raw materials.
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Transportation – The negative impact on operating income primarily resulted from higher marine transportation costs.
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Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalty
payments.
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ICL Group Limited Q3 2022 Results 15
Results analysis for the period January – September 2022
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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 bromine based industrial solutions and clear brine fluids.
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Price – The positive impact on operating income was due to higher selling prices of bromine and phosphorus-based flame retardants, as well
as bromine based industrial solutions.
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Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro against the US dollar which had a negative impact on sales that exceeded the positive impact on operational costs.
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Raw materials – The negative impact on operating income was primarily due to increased costs of raw materials.
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Energy – The negative impact on operating income was primarily due to increased electricity and gas prices.
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Transportation – The negative impact on the segment’s operating income was primarily related to higher marine transportation costs.
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Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalty
payments.
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ICL Group Limited Q3 2022 Results 16
Potash
The Potash segment produces and sells mainly potash, salts, magnesium,
and electricity. Potash is produced in Israel and Spain using an evaporation process to extract potash from the Dead Sea at Sodom Israel and conventional mining from an underground mine in Spain. The segment also includes the production and sale of
pure magnesium and magnesium alloys, as well as the production and sale of 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 to ICL
companies in Israel (surplus electricity is sold to external customers) and steam to all facilities at the Sodom site.
Results of operations
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Potash sales to external customers
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Potash sales to internal customers
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Other and eliminations (1)
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Depreciation and amortization
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Potash price - CIF ($ per ton)
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(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.
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Highlights and business environment
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• |
ICL's potash price (CIF) per ton of $697 was 13% lower compared to the second quarter of 2022 and 108% higher year-over-year.
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• |
The Grain Price Index decreased during the third quarter following a decrease in soybean and corn prices by 16.3% and 8.1%, respectively, in light
of a bearish macroeconomic outlook and losses in other food commodities. However, the decrease in the Grain Price Index was partially offset by an increase in rice and wheat prices by 6.6% and 1.6%, respectively. The increase in rice prices
is due to restricted supply and tight stocks in Thailand, lower planted areas in the US, a flood in Pakistan and export quotas in India. Wheat prices increased due to impact of the escalation of the Russia – Ukraine war.
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• |
The WASDE (World Agricultural Supply and Demand Estimates) report, published by the USDA in October 2022, showed a continued decrease in the
expected ratio of global inventories of grains to consumption to 27.6% for the 2022/23 agriculture year, compared to 28.3% for the 2021/22 agriculture year and 29.2% for the 2020/21 agriculture year.
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ICL Group Limited Q3 2022 Results 17
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• |
In August 2022, ICL signed a binding memorandum of understanding ("MOU") with a European customer to supply 300,000 metric tons of potash
annually. The terms of the MOU will be incorporated into a definitive long-term agreement, which will become effective in January 2023, and will remain effective for a period of two consecutive years with an automatic renewal for successive
periods of one year each. The price will be based on prevailing market prices and in accordance with mutual understandings with the customer. The product shall be manufactured and delivered from ICL’s plants in Israel and Spain.
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ICL Dead Sea
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• |
In June 2022, an unexpected flow of brine was discovered above ground at the outskirts of an alluvial fan area which, according to initial tests
by the Company, appears to have resulted from a combination of seepage from a certain area of the feeder canal of ICL Dead Sea’s pumping station P-9 (hereinafter P-9), which according to the Company's estimations does not exceed the
approved design specifications of P-9, and unique ground conditions. The Company has taken steps to create solutions for the short and long term and intends to rectify any resulting environmental impacts to the extent required. For further
information, please see Note 7 to the Company’s interim Financial Statements.
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ICL Iberia
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• |
Operational and geological challenges at ICL Iberia’s mine negatively impacted production during the second and third quarters. ICL Iberia has
initiated performance improvement measured which are expected to increase production. In addition, a ramp up at the site's flotation plant is planned to be completed by year end. These actions should enable ICL Iberia to reach and sustain a
one-million-ton production capacity level while lowering its cost per ton.
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Metal Magnesium
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• |
Annual contracts secured at high prices, supported by stable and sustainable production, drove an increase in sales year-over-year, despite a
softening of demand in the metal magnesium market.
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ICL Group Limited Q3 2022 Results 18
Additional segment information
Global potash market - average prices and imports:
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Granular potash – Northwest Europe
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CIF spot/contract
(€ per ton)
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Standard potash – Southeast Asia
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Sources: CRU (Fertilizer Week Historical
Price: October 2022), FAI, Brazilian and Chinese customs data.
Potash – Production and Sales
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Total sales (including internal sales)
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Third quarter 2022
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- |
Production – Production was 11 thousand tons higher year-over-year mainly due to operational improvements implemented at ICL Dead Sea.
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Sales – The quantity of potash sold was 70 thousand tons higher year-over-year, mainly due to higher sales quantities to China, India and
the US, offset by lower sales to Brazil.
