ICL Group Ltd (ICL) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call showed positive financial performance with growth across segments and stable cash flow. However, concerns about high sulfur costs, currency risks, and halted LFP projects counterbalance this. The Q&A highlighted potential risks, particularly in Brazil and with the shekel's impact. The dividend yield is modest, and management's unclear responses add uncertainty. Overall, the mixed signals suggest a neutral stock reaction.
Key Financial Performance
Sales (Q4 2025) $1.701 billion, up 6% year-over-year. Growth attributed to all 4 segments delivering sales growth.
Consolidated Adjusted EBITDA (Q4 2025) $380 million, improved 10% year-over-year. Growth driven by price increases in bromine, potash, and phosphate fertilizers.
Adjusted Diluted Earnings Per Share (Q4 2025) $0.09, up 13% year-over-year. Reflects overall financial improvement.
Operating Cash Flow (Q4 2025) $340 million, improved 2% sequentially. Reflects stable operational performance.
Consolidated Sales (2025) $7.153 billion, up 5% year-over-year. Growth driven by Industrial Products, Phosphate Solutions, and Growing Solutions segments.
Full Year EBITDA (2025) $1.488 billion, up slightly year-over-year. Growth tempered by higher raw material costs.
Adjusted Diluted EPS (2025) $0.36, reflects stable financial performance.
Operating Cash Flow (2025) $1.056 billion, reflects strong cash generation.
Industrial Products Sales (Q4 2025) $296 million, up 6% year-over-year. Growth driven by higher bromine prices and strong demand for magnesium chloride.
Industrial Products EBITDA (Q4 2025) $68 million, reflects stable segment performance.
Potash Sales (Q4 2025) $473 million, up 12% year-over-year. Growth driven by higher potash prices and increased sales volume.
Potash EBITDA (Q4 2025) $150 million, up 15% year-over-year. Growth supported by operational improvements and strong market demand.
Phosphate Solutions Sales (Q4 2025) $518 million, up 2% year-over-year. Growth driven by higher food specialties sales in North America and Asia.
Phosphate Solutions EBITDA (Q4 2025) $121 million, reflects stable segment performance despite higher sulfur costs.
Growing Solutions Sales (Q4 2025) $467 million, up 6% year-over-year. Growth driven by higher prices in North America and successful product mix strategy in Europe.
Growing Solutions EBITDA (Q4 2025) $60 million, up 18% year-over-year. Growth driven by profit improvement in North America and Europe.
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Operating Highlights
Acquisition of Bartek Ingredients: ICL acquired Bartek Ingredients, a global leader in food-grade malic and fumaric acids, to expand its portfolio in specialty food solutions and leverage its global food presence.
New product pipeline: ICL expanded its food project pipeline with nearly 40 new solutions since mid-2025, including a high-protein drink stabilization system for GLP-1 users and portfolio expansion in seafood and soy protein.
Geographic expansion: ICL expanded its food business in China, achieving a 15% increase in sales in Q4 2025 and a 12% increase for the year. The company also saw growth in North America and Asia.
Potash market: ICL signed a contract with Chinese customers for potash supply at $348 per metric ton, aligning with recent industry settlements. Potash sales volume increased by 15% year-over-year in Q4 2025.
Operational improvements: ICL achieved operational improvements in its Spanish potash operations, leading to a quarterly production record in Q4 2025.
Cost management: ICL is actively working to mitigate rising raw material costs, including sulfur, and using hedging techniques to manage currency exposure.
Strategic focus areas: ICL identified specialty crop nutrition and specialty food solutions as its two strategic growth engines, discontinuing less synergetic activities like LFP battery material projects and initiating the sale of its UK operations.
Dead Sea concession: ICL secured compensation for its Dead Sea assets and ensured bromine supply through at least 2035, while preparing to participate in the 2030 concession process.
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Risk or Challenges
Discontinuation of LFP battery material projects: ICL decided to discontinue its LFP battery material projects in St. Louis and Spain, citing a lack of synergy and low potential. This represents a strategic shift but also a challenge in reallocating resources effectively.
Closure of R&D facility in Israel: The company closed a minor R&D facility in Israel as part of its strategic adjustments, which could impact innovation and research capabilities in the short term.
Impairment of Boulby assets in the U.K.: ICL recorded an impairment of its Boulby assets in the U.K. and initiated a sale process for these operations, reflecting challenges in aligning these assets with its strategic goals.
Higher raw material costs, especially sulfur: The company faced significant increases in raw material costs, particularly sulfur, which are difficult to pass on to customers and are expected to persist into 2026.
