Fertilizer producer ICL reports 43% loss in Q4 net profit

27 March 2013 22:06  [Source: ICIS news]

HOUSTON (ICIS)--Fertilizer producer Israel Chemical (ICL) on Wednesday reported a 43% year-on-year loss in Q4 net profit as a result of reduced potash sales to its primary markets in China and India.

Net profit for the fourth quarter declined to $209.5m (€163.4m) from $369.6m year-on-year while revenue for the last quarter was at $1.34bn versus $1.71bn a year prior. ICL attributes the decline to both lower quantity of sales as well as a reduction in the average price for the crop nutrient.

Analysts had anticipated that ICL, the sixth largest potash producer, would reach an earnings level of $224m in the quarter. Overall the global market for potash has taken a step backwards with shrinking demand and a persistent downward trend in pricing.

Company officials remain optimistic for the 2013 earnings outlook as it has concluded supply agreements with its customer base in China and India within the Q1 period. ICL has announced that it will supply 820,000 tons (744,000 tonnes) of potash to India and that it is presently looking at more discussions within the country to ship additional supplies.

In terms of China, ICL has signed agreements with Chinese customers to provide 660,000 tons within the first half of the year and are working on a three-year contract that will deliver up to 3.3m tons of the fertilizer to the growing agricultural industry.

“The high price of agricultural products, together with past year’s decline in fertilizer prices, has given farmers a strong incentive to increase fertilizer application,” said ICL.

The company has been the target in recent months by Canadian fertilizer giant PotashCorp, which owns 13.9% of the company. PotashCorp has said it wants a larger share of ICL but has stated that it would not take a hostile takeover approach.

Opponents of the purposed takeover, which include politicians and labour groups, have been very firm in their stance as the plans have upset local sentiment as it is felt it would allow foreign interests to seize control of a vital nationally asset. It has also been feared locally that PotashCorp would reduce employment or move operations into another country if they were successful in acquiring the smaller yet well positioned company.

Analysts have estimated if Potash were to acquire Israel Chemicals it could conceivably control 25% of global production as well as unleash expanded markets within Europe and Asia.

By: Mark Milam
+1 713 525 2653

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