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1-9/2022
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Production – In the nine-month period ended September 30, 2022, potash production was 141 thousand tons higher than the corresponding
period last year, mainly due to higher production at ICL Dead Sea due to operational improvements, as well as higher production at ICL Iberia following the connection of the ramp to the Cabanasses mine.
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Sales – The quantity of potash sold in the nine-month period ended September 30, 2022, was 144 thousand tons higher year-over-year, mainly
due to higher sales to Brazil, China, and India, partially offset by lower sales to the US and Spain.
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ICL Group Limited Q3 2022 Results 19
Results analysis for the period July – September 2022
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Quantity – The positive impact on operating income was primarily related to increased potash sales volumes from ICL Dead Sea site.
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Price – The positive impact on operating income resulted primarily from an increase of $362 in the potash price (CIF) per ton year-over-year.
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Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro against the US dollar which had a negative impact on sales that exceeded the positive impact on operational costs.
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Energy – The negative impact on operating income was due to increased electricity and gas prices, mainly in Europe.
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Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalty
payments.
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ICL Group Limited Q3 2022 Results 20
Results analysis for the period January – September 2022
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Quantity – The positive impact on operating income was primarily related to increased potash sales volumes from ICL Dead Sea and ICL Iberia.
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- |
Price – The positive impact on operating income resulted primarily from an increase of $416 in the potash price (CIF) per ton year-over-year.
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- |
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro against the US dollar which had a negative impact on sales that exceeded the positive impact on operational costs.
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Raw materials – The negative impact on operating income was due to increased costs of raw materials.
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Energy - The negative impact on operating income was due to increased electricity and gas prices, mainly in Europe.
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Transportation – The negative impact on operating income resulted from increased marine and inland transportation costs.
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Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalty
payments.
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ICL Group Limited Q3 2022 Results 21
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.
Sales of phosphate specialties of $455 million and operating income of
$98 million in the third quarter of 2022 were approximately 32% and 158% higher, respectively, compared to the third quarter of 2021. The increase in operating income was driven mainly by higher prices which offset increased raw material costs, as
well as energy and other production costs. Despite ongoing supply chain challenges, the segment’s global production footprint enabled it to provide reliable supply to its customers worldwide.
Sales of phosphate commodities amounted to $311 million, approximately
22% higher than in the third quarter of 2021, primarily due to a significant increase in market prices. Operating income of $95 million, a year-over-year increase of $45 million, was primarily due to higher prices, partially offset by higher costs
of raw materials, mainly sulphur.
Results of operations
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Sales to external customers
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Sales to internal customers
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Depreciation and amortization*
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* For Q3 2022, comprised of $13 million in
phosphate specialties and $33 million in phosphate commodities. For Q3 2021, $13 million in phosphate specialties and $40 million in phosphate commodities.
Highlights and business environment
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• |
The specialty phosphates business benefited from strong demand and higher prices in all regions, despite continuing supply-chain challenges, which
negatively impacted raw material and production costs.
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• |
White phosphoric acid (WPA) sales increased year-over-year, driven by higher selling prices in all regions, partially offset by increasing raw
material costs.
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• |
The Company's YPH joint venture in China continued to experience growing demand for specialty raw materials used for energy storage solutions.
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Sales of dairy proteins increased substantially year-over-year, driven by strong demand for the segment's specialty milk powders and other food
applications.
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• |
In the third quarter, phosphate specialties’ major raw material suppliers experienced significant unplanned production downtime. However, the
segment’s global production and logistical network enabled business continuation.
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ICL Group Limited Q3 2022 Results 22
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• |
Phosphate fertilizer prices decreased in the quarter mainly due to a decrease in demand and OCP's (Morocco) notification regarding increased
production at its Jorf Lasfar site. This decrease occurred despite China's declaration regarding combined DAP/MAP/TSP/NPS export quotas for the third quarter, as global sulphur market prices decreased sharply.
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In India, DAP prices decreased following orders for a total of 6 million tons in 2022.
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- |
In the US, the DAP/MAP price decrease was moderated by a lack of imports towards the scheduled closure of the Mississippi river system (late
October/early November) and the halt in production at Mosaic’s plants in Florida due to Hurricane Ian.
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In Brazil, MAP prices decreased due to high imported stocks, mainly from Russia.
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• |
IFFCO (India) finalized its phosphoric acid supply contracts for the fourth quarter of 2022 with at least one major supplier at $1,200/t P2O5 CFR,
down by $515/t. In addition, OCP (Morocco) reported it settled its Phosphoric acid supply contracts to Western Europe at $1,280 - $1,410/t P2O5 CFR, down by $553/t.
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In October 2022, ICL announced that it plans to build a $400 million lithium iron phosphate (“LFP”) cathode active material manufacturing plant in
St. Louis, Missouri. This is expected to be the first large-scale LFP material manufacturing plant in the US. The Company was awarded $197 million through Bipartisan Infrastructure Law funding, which is subject to the completion of
negotiations with the Department of Energy. The plant is expected to be operational by 2024 and will produce high-quality LFP material for the global lithium battery industry using, primarily, a domestic supply chain.
