* Q3 revenue $1.818 bln vs $1.833 bln forecast
* Q3 net profit $395 mln vs $383 mln forecast
* Sees reduced potash shipments in Q4 vs Q4 2011
* Says indicators point to strong fertiliser sales in 2013
By Tova Cohen
TEL AVIV, Nov 21 (Reuters) – Fertiliser and specialty
chemical maker Israel Chemicals (ICL) expects a decline
in shipments of potash in the final quarter as customers in
India and China delay the renewal of contracts for the crop
nutrient.
But the world’s sixth-largest potash producer, which
reported lower third quarter profit and sales on Wednesday, said
that indicators point to strong sales of fertilisers in the 2013
planting season.
Canada’s Potash Corp, the world’s largest
fertiliser producer, owns 13.9 percent of ICL, which is
controlled by conglomerate Israel Corp.
Potash Corp has begun talks with Israeli officials on
acquiring ICL, the second-largest company on the Tel Aviv stock
market with a value of $14.9 billion, so it can shore up its
leverage with China and India, which are expected to drive much
of the industry’s growth.
UBS analyst Roni Biron said a takeover by Potash was a
“distinct possibility” following a general election in January,
assuming Prime Minister Benjamin Netanyahu stays in power.
“While public opinion remains the main issue and anti-trust
clearance may be required in different markets, the combination
of a willing seller, interested buyer, and a potentially
supportive prime minister makes this transaction more feasible,
in our view,” Biron said.
Despite declining world sales of potash in the third
quarter, ICL sold 1.39 million tonnes in the quarter, almost
unchanged from a year ago.
“However, the completion of existing contracts coupled with
delayed renewals of contracts in India and China is expected to
reduce the company’s fourth-quarter 2012 potash shipments as
compared with the fourth quarter of 2011,” ICL said.
“The continued decline of global grain stock-to-use ratios
to historically low levels, as predicted by the U.S. Department
of Agriculture, and other indicators point to a market
environment that will support strong sales of fertilisers in the
2013 planting season.”
Bank of American Merrill Lynch analyst Andrew Stott said the
likely absence of Indian sales will be especially negative for
the fourth quarter.
Global potash peers such as Potash Corp and Mosaic
have already pointed to a slowdown in the fourth quarter.
Q3 PROFIT FALLS LESS THAN EXPECTED
Third quarter net profit fell to $395 million from $436
million a year earlier as revenue slipped to $1.818 billion from
$1.898 billion. Unfavourable exchange rate fluctuations
accounted for $72 million of the drop in revenue while higher
costs for raw materials and energy dragged on earnings.
ICL was forecast in a Reuters poll to earn $383 million on
revenue of $1.833 billion. The beat in profit was due to lower
tax and financial expenses, said Biron, who rates ICL “buy”.
ICL’s new chief executive, Stefan Borgas, said a balanced
portfolio was helping the company to offset low economic growth.
Shares in ICL were down 0.45 percent to 45.54 shekels in
afternoon trade in Tel Aviv.
The company’s industrial products division showed a drop in
quarterly revenue as the economic slowdown, especially in China,
has led to reduced demand for brominated flame retardants used
in electronics and building industry products.
As a result, production was halted at one of ICL’s bromine
units in the third quarter and this is expected to continue into
the fourth.
ICL said it would pay a dividend of 21.7 cents, or a total
of $276 million in the quarter, compared with $285 million for
the second quarter.
