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    ICL   IL0002810146

ICL GROUP LTD

(ICL)
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ICL : FITCH Affirms ICL's BBB- Rating with a Stable Outlook (Form 6-K)

06/21/2021 | 04:31pm EDT
FITCH Affirms ICL's BBB- Rating with a Stable Outlook
The Company hereby reports that FITCH has reaffirmed its Long-term Issuer Default Rating at BBB- with a Stable Outlook.

The FITCH report is attached.
3/13



RATING ACTION COMMENTARY
Fitch Affirms ICL's IDR at 'BBB- '; Outlook Stable
Mon 21 Jun, 2021 - 12:53 PM ET
Fitch Ratings - Barcelona - 21 Jun 2021: Fitch Ratings has affirmed ICL Group Ltd's Long- Term Issuer Default Rating (IDR) and senior unsecured rating at 'BBB-'. The Outlook on the Long-Term IDR is Stable.

The ratings of ICL reflect a strong business profile stemming from its strategic assets in the Dead Sea, stable earnings due to its leadership in bromine, focus on specialty products accounting for about 60% of revenue and efficient diversification of geographies and end- markets, as well as its strong liquidity.

The Stable Outlook reflects our view that ICL will be able to maintain its funds from operations (FFO) net leverage below 3x through the cycle despite recent acquisitions.

KEY RATING DRIVERS
Leverage Within Sensitivities: ICL's FFO net leverage increased to 3x in 2020, due mainly to low fertiliser prices, but remained within the rating sensitivities. Fitch expects higher volumes and prices, as well as growth of acquired companies to drive a progressive decrease in ICL's FFO net leverage to 2.8x in 2021, despite significant M&A cash outflows this year, and to 2.5x by 2023. We forecast EBITDA to grow to USD1.3 billion by 2024 from USD900 million in 2020. Based on our price assumptions, which reflect sustainable mid- cycle prices, ICL would be well-positioned within our rating sensitivities through the cycle.
4/13

Market Leader in Bromine: ICL controls about 40% of the world's bromine capacity, used to manufacture flame retardants and industrial solution in diverse industries. Volumes of clear brine fluids to the oil and gas sector, which was the driver of profit growth before the pandemic, have weakened following a slump in oil prices. However, the recovery of the automotive and electronics sectors, and capacity rationalisations in China led to a strong increase in bromine prices since 4Q20. Fitch sees ICL's position in the bromine industry as a key strength given the stability of margins at around 30% and solid growth prospects as highlighted by the earlier-than-expected full utilisation of the company's new capacity.
Increasing Potash Volumes, Prices: In 2020, record potash volumes produced following the completion of the Dead Sea facility upgrade were not sufficient to offset a fall in prices, resulting in a 35% decrease in the segment's EBITDA. Production capacity is expected to grow to 5 million tonnes (mt) in 2022 from about 4.8mt in 2020 following the completion of its two mines consolidation in Spain, with a further 0.3mt gain expected within three years. Moreover, higher realised prices from 3Q21 following a supply agreement with Indian buyers at a price USD50/tonne higher than the previous contract, and reduced cost per tonne will lift potash EBITDA to USD350 million-USD400 million in the coming years.
Focus on Specialty Phosphates: Increasing earnings from phosphate food specialties and acids, and cost reductions managed to offset a fall in phosphate prices in 2020, resulting in steady phosphate EBITDA compared with 2019. The phosphate division has lower EBITDA margins than potash or industrial products, but benefits from robust demand for food- grade specialties, and will see its contribution improving materially in 2021 as a result of a significant increase in phosphate prices. We expect this division to contribute around USD330 million in EBITDA per year over the next four years, corresponding to a 15% margin on average.

M&A Increases Specialty, Brazil Focus: The acquisition of Fertilaqua in 1Q21 and Compas Minerals' South American plant nutrition division, which is expected to close in 2H21, will add about USD300 million revenue with accretive EBITDA margins and USD500 million in net debt. We expect growing earnings to support deleveraging and acknowledge that ICL can divest non-core assets such as non-controlling interests, as seen in 1Q21. However, we expect ICL to have limited headroom for further M&A in 2021 under its current rating sensitivities, but to pursue bolt-on acquisitions farther out.

5/13

Efficient Diversification: We see ICL's diversification between industrial products, commodity and specialty fertilisers as effective as the markets they address are not correlated. The bromine division generates steady margins that help offset the cyclicality of fertilisers, while potash is able to generate high earnings with EBITDA margins in mid-20%. Moreover, ICL's increased focus on specialty fertiliser offers growth opportunities.