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Additional segment information
Global phosphate commodities market - average prices:
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CFR Brazil inland 18-20% P2O5 Bulk Spot
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Bulk FOB Adnoc monthly Bulk contract
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Source: CRU (Fertilizer Week Historical
Prices, October 2022).
ICL Group Limited Q3 2022 Results 23
Results analysis for the period July - September 2022
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- |
Quantity – The negative impact on operating income was primarily related to lower sales volumes of white phosphoric acid (WPA), mainly in
Europe and South America, as well as lower sales volumes of fertilizers produced in YPH due to a maintenance shutdown and limitations on export quotes. This was partially offset by an increase in sales volumes of specialty raw materials
used for energy storage solutions.
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Price – The positive impact on operating income was primarily related to an increase in the selling prices of WPA, salts and
phosphate-based food additives in all regions, as well as phosphate fertilizers.
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Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro and the Chinese yuan against the US dollar, which had a negative impact on sales that exceeded the positive impact on operational costs.
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Raw materials – The negative impact on operating income was due to higher costs of sulphur, as well as caustic soda and potassium hydroxide
(KOH).
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Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs and royalty
payments.
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ICL Group Limited Q3 2022 Results 24
Results analysis for the period January – September 2022
|
- |
Quantity – The positive impact on operating income was driven mainly by strong sales volumes of WPA, specialty raw materials used for
energy storage solutions, salts and dairy proteins products. This was partially offset by lower sales volumes of phosphate fertilizers.
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- |
Price – The positive impact on operating income was primarily related to an increase in the selling prices of phosphate fertilizers, WPA,
salts and phosphate-based food additives in all regions.
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- |
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro and the Chinese yuan against the US dollar, which had a negative impact on sales that exceeded the positive impact on operational costs.
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Raw materials – The negative impact on operating income was due to higher costs of sulphur, as well as caustic soda and potassium hydroxide
(KOH).
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Energy – The negative impact on operating income was due to increased electricity and gas prices, mainly in Europe and North America.
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Transportation – The negative impact on operating income resulted primarily from increased marine and inland transportation costs.
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ICL Group Limited Q3 2022 Results 25
Growing Solutions
The Growing Solutions segment aims to achieve global leadership in
plant nutrition markets by enhancing its position 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, polysulphate and its chemistry know-how, as well as its ability to integrate and generate
synergies from acquired businesses. The segment works continuously 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), its FertilizerpluS range, soil and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.
As the Company continues to focus on targeting long-term growth
through its diversified specialty solutions, it decided to change its managerial structure so that, as of January 2022, the activities of ICL Boulby and other European business components were allocated from the Potash and Phosphate Solutions
segments, respectively, to the Growing Solutions segment. Comparative figures have been restated to reflect the structural change of the reportable segments.
Results of operations
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Sales to external customers
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Sales to internal customers
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Depreciation and amortization
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ICL Group Limited Q3 2022 Results 26
Highlights and business environment
|
• |
The Growing Solutions (formerly Innovative Ag Solutions) segment's profit for the third quarter increased year-over-year mainly due to higher
selling prices in most regions and business lines.
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|
• |
The increase in market prices was driven by higher raw material costs, primarily nitrogen, phosphate, and potash.
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• |
Sales to the specialty agriculture market increased year-over-year, due to higher sales prices of straights fertilizers, liquid NPKs, water
soluble NPKs, and controlled-release fertilizers, as well as the strong performance of newly acquired companies in Brazil. An increase in selling prices was prevalent in all regions.
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• |
Sales of the Turf and Ornamental business (T&O) increased year-over-year, mainly due to higher
selling prices.
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• |
Sales of FertilizerpluS (the Company’s Polysulphate line of products) increased year-over-year due to
higher selling prices and sales volumes.
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• |
In August 2022, ICL signed a multi-year, strategic, collaboration agreement with Lavie Bio Ltd., according to which it will invest $10 million in
Lavie Bio under a SAFE (simple agreement for future equity). The collaboration will focus on developing novel bio-stimulant products to enrich fertilizer efficiency. Ag-biologicals are externally applied products and used to optimize
overall plant and soil health.
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• |
In September 2022, ICL launched a biodegradable coated fertilizer technology - eqo.x, controlled release
urea designed for open field agriculture. This solution will help farmers maximize agricultural crop performance, while also limiting environmental impact by reducing nutrient loss and increasing
nutrient use efficiency (NUE). The eqo.x release technology is the first offering in the market to provide a controlled release fertilizer (CRF) coating for urea which biodegrades more rapidly, and was specifically designed to meet future
European fertilizer standards set to go into effect in 2026.
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ICL Boulby
|
• |
In the third quarter, the production of polysulphate increased by 9% year-over-year to 216 thousand tons.
