Israel Chemicals beats second-quarter profit forecasts thanks to specialty products

Israel Chemicals (ICL), one of the three major suppliers of potash to China, India and Europe, reported a better-than-expected second-quarter profit on Wednesday. It predicted further gains from its specialty-products units.

However, growth in its essential-minerals division, which includes its main businesses (potash, a crop nutrient, and phosphates), was marginal, and that would probably continue due to strong competition, chief executive Stefan Borgas said.

Israel’s biggest chemicals producer earned 10 cents per diluted share, excluding oneoff items, down from 13 cents per diluted share in the same quarter a year ago but higher than the 6 cents per share forecast by Thomson Reuters I/B/E/S.

Revenue jumped 15 percent to $1.4 billion, in part due to a stoppage a year earlier when workers went out strike, and beat a $1.26b. forecast.

ICL, which has exclusive permits in Israel to extract minerals from the Dead Sea, said quarterly results benefited from a diversification away from core businesses into specialty products such as advanced additives and specialty fertilizers.

Sales at the specialty-solutions business grew 15% in the quarter.

“This is a sustainable growth rate for the upcoming quarters as well,” Borgas said on a conference call with analysts.

ICL, a subsidiary of Israel Corp., said it would pay a quarterly dividend of $60 million, or 5 cents per share.

The company in recent weeks has signed potash supply contracts with Chinese and Indian customers and said it was continuing to negotiate with additional customers in India.

“ICL’s potash business in the second half of the year will experience higher sales quantities but lower average prices,” it said.

Due to falling potash and commodities prices, ICL said it will accelerate the transition from extracting and producing potash to producing polysulphate at its mine in Britain. The steps are expected to reduce the mine’s annual potash production, freeing up production capacity for manufacturing polysulphate, it said.

(Reuters)