DERIVATION SUMMARY
ICL's business profile is a combination of fairly volatile fertiliser and resilient specialty products (around 60% of revenue) segments. ICL's fertilisers portfolio has a higher exposure to specialty fertilisers, comparable margins but smaller scale than its US fertiliser peer The Mosaic Company (BBB-/Stable), and weaker cost positioning across its phosphate products than its EMEA peers PJSC PhosAgro (BBB-/Stable) and OCP S.A. (BB+/Stable).
ICL's diversification across fertilisers and non-agro chemicals is similar to OCI N.V.'s (BB/Stable), which is split between nitrogen-based fertilisers and industrial chemicals. OCI exhibits higher margins than ICL owing to access to low-cost feedstock in the US and north Africa but its credit profile is constrained by high leverage.

KEY ASSUMPTIONS
Fitch's Key Assumptions Within Our Rating Case for the Issuer
-
Fertiliser prices in line with Fitch's fertiliser price deck over the next four years
-
Sales of industrial products growing in mid-single digits per year, driven by prices and volumes, over the next four years
-
Sales of potash growing 12% in 2021, driven by higher volumes and realised prices, followed by low single digits to 2024
-
Sales of phosphate specialties growing 19% in 2021, driven by prices, before declining 12% in 2022 as prices ease, and then growing 2% in 2023-2024
-
EBITDA margins in high 30% for bromine, low 20% for potash, mid-10% for phosphate and high single digits for innovative agriculture solutions
-
Capex of USD550 million to USD580 million per year to 2024
-
Dividend at 50% of net income, growing from USD214 million in 2021 to USD292 million in 2024
-
Net M&A cash outflows of USD439 million in 2021, followed by USD50 million per year to 2024

6/13

RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
-
FFO net leverage below 2.2x on a sustained basis
-
Adherence to a conservative financial policy
Factors that could, individually or collectively, lead to negative rating action/downgrade:
-
Under-performance or M&A leading to FFO net leverage above 3.2x on a sustained basis
-
Operating EBITDA margin consistently below 15%

BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: As of 31 March 2021, ICL maintained strong liquidity of USD1 billion, consisting of USD895 million availability under its USD1.1 billion revolving facility and USD216 million of cash and short-term deposits, excluding USD40 million that Fitch deems not readily available.
Two debt instruments totalling USD202 million were repaid during 1Q21. Available liquidity is sufficient to comfortably cover the remaining USD0.4 billion financial liabilities due in 2021 as well as an estimated USD0.3 billion cash outflow for the acquisition of Compas Minerals' South American plant nutrition assets that is expected to close in 2H21. ICL also has USD123 million unused securitisation facility.
7/13

ICL's revolving facility is provided by a pool of 11 international banks, with USD200 million expiring in March 2023 and USD900 million in March 2025. Although the facility is subject to financial covenants, we assume it will remain available to the company until maturity given significant headroom under its covenanted ratios.
Fitch expects ICL to maintain a healthy debt maturity profile, underpinned by its proven access to long-term funding from international financial institutions and public debt markets, as recently exhibited through its successful bond issue despite adverse capital- market conditions in 2020.

ISSUER PROFILE
ICL is a global producer of fertilisers and chemicals using phosphate, potash and bromine feedstocks.

SUMMARY OF FINANCIAL ADJUSTMENTS
Depreciation of rights-of-use assets of USD67 million and lease-related interest expense of USD15 million deducted from EBITDA. Lease liabilities of USD325 million excluded from financial debt. Cash flow from operations reduced by USD67 million, cash flow from financing activities increased by USD67 million.
USD40 million cash and short-term investments excluded from readily available cash as they are deemed not readily available to repay consolidated financial debt.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.