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ICL Group Limited Q3 2022 Results 27
Results analysis for the period July – September 2022
|
- |
Quantity – The negative impact on operating income was due to lower sales volumes of specialty agriculture and FertilizerpluS products.
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Price – The positive impact on operating income was due to higher selling prices across most business lines, primarily specialty
agriculture and FertilizerpluS products.
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Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro against the US dollar, which had a negative impact on sales that exceeded the positive impact on operational costs.
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Raw materials – The negative impact on operating income was primarily related to higher costs of commodity fertilizers.
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Energy – The negative impact on operating income was primarily due to increased electricity and gas prices, mainly in Europe.
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Transportation – The negative impact on operating income resulted from increased marine and inland transportation costs.
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- |
Operating and other expenses – The negative impact on operating income was primarily related to higher sales commissions and operational
costs.
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ICL Group Limited Q3 2022 Results 28
Results analysis for the period January – September 2022
|
- |
New Brazilian businesses contribution – In July 2021, the Company completed the acquisition of the South American Plant Nutrition business
of ADS.
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Quantity – The negative impact on operating income was due to a decrease in sales volumes of specialty agriculture products. The decrease
was partially offset by higher sales volumes of FertilizerpluS products.
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Price – The positive impact on operating income was due to higher selling prices across most business lines, primarily specialty
agriculture and FertilizerpluS products.
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Exchange rate – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the
euro against the US dollar, which had a negative impact on sales that exceeded the positive impact on operational costs.
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- |
Raw materials – The negative impact on operating income was primarily related to higher costs of commodity fertilizers.
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Energy – The negative impact on operating income was due to increased electricity and gas prices, mainly in Europe.
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Transportation – The negative impact on operating income resulted from increased marine and inland transportation costs.
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- |
Operating and other expenses – The negative impact on operating income was primarily related to higher sales commissions and operational
costs.
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ICL Group Limited Q3 2022 Results 29
Liquidity and Capital Resources
Net cash provided by operating activities
In the third quarter of 2022, cash flow provided by operating activities amounted to $606 million, compared to $273 million in the corresponding quarter last year. The increase was mainly due to stronger operating results in the current quarter.
Net cash used in investing activities
In the third quarter of 2022, net cash used in investing activities
amounted to $176 million, compared to $296 million in the corresponding quarter last year. The decrease was mainly due to business acquisitions in Brazil, which was partially offset by proceeds from the divestiture of businesses in the
corresponding quarter last year.
Net cash used in financing activities
In the third quarter of 2022, net cash used in financing activities amounted to $337 million, compared to $2 million net cash provided by financing activities in the corresponding quarter
last year. The increase in the net cash used in financing activities was mainly due to higher dividend payments in the current quarter, along with higher receipt of long-term debt in the
corresponding quarter last year.
As of September 30, 2022, ICL’s net financial liabilities amounted to
$2,181 million, a decrease of $268 million compared to December 31, 2021.
The total amount of the Company's securitization facility framework is
$300 million. As of September 30, 2022, ICL utilized approximately $256 million of the facility’s framework.
In July 2022, the long-term credit facility decreased by $100 million
following an agreement on early termination with one of the banks, a few months prior to the official termination date. The updated total credit facility is $1,100 million, of which $325
million was utilized as of September 30, 2022.
Ratings and financial covenants
Fitch Ratings
In June 2022, 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 2022,
S&P credit rating 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, 2022, the Company was in compliance with all of
its financial covenants stipulated in its financing agreements.
ICL Group Limited Q3 2022 Results 30
Critical Accounting Estimates
In the nine and three month periods ended September 30, 2022, 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, 2021.
Board of Directors and Senior Management Updates
In September 2022, Yaniv Kabalek was appointed President, Industrial
Products Division, and is considered an office holder of the Company, following a tragic car accident that occurred on July 29, 2022, in Israel in which Anat Tal-Ktalav, President, Industrial Products Division, and Nitzan Moshe, EVP, Global
Operations, were killed. The responsibilities of Nitzan Moshe, such as safety, sustainability, risk management and QA were divided among other executive management members.
Following the accident, on September 14, 2022, ICL’s HR &
Compensation Committee and Board of Directors approved the termination package for Anat Tal-Ktalav and Nitzan Moshe, in accordance with ICL’s compensation policy.
In the nine and three month periods ended September 30, 2022, 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, 2021.
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, 2021.
For 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.
