Israel Chemicals (TASE: ICL: NYSE: ICL) has halted the slide in terms of revenue, but reported falling profit for the third quarter of 2016 and a huge operating loss.
Consolidated sales of $1.383 billion edged up from sales of $1.379 billion in the corresponding quarter of 2015. Higher quantities sold in the Essential Minerals division, as well as organic growth in the Specialty Solutions division were mostly offset by weaker pricing in the Essential Minerals division. Net profit fell to $120 million in the third quarter, down from $155 million in the corresponding quarter of 2015.
In the third quarter, the company reported an operating loss of $331 million, which includes write-offs resulting from the previously disclosed termination of projects totaling $489 million: $282 million related to the discontinuation of a global ERP project (Harmonization Project), and a $202 million charge related to the termination of a potash project in Ethiopia. In addition, an asset write-off of $5 million was recorded at ICL UK following the Company's decision to accelerate its transition to producing Polysulphate.
ICL's acting CEO, Asher Grinbaum, stated, "Good performance in Specialty Solutions division highlighted third quarter performance with a 30% year-over-year increase in the division's profit. This result underscores the importance of investments we have made to leverage our unique mineral assets to develop proprietary solutions for our customers which provide a balancing effect and limit our sensitivity to commodity price. This was evident in the quarter as it helped to mitigate price decreases in commodity fertilizers which, as a result, lowered profitability in our Essential Minerals division. Other contributions were cost reduction initiatives and the improved competitiveness of our mineral assets, particularly at ICL Dead Sea. "
He added, "Following a thorough analysis, some decisions were made during the past few months, including the discontinuation of the company's global "Harmonization" project, as substantial risks related to the project's readiness were identified, which significantly impacted its future cost and timeline. It was also decided to terminate the Ethiopian potash project following the Ethiopian government's failure to provide the necessary infrastructure and regulatory framework. The return on these projects simply did not justify their continuation and their termination is expected to save hundreds of millions of dollars in future CapEx."
Published by Globes [online], Israel business news - www.globes-online.com - on November 23, 2016
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