8/13

ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

RATING ACTIONS
ENTITY/DEBT
RATING
PRIOR
ICL Group Ltd.
LT IDR BBB- Rating Outlook Stable Affirmed
BBB- Rating Outlook Stable
● senior unsecured
LT
BBB- Affirmed
BBB-

VIEW ADDITIONAL RATING DETAILS

FITCH RATINGS ANALYSTS

Guillaume Daguerre
Director
Primary Rating Analyst
+34 93 323 8404
guillaume.daguerre@fitchratings.com
Fitch Ratings Ireland Spanish Branch, Sucursal en España
Av. Diagonal 601 Barcelona 08028

Nikos Kousiantzas
Associate Director
Secondary Rating Analyst
+34 93 323 8417
nikolaos.kousiantzas@fitchratings.com
Angelina Valavina
Senior Director
Committee Chairperson
+44 20 3530 1314
angelina.valavina@fitchratings.com
9/13

MEDIA CONTACTS
Adrian Simpson
London
+44 20 3530 1010
adrian.simpson@thefitchgroup.com
Pilar Perez
Barcelona
+34 93 323 8414
pilar.perez@fitchratings.com
Additional information is available on www.fitchratings.com
APPLICABLE CRITERIA
Corporate Rating Criteria (pub. 21 Dec 2020) (including rating assumption sensitivity)
Corporates Recovery Ratings and Instrument Ratings Criteria (pub. 09 Apr 2021) (including rating assumption sensitivity)
Sector Navigators - Addendum to the Corporate Rating Criteria (pub. 30 Apr 2021)

APPLICABLE MODELS
Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

Corporate Monitoring & Forecasting Model (COMFORT Model), v7.9.0 (1)
ADDITIONAL DISCLOSURES
Dodd-Frank Rating Information Disclosure Form
Solicitation Status
Endorsement Policy
ENDORSEMENT STATUS
ICL Group Ltd.EU Issued, UK Endorsed

10/13
DISCLAIMER
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM /UNDERSTANDINGCREDITRATINGS. IN ADDITION, THE FOLLOWING HTTPS://WWW.FITCHRATINGS.COM/RATING- DEFINITIONS-DOCUMENT DETAILS FITCH'S RATING DEFINITIONS FOR EACH RATING SCALE AND RATING CATEGORIES, INCLUDING DEFINITIONS RELATING TO DEFAULT. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE AT HTTPS://WWW.FITCHRATINGS.COM/SITE/REGULATORY. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR WHICH THE LEAD ANALYST IS BASED IN AN ESMA- OR FCA-REGISTERED FITCH RATINGS COMPANY (OR BRANCH OF SUCH A COMPANY) CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH RATINGS WEBSITE.
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COPYRIGHT
Copyright © 2021 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435.
Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. 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Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided 'as is' without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.
11/13
For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001
Fitch Ratings, Inc. is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (the 'NRSRO'). While certain of the NRSRO's credit rating subsidiaries are listed on Item 3 of Form NRSRO and as such are authorized to issue credit ratings on behalf of the NRSRO (see https://www.fitchratings.com/site/regulatory), other credit rating subsidiaries are not listed on Form NRSRO (the 'non-NRSROs') and therefore credit ratings issued by those subsidiaries are not issued on behalf of the NRSRO. However, non-NRSRO personnel may participate in determining credit ratings issued by or on behalf of the NRSRO.
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SOLICITATION STATUS
The ratings above were solicited and assigned or maintained by Fitch at the request of the rated entity/issuer or a related third party. Any exceptions follow below.
ENDORSEMENT POLICY
Fitch's international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU CRA Regulation or the UK Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, as the case may be. Fitch's approach to endorsement in the EU and the UK can be found on Fitch's Regulatory Affairs page on Fitch's website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis.

Chemicals and Fertilizers Corporate Finance Middle East Asia-Pacific Europe Israel

12/13

Disclaimer

ICL - Israel Chemicals Ltd. published this content on 21 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 June 2021 20:30:05 UTC.


ę Publicnow 2021
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Financials (USD)
Sales 2021 5 932 M - -
Net income 2021 573 M - -
Net Debt 2021 2 428 M - -
P/E ratio 2021 15,3x
Yield 2021 3,52%
Capitalization 8 801 M 8 799 M -
EV / Sales 2021 1,89x
EV / Sales 2022 1,76x
Nbr of Employees 11 000
Free-Float 52,9%
Chart ICL GROUP LTD
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ICL Group Ltd Technical Analysis Chart | MarketScreener
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Technical analysis trends ICL GROUP LTD
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 4
Last Close Price 6,85 $
Average target price 7,84 $
Spread / Average Target 14,4%
EPS Revisions
Managers and Directors
Raviv Zoller President & Chief Executive Officer
Kobi Altman Chief Financial Officer
Yoav Doppelt Executive Chairman
Miri Mishor Senior Vice President-Information Technology
Eyal Ginzberg Chief Technology Officer & Senior VP
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