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:
Changes in exchange rates or prices compared to
those we are currently experiencing; 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; failure to "harvest" salt which could lead to accumulation of salt at the bottom of the evaporation Pond 5 in the Dead Sea; construction of a new pumping station; disruptions at our seaport shipping facilities or
regulatory restrictions affecting our ability to export our products overseas; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; delays
in the completion of major projects by third party contractors and/or termination of engagements with contractors and/or governmental obligations; the inflow of significant amounts of water into the Dead Sea could adversely affect production at our
plants; labor disputes, slowdowns and strikes involving our employees; pension and health insurance liabilities; the ongoing COVID-19 pandemic, which has impacted, and may continue to impact our sales, operating results and business operations by
disrupting our ability to purchase raw materials, by negatively impacting the demand and pricing for some of our products, by disrupting our ability to sell and/or distribute products, impacting customers' ability to pay us for past or future
purchases and/or temporarily closing our facilities or the facilities of our suppliers or customers and their contract manufacturers, or restricting our ability to travel to support our sites or our customers around the world; changes to
governmental incentive programs or tax benefits, creation of new fiscal or tax related legislation; changes in our evaluations and estimates, which serve as a basis for the recognition and manner of measurement of assets and liabilities; higher tax
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; disruption
of our, or our service providers', 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; 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; 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; uncertainties surrounding the withdrawal of the United Kingdom from the European Union; hazards inherent to mining and
chemical manufacturing; the failure to ensure the safety of our workers and processes; cost of compliance with environmental regulatory legislative and licensing restrictions; laws and regulation related to, and physical impacts of climate change
and greenhouse gas emissions; litigation, arbitration and regulatory proceedings; 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; closing of transactions, mergers and acquisitions; war or acts of terror and/or political, economic and military instability in Israel and its region; filing of class actions and derivative actions against the
Company, its executives and Board members; The Company is exposed to risks relating to its current and future activity in emerging markets; 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, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 23, 2022 (the “Annual Report”).
Forward‑looking statements speak only as of the
date they are made, and 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 in order to reflect later events or circumstances or to reflect
the occurrence of unanticipated events.
This report for the third quarter of 2022 (the
“Quarterly Report”) should be read in conjunction with the Annual Report and the report for the first and second quarters of 2022 published by the Company (the "prior quarterly reports"), including the description of events occurring subsequent to
the date of the statement of financial position, as filed with the US SEC.
ICL Group Limited Q3 2022 Results 31
Condensed Consolidated Statements of Financial Position as of (Unaudited)
|
|
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|
Cash and cash equivalents
|
|
|
|
Short-term investments and deposits
|
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|
|
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|
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|
|
|
|
Prepaid expenses and other receivables
|
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|
|
|
|
|
| |
|
|
|
|
|
|
|
|
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|
Property, plant and equipment
|
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|
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|
|
|
|
|
|
|
|
|
Total current liabilities
|
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|
| |
|
|
|
|
|
|
|
|
Long-term debt and debentures
|
|
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|
|
Long-term employee liabilities
|
|
|
|
Long-term provisions and accruals
|
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|
|
|
Total non-current liabilities
|
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|
|
| |
|
|
|
|
|
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|
| |
|
|
|
|
|
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|
|
Total shareholders’ equity
|
|
|
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
| |
|
|
|
Total liabilities and equity
|
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|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Q3 2022 Results 33
Condensed Consolidated Statements of Income (Unaudited)
(In millions except per share data)
| |
For the three-month
period ended
|
For the nine-month
period ended
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|
| |
|
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|
|
|
Selling, transport and marketing expenses
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
|
|
Research and development expenses
|
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| |
|
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|
|
|
Share in earnings of equity-accounted investees
|
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|
| |
|
|
|
|
|
Income before taxes on income
|
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| |
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|
| |
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|
| |
|
|
|
|
|
Net income attributable to the non-controlling interests
|
|
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|
|
|
| |
|
|
|
|
|
Net income attributable to the shareholders of the Company
|
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|
| |
|
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|
|
|
Earnings per share attributable to the shareholders of the Company:
|
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| |
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Basic earnings per share (in dollars)
|
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|
Diluted earnings per share (in dollars)
|
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| |
|
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Weighted-average number of ordinary shares outstanding:
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|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Q3 2022 Results 34
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
| |
For the three-month period ended
|
For the nine-month period ended
|
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| |
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| |
|
|
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|
|
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
|
|
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|
|
|
Tax relating to items that will be reclassified subsequently to net income
|
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| |
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| |
|
|
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|
|
Components of other comprehensive income that will not be reclassified to net income
|
|
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|
|
|
Net changes of investments at fair value through other comprehensive income
|
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|
|
|
Actuarial gains from defined benefit plans
|
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|
Tax relating to items that will not be reclassified to net income
|
|
|
|
|
|
| |
|
|
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|
|
| |
|
|
|
|
|
Total comprehensive income
|
|
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|
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|
| |
|
|
|
|
|
Comprehensive income (loss) attributable to the non-controlling interests
|
|
|
|
|
|
| |
|
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|
|
Comprehensive income attributable to the shareholders of the Company
|
|
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|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Q3 2022 Results 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
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
Reversal of fixed assets impairment
|
|
|
|
|
|
Exchange rate, interest and derivative, net
|
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| |
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| |
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Change in trade receivables
|
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|
|
Change in other receivables
|
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Net change in operating assets and liabilities
|
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| |
|
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|
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|
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|
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Income taxes paid, net of refund
|
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| |
|
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|
|
Net cash provided by operating activities
|
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|
|
|
| |
|
|
|
|
|
Cash flows from investing activities
|
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|
|
|
Proceeds (payments) from deposits, net
|
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|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment and intangible assets
|
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|
|
Proceeds from divestiture of assets and businesses, net of transaction expenses
|
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Net cash used in investing activities
|
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|