Strengthening of the shekel against the U.S. dollar: The strengthening of the shekel versus the U.S. dollar increases operational costs for ICL as a dollar-denominated company, despite hedging efforts.
Israeli Supreme Court ruling on water extraction fees: ICL was obligated to pay $14 million in fees for water extracted from wells in the Dead Sea concession area, with a total recognition of $80 million for prior periods, adding financial strain.
Market softness in Europe: The company experienced continued market softness in Europe, particularly in its Phosphate Solutions division, which could impact sales and profitability.
Pressure from competitive forces in specialty phosphate: Competitive pressures and higher raw material costs are impacting the specialty phosphate segment, creating challenges in maintaining profitability.
Geopolitical and supply issues affecting sulfur prices: Exceptional volatility in the sulfur market, driven by geopolitical and supply issues, is causing cost increases across several business segments.
Affordability issues in Brazil's agricultural market: Farmers in Brazil are facing affordability issues, and distributors are shifting buying behavior, which is impacting profitability in the Growing Solutions segment.
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Guidance & Outlook
Consolidated EBITDA for 2026: Expected to be between $1.4 billion to $1.6 billion, comprising all 4 business segments.
Potash sales volumes for 2026: Expected to be between 4.5 million and 4.7 million metric tons, benefiting from operational improvements made at the Dead Sea and in Spain in 2025.
Annual adjusted tax rate for 2026: Expected to be approximately 30%.
Market trends for minerals (potash, phosphate, bromine): Prices are stable to improving, and these trends are expected to continue into the first quarter of 2026.
Specialty phosphate market: Facing pressure from competitive forces and higher raw material costs, with sulfur prices experiencing exceptional volatility and reaching multiyear highs.
Currency impact: The strengthening of the shekel versus the U.S. dollar is expected to continue impacting costs for the company in 2026, with hedging techniques being used to mitigate some of this exposure.
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Shareholder Return Plan
Dividend Distribution: 50% of adjusted net income distributed to shareholders, totaling $224 million in 2025. This results in a trailing 12-month dividend yield of 3.1%.
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Key Q&A
Q:What are the upside and downside risks for 2026 across different segments?
A:Upside risks include higher potash production and sales, potential increase in potash and bromine prices, and improved demand in the Brazilian market. Downside risks include increased sulfur costs (from $140-$150 to over $500) and the strengthening of the shekel against the dollar, which impacts expenses in Israel.
Q:What is the outlook for the Growing Solutions segment, particularly in Brazil?
A:The Growing Solutions segment showed progress with improved EBITDA in Q4. However, Brazil, which constitutes about 1/3 of the segment, faced challenges due to high interest rates and limited credit availability. The company adapted its cost structure and expects 2026 to be better. Europe and the Far East also show potential, with adjustments in product portfolios and raw material cost challenges.
Q:What are the expectations for different business segments in 2026?
A:Potash volumes and prices are expected to be higher, but the strengthening shekel will offset some gains. Bromine is expected to remain stable. Phosphate Solutions may see lower EBITDA due to high sulfur prices. Growing Solutions is expected to perform better due to less dependency on the shekel and favorable currency conditions.
Q:What is the company's sensitivity to the shekel and its hedging strategy?
A:The company is short by over $1 billion in shekels, with a 1% change equating to about $10 million. Approximately 50% of the exposure is hedged, with an assumption of a hedged rate of over $320 million for 2026.
Q:What is the situation in Brazil regarding suppliers acting as creditors?
A:The situation is cyclical, with suppliers often acting as creditors during tough times. The company is cautious about credit exposure in Brazil and believes the market has acclimated to the current conditions. The outlook for 2026 is expected to be stable or slightly better.
Q:What is the company's stance on the battery market and LFP projects?
A:The company has decided to halt its LFP projects in Spain and the U.S. due to lack of competitive advantage and support. It will focus on supplying raw materials to the Chinese market, which remains strong. The decision is seen as prudent given market uncertainties.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding the exact timeline for sulfur price normalization and the long-term impact of the strengthening shekel on financials. Additionally, their response to the future of the battery market was broad, lacking specific details on potential re-entry conditions or alternative strategies.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America Europe
Aviram
Bartek Ingredients
LFP battery
MOU
Prices
Sea concession
Slide review
Solutions Growing
Solutions segment
acquisition Bartek
acquisition portfolio
affordability
asset
battery material
concession process
crop nutrition
distributor
division Slide
engine specialty
expansion
exposure
facility
finish
food sale
food solution
force
mineral
nutrition specialty
opportunity
priority
progress principle
project
protein
sale phosphorus
sale process
segment sale
solution area
specialty food
sulfur
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ICL Report
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