August 17, 2011 / 6:11 AM / 6 years ago

UPDATE 2-Israel Chemicals Q2 results beat estimates

* Q2 revenue up 29 pct to $1.93 bln, vs $1.75 bln forecast

* Net profit $426.2 mln vs $367 mln forecast

* Potash sales fall to 1.35 mln tonnes due to delays in India (Adds analyst comment, detail, shares)

By Tova Cohen

TEL AVIV, Aug 17 (Reuters) - Fertiliser and specialty chemicals maker Israel Chemicals beat forecasts for second-quarter net profit and revenue, boosted by higher prices for key products and acquisitions.

ICL, the world’s sixth-largest producer of potash, said on Wednesday the results were achieved despite a delay in closing new potash supply contracts with Indian customers, which impacted the quantity of potash sold.

The contracts were concluded in August rather than in April.

“In light of the delayed closing of new potash supply contracts with India, this is a good set of numbers,” Citi analyst Andrew Benson said in a note to clients, referring to fertiliser sales of $1.1 billion, up 34 percent.

“While the outlook for ICL for the remainder of the year is encouraging, we see this as discounted by the share price,” said Benson, who rates ICL “hold” with a 62 shekel price target.

Potash volumes were down 12 percent for the quarter at 1.35 million tonnes, noted Bank of America Merrill Lynch analyst Andrew Stott, who reiterated a “neutral” rating and 48 shekel price objective.

“We downgraded ICL last week due to growing concerns on fertilisers on the back of demand slowdown, therefore limiting ability to grow prices and with growing risks to volumes.”

ICL shares were down 1.4 percent to 49.25 shekels in midday trade in Tel Aviv.

Clal Finance analyst Jonathan Kreizman estimated ICL achieved an average price of $449 per tonne for potash in the quarter. “We expect a rise in quantities and price in the second half of the year. We estimate an average price for potash of $465 a tonne,” said Kreizman, who rates ICL a “market perform”.

Canadian group Potash Corp , the world’s largest fertiliser producer, owns 13.9 percent of ICL, which is controlled by conglomerate Israel Corp .

ICL’s quarterly net profit increased 44 percent to $426 million on revenue up 30 percent to $1.93 billion, compared with forecasts for $367 million and $1.75 billion respectively in a Reuters poll.

ICL consolidated for the first time specialty fertiliser businesses acquired in the first quarter, including the Everris division of The Scotts Miracle Gro Co and Spain-based Fuentes. As a result of these acquisitions, half of ICL’s manufacturing output is now produced outside Israel.

ICL is the world leader in brominated flame retardants -- fire resistant chemicals used for consumer products -- for the electronics industry.

Its industrial division, which includes bromine, posted an 18 percent rise in sales to $424 million as it benefited from higher prices for flame retardants and reduced production of bromine in China.

It will pay a dividend of $298 million for the quarter, up from $195 million for the first quarter. ($1 = 3.52 shekels) (Editing by Will Waterman and Dan Lalor)

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