| |
|
|
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|
|
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, net
|
|
|
|
|
|
Receipts (payments) from transactions in derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
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|
| |
|
|
|
|
|
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 Q3 2022 Results 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, 2022
|
|
|
|
|
|
|
|
|
|
Balance as of July 1, 2022
|
|
|
|
|
|
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|
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|
| |
|
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|
|
|
|
|
|
|
|
|
Balance as of September 30, 2022
|
|
|
|
|
|
|
|
|
|
| |
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
| |
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
|
|
| |
|
For the three-month period ended September 30, 2021
|
|
|
|
|
|
|
|
|
|
Balance as of July 1, 2021
|
|
|
|
|
|
|
|
|
|
| |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2021
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Q3 2022 Results 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, 2022
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2022
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2022
|
|
|
|
|
|
|
|
|
|
| |
Attributable to the shareholders of the Company
|
Non-controlling interests
|
|
| |
|
|
Cumulative translation adjustments
|
|
|
|
Total shareholders' equity
|
|
|
| |
|
For the nine-month period ended September 30, 2021
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2021
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2021
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements
ICL Group Limited Q3 2022 Results 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, 2021
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2021
|
|
|
|
|
|
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| |
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|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2021
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group Limited Q3 2022 Results 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 its 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.
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, 2021 (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.
Classifications
The Company made a number of insignificant classifications in
comparative figures in order to adjust them to the manner of classification in the current financial statements. The said classifications have no effect on the total profit (loss).
ICL Group Limited Q3 2022 Results 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 (formerly, Innovative Ag Solutions).
As the Company continues to focus on targeting long-term growth
through its diversified specialty solutions, it decided to change its managerial structure so that, as of January 2022, the activities of ICL Boulby and other European business components were allocated from the potash and phosphate solutions
segments, respectively, to the Growing Solutions segment. Comparative figures have been restated to reflect the structural change of the reportable segments.
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 Q3 2022 Results 41
Notes to the condensed consolidated interim financial statements as of September 30,
2022 (Unaudited)
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, targeting high-growth markets such as
Brazil, India and China, by leveraging its unique R&D capabilities, substantial agronomic experience, global footprint, backward integration to potash, phosphate and polysulphate and chemistry know-how, while integrating and generating
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), organic fertilizers, water soluble fertilizers (WSF), liquid fertilizers and straights
(MKP/MAP/PeKacid), 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, as well as secondary nutrients, biostimulants, soil conditioners, seed treatment products, and
adjuvants in Brazil.
Other Activities – 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 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.
ICL Group Limited Q3 2022 Results 42
Note 3 - Operating Segments (cont’d)
B. Operating segment data
For the three-month period ended September 30, 2022
|
|
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|
|
|
|
|
| |
|
|
|
|
|
|
|
Sales to external parties
|
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|
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|
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| |
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|
Segment operating income (loss)
|
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|
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|
|
Other income not allocated to the segments
|
|
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| |
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|
|
Income before income taxes
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
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|
|
|
| |
|
|
|
|
|
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|
|
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|
ICL Group Limited Q3 2022 Results 43
Notes to the condensed consolidated interim financial statements as of September 30,
2022 (Unaudited)
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the three-month period ended September 30, 2021
|
|
|
|
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|
| |
|
|
|
|
|
|
|
Sales to external parties
|
|
|
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Segment operating income (loss)
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Other income not allocated to the segments
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Income before income taxes
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Depreciation and amortization
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Capital expenditures as part of business combination
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ICL Group Limited Q3 2022 Results 44
Notes to the condensed consolidated interim financial statements as of September
30, 2022 (Unaudited)
Note 3 - Operating Segments (cont’d)
B. Operating segment data
For the nine-month period ended September 30, 2022
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Sales to external parties
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Segment operating income (loss)
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Other income not allocated to the segments
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Income before income taxes
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Depreciation and amortization
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ICL Group Limited Q3 2022 Results 45
Notes to the condensed consolidated interim financial statements as of September 30,
2022 (Unaudited)
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the nine-month period ended September 30, 2021
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Sales to external parties
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Segment operating income (loss)
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Other income not allocated to the segments
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Share in earnings of equity-accounted investees
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Income before income taxes
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Depreciation and amortization
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Capital expenditures as part of business combination
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ICL Group Limited Q3 2022 Results 46
Notes to the condensed consolidated interim financial statements as of September 30,
2022 (Unaudited)
Note 3 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
For the year ended December 31, 2021
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Sales to external parties
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Segment operating income (loss)
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Other income not allocated to the segments
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Share in earnings of equity-accounted investees
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Income before income taxes
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Depreciation amortization and impairment
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Capital expenditures as part of business combination
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ICL Group Limited Q3 2022 Results 47
Notes to the condensed consolidated interim financial statements as of September 30,
2022 (Unaudited)
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:
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% of
sales
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millions
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% of
sales
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millions
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% of
sales
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ICL Group Limited Q3 2022 Results 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, 2022
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For the three-month period ended September 30, 2021
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ICL Group Limited Q3 2022 Results 50
Notes to the condensed consolidated interim financial statements as of September 30,
2022 (Unaudited)
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, 2022
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For the nine-month period ended September 30, 2021
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ICL Group Limited Q3 2022 Results 51
Notes to the condensed consolidated interim financial statements as of September 30,
2022 (Unaudited)
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, 2021
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ICL Group Limited Q3 2022 Results 52
Note 4 - Intangible Assets
A. Intangible assets with an indefinite useful life
Goodwill and intangible assets having an indefinite lifespan are not
amortized on a systematic basis but, rather, are examined at least once a year for impairment.
