ICL Group Ltd. — FY2023 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing; the provided text does not give a clear set of Q4-only financial results. Financial statements are prepared under IFRS, in U.S. dollars.
Business context
ICL is an Israel-based specialty minerals and chemicals company operating in four segments: Industrial Products, Potash, Phosphate Solutions and Growing Solutions. Its businesses serve agriculture, food and industrial markets and depend substantially on mineral resources, concessions, permits and global commodity and shipping markets.
Financial performance
| Metric (US$ millions, except per-share data) | 2023 | 2022 |
|---|---|---|
| Sales | 7,536 | 10,015 |
| Gross profit / gross margin | 2,671 / 35.4% | 5,032 / 50.2% |
| Operating income / operating margin | 1,141 / 15.1% | 3,516 / 35.1% |
| Adjusted operating income (non-IFRS) | 1,218 | 3,509 |
| Net income attributable to ICL shareholders | 647 | 2,159 |
| Adjusted net income attributable to shareholders (non-IFRS) | 715 | 2,350 |
| Basic EPS | $0.50 | $1.68 |
| Operating cash flow | 1,595 | 2,025 |
| Cash, cash equivalents, short-term investments and deposits | 592 | 508 |
| Total assets / total liabilities / total equity | 11,627 / 5,590 / 6,037 | 11,750 / 6,037 / 5,713 |
Gross margin fell to 35.4% from 50.2%; operating margin fell to 15.1% from 35.1%. Net financing expense rose to $168 million from $113 million, while the effective tax rate was 29% versus 35% in 2022. Cash used in investing was $863 million, including $780 million of purchases of property, plant and equipment and intangible assets; cash used in financing was $712 million. Cash capital expenditures were $594 million. The company reported net financial liabilities of $2.095 billion; year-end short- and long-term debt totaled $2.687 billion, including current maturities.
ICL reported $1.2 billion of unused long-term credit facilities and a $300 million committed securitization framework, of which $182 million was utilized. It stated that available liquidity was adequate for anticipated working capital, capital expenditures and other needs over the next 12 months. S&P and Fitch affirmed investment-grade ratings of BBB- with stable outlooks; the company reported compliance with financial covenants.
Material changes versus 2022
- Sales declined 25%, operating income 68%, and attributable net income 70%. Lower selling prices were the principal factor, including a $289-per-tonne year-over-year reduction in the average potash CIF price.
- Potash segment sales fell 34% to $2.182 billion and operating income fell 63% to $668 million. Potash production declined to 4.42 million tonnes from 4.69 million tonnes, while sales volume increased to 4.68 million tonnes.
- Phosphate Solutions sales decreased 20% to $2.483 billion and operating income decreased 58% to $329 million. Growing Solutions sales fell 14% to $2.073 billion and operating income fell 87% to $51 million. Industrial Products sales decreased 31% to $1.227 billion and operating income decreased 65% to $220 million.
- Operating cash flow decreased by $430 million, mainly reflecting stronger 2022 operating results, partly offset by lower working capital and income taxes paid. Cash dividends paid decreased to $474 million from $1.166 billion.
Management commentary, outlook and risks
- Management described 2023 as a year of uncertainty and challenging commodity markets. It cited lower fertilizer and product prices, cautious “just-in-time” customer purchasing, softer demand in several industrial and specialty fertilizer markets, and ongoing supply-chain and geopolitical disruptions. No clear numerical FY2024 financial guidance is provided in the supplied filing text.
- The 2023 results include restructuring and other unusual items: $16 million of early-retirement provisions, $49 million mainly for asset write-offs and site-closure provisions, $14 million related to the security situation in Israel, and a $2 million reversal of a legal provision. These items reconcile to $77 million of net adjustments to operating income. Adjusted figures are non-IFRS measures and should not be treated as substitutes for IFRS results.
- The war declared in Israel in October 2023 caused some supply-chain disruption, reserve-duty staffing shortages and currency fluctuations; management said the security situation had not materially affected 2023 results, but could not estimate future effects. Red Sea shipping disruption could also increase delays and costs.
- Key operating and resource risks include renewal of the Dead Sea concession, which expires in March 2030; the phosphate mining concession in Israel, which was due to expire at the end of 2024 and was subject to a pending tender; and limited reserves at existing Israeli phosphate mines. Barir-field development and other alternatives require approvals and are uncertain.
- Environmental compliance, emissions and waste-management requirements, mine safety, water availability, Dead Sea salt harvesting, natural disasters, commodity prices, energy and raw-material costs, foreign exchange, interest rates, and customer demand are material risks. ICL estimated $2.3 billion of commitments for raw materials and energy and $712 million of capital expenditure commitments at year-end.
- Management targets a 30% reduction in Scope 1 and 2 greenhouse-gas emissions by 2030 versus 2018 and net zero by 2050. Reported 2023 Scope 1 and 2 emissions were 22.2% below 2018. The company expects significant environment-related investments, estimating about $174 million for 2024.
- Growth initiatives include a U.S. lithium iron phosphate battery-materials plant, supported by a $197 million U.S. Department of Energy grant, and a customer innovation center planned to be operational by the end of 2024. ICL completed a $30 million acquisition of Brazilian biological crop-inputs company Nitro 1000 in February 2024.
- The company’s dividend policy targets distributions of up to 50% of annual adjusted net income, subject to Board discretion. The filing’s selected financial data reports 2023 dividends declared of $0.27 per share, while the dividend schedule lists $0.36 per share; investors should reconcile this discrepancy.
Most important facts for investors to verify
- Reconcile the reported 2023 dividend per share ($0.27 versus $0.36) and distinguish declared dividends from cash dividends paid.
- Review the assumptions behind DSW asset useful lives extending beyond the 2030 concession. The auditor identified this as a critical audit matter; concession renewal and end-of-term asset valuation remain uncertain.
- Track the Israeli phosphate concession tender, reserve life at Rotem and Oron, and progress on Barir-field approvals and alternative phosphate sources.
- Assess whether the 2023 price and volume declines have stabilized, especially in potash, phosphate products, bromine and specialty fertilizers, and whether segment profitability can recover.
- Monitor war-related operating and shipping impacts, environmental and safety proceedings, and the delivery, cost and permitting of major capital projects.
Assurance: KPMG’s member firm Somekh Chaikin issued an unqualified opinion on the IFRS financial statements and concluded that internal control over financial reporting was effective as of December 31, 2023.