The goodwill is not monitored for internal reporting purposes and,
accordingly, it is allocated to the Company’s operating segments and not to the cash-generating units, the level of which is lower than the operating segment, as long as the acquired unit is presented in the Company's reportable segments. The
examination of impairment of the carrying amount of the goodwill is made 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 testing
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 an 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 10.4% and a long‑term growth rate of 2.6%, reflecting the industries and markets in which the Company is engaged.
ICL Group Limited Q3 2022 Results 53
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
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Debentures bearing fixed interest
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The following table presents an analysis of the financial
instruments measured by fair value, using the valuation method.
The following levels were defined:
Level 1: Quoted (unadjusted) prices in an active market for
identical instruments
Level 2: Observed data (directly or indirectly) not included in
Level 1 above.
Investments at fair value through other comprehensive income
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Derivatives designated as economic hedge, net
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Derivatives designated as cash flow hedge, net
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ICL Group Limited Q3 2022 Results 54
|
Note 5 – Loans, Financial Instruments and Risk Management (cont'd)
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.
Note 6 – Long Term Compensation Plans and Dividend Distributions
|
A. |
Share based payments - non-marketable options
|
|
1. |
On March 30, 2022, the general meeting of shareholders approved an equity-based award in the form of about 3 million non-marketable and
non-transferable stock options for the years 2022 – 2024, under the amended 2014 Equity Compensation Plan, to the CEO and Chairman of the Board. The vesting period of the options will be in three equal tranches, upon the lapse of 12 months,
24 months and 36 months from the grant date (March 30, 2022). The fair value at the grant date was about $8 million.
|
|
2. |
During the nine and three-month periods ended September 30, 2022, 6.8 million options and 4.7 million options were exercised, respectively.
|
|
B. |
Dividend distributions
|
Decision date for dividend distribution by the Board of Directors
|
Actual date of dividend distribution
|
Distributed amount
($ millions)
|
|
* The
dividend will be distributed on December 14, 2022, with a record date for eligibility of November 30, 2022.
ICL Group Limited Q3 2022 Results 55
Note 7 – Provisions, Contingencies and Other Matters
|
1. |
Note 17 to the Annual Financial Statements provides a disclosure regarding the Israeli Water Authority’s decision that fees will not be charged
for water production within the concession area, based on the opinion of the Ministry of Justice, according to which the royalties arrangement established in the Dead Sea Concession Law, 5771-1961, is the sole arrangement for collecting
payment for the right to extract water in the concession area, and therefore that it is not legally possible to impose additional charges for water fees in addition to the royalties (hereinafter –
the Opinion). In September 2022, the Company was presented with two petitions filed in Israel’s Supreme Court, one by Adam Teva V’Din and the second by Lobby 99 Ltd., against the Water Authority, Israel’s Attorney General, the Ministry of
Justice, Mekorot Water Company Ltd. and the Company. As part of the petitions, the petitioners requested that the Supreme Court rule that the said Opinion is incorrect and, therefore, the Company should be obliged to pay water fees for
water extracted from wells in the concession area in addition to the payment of royalties beginning from the date of the amendment to the Water Law enacted in 2018. Accordingly, the petitioners
requested that the Supreme Court order the Water Authority to collect water fees from the Company for the period between 2018-2020, which according to one of the petitioners, allegedly amounts to $24 million. In October 2022, a decision
was made to hold a consolidated hearing regarding both petitions in April 2023. The Company rejects the claims made in the petitions and believes it is more likely than not that its position will be accepted.
|
|
2. |
Further to Note 18 to the Annual Financial Statements regarding an application for certification of a class action with respect to the IT
(Harmonization) project management and termination, in September 2022, the parties announced their agreement to resort to mediation. 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. |
Note 18 to the Annual Financial Statements provides a disclosure regarding an application for certification of a class action which was filed
against the Company, for alleged exploitation of its monopolistic position to charge consumers, in Israel, excessive and unfair prices for products classified as "solid phosphate fertilizer" between 2011 and 2018. Following the Central
District Court’s decision in March 2020 to grant the Company a motion for delay in proceedings, in September 2022 the proceedings were renewed, at the request of the applicants, following a decision made in July 2022 by the Supreme Court
in a similar proceeding. The Company denies the allegations and believes it is more likely than not that its position will be accepted.
|
|
4. |
Further to Note 18 to the Annual Financial Statements, regarding Energean's continued delays in supply of natural gas (NG) and the measures
that the Company is taking to secure its supply of NG until full gas supply is obtained from Energean, or other sources. Recently, Energean started NG production activities. In order to ensure the ongoing operations of ICL’s facilities
until Energean enters commercial production, the Company signed NG supply agreements with various market sources, including Leviathan reservoir, which are valid until the end of the first quarter of 2023. The Company believes it is more
likely than not that it will obtain sufficient NG for its facilities in Israel until the full supply is obtained from Energean. The Company intends to exercise all its legal rights in connection with Energean's continuous delays.
|
ICL Group Limited Q3 2022 Results 56
Note 7 – Provisions, Contingencies and Other Matters (cont’d)
|
5. |
Further to Note 15 to the Annual Financial Statements regarding the calculation of the Surplus Profit Levy, according to the Israeli Law for
Taxation of Profits from Natural Resources (hereinafter - the Law), at the end of June 2022, a settlement agreement was signed with the Israeli Tax Authority, which entered into force on July 26, 2022. The settlement agreement provides
final assessments for the tax years 2016-2020, as well as outlines understandings for the calculation of the levy for the years from 2021 and onwards.
|
In the second quarter of 2022, the Company recorded tax expenses for
prior years in the amount of $188 million, including interest and linkage and net of corporate income tax, of which $124 million was in connection with the understandings reached regarding the measurement of fixed assets in the said final
assessments (for 2016-2020).
|
6. |
In June 2022, an unexpected flow of brine was discovered above the ground at the outskirts of an alluvial fan area, which according to initial
tests by the Company, appears to have resulted from a combination of seepage from a certain area of the feeder canal of ICL Dead Sea’s pumping station P-9 (hereinafter P-9), which according to the Company's estimations does not exceed the
approved design specifications of P-9, and unique ground conditions. The Company is continuously acting to rectify any resultant environmental impacts to the extent required, including, at the request of the Israeli Nature and Parks
Authority, implementing a project involving the installation of sealing sheets over an approximately 2km long section of the 15km feeder canal in the area of the fan (hereinafter the Project). Completion of the Project is expected within
a few months. The Company has already implemented intermediary actions to prevent increased salinity flow to the surface. In June 2022, as part of a hearing process, the District Manager of the Ministry of Environmental Protection
recommended opening an investigation by the Green Police. As of the reporting date, the Company is not aware of any such investigation.
|
Considering the preliminary stage of the event, it is a difficult to
estimate its outcome. Nevertheless, in the Company’s estimation, no material impact on the Company’s financial statements is expected.
|
7. |
Further to Note 18 to the Company’s Annual Financial Statements regarding the regulation of Rotem Amfert Israel's Phosphogypsum storage area and
the new approved master plan, in April 2022 Israel’s Planning Administration stated its position that the Company should pay insignificant fees to obtain required building permits. In June 2022, the Tamar Regional Council rejected this
position. The Company believes that it is more likely than not that its position will be accepted in a legal proceeding to determine the amounts of fees under the current law.
|
|
8. |
Note 18 to the Annual Financial Statements provides disclosure regarding the application for certification of a class action against the Company
for alleged environmental hazards that resulted from the leakage of wastewater to a groundwater aquifer in the vicinity of the Bokek stream. The leakage began in the 1970’s during which time the Company was government owned and ended by
2000. Following a decision in April 2022 by the Be'er Sheva District Court to dismiss the application with prejudice, the plaintiffs filed an appeal in June 2022 to Israel’s Supreme Court against the district court’s decision. It is
difficult to estimate the outcome of the appeal at this preliminary stage.
|
ICL Group Limited Q3 2022 Results
57
Note 7 – Provisions, Contingencies and Other Matters (cont’d)
|
9. |
As part of the Company's strategy to divest low synergy businesses and non-core business activities, in January 2022, the Company entered into a
definitive agreement to sell its 50% share in its joint venture, Novetide Ltd., which was accounted for according to the equity method. In March 2022, the sale was completed. Consideration from the sale was $33 million, of which $8
million represents an estimate for the fair value of a contingent consideration. As a result, the Company recognized a capital gain of $22 million.
|
|
10. |
Further to Note 18 to the Annual Financial Statements, regarding the expansion of gypsum and flotation ponds at YPH, in April 2022, the Company
received an official certification enabling the required expansion of the ponds.
|
ICL Group Limited Q3 2022 Results 58