November 13, 2013 / 8:18 AM / 5 years ago

UPDATE 1-Israel Chemicals profit falls, plans New York listing

* Q3 adjusted net profit $196 mln vs $188.4 mln forecast

* Revenue $1.45 bln vs $1.46 bln forecast

* Produced 1.27 mln tonnes of potash in Q3, up 9 pct

By Tova Cohen

TEL AVIV, Nov 13 (Reuters) - Weakness in the potash market led to a decline in third-quarter earnings at Israel Chemicals (ICL), which said it was preparing a dual listing of its shares on the New York Stock Exchange.

ICL, the world’s sixth-largest producer of the crop nutrient potash, attributed lower sales and profits to “weakness and instability in the potash market, which led to an appreciable reduction in amounts sold and to lower selling prices of fertilisers”.

The announcement by Russia’s Uralkali in July that it would quit one of the world’s two largest potash cartels triggered a decline in prices, which led to a delay in purchases by customers in anticipation of more price reductions. Towards the end of the third quarter, there was some recovery in demand which continued in October, ICL said.

ICL’s potash production increased by 9 percent in the third quarter to 1.27 million tonnes due to greater production efficiency at the company’s mine in England.

ICL, a subsidiary of holding company Israel Corp, said the listing of its shares in New York would aid its growth by improving access to international financial markets and providing flexibility in financing mergers and acquisitions. It did not provide further details of its plans.

ICL reported adjusted net profit in the third quarter of $196 million, down from $395 million a year earlier. The 2013 figure excludes one-time tax expenses of $118 million. Revenue fell to $1.45 billion from $1.76 billion.

ICL was forecast in a Reuters poll to earn $188.4 million on revenue of $1.46 billion.

It was also hit by lower demand for phosphate fertilisers in India and increased competition that led to lower prices.

Phosphates unit Rotem is going through one of its most difficult crises of the past several years, ICL said. Rotem’s cost competitiveness is well below the average of competitors and available resources are only expected to last six to nine years because the Israeli government has still not granted a license to mine new reserves, it said.

The company said it began to implement a growth strategy, launched at the end of the second quarter, that includes measures to improve operational processes to save a few hundreds million dollars by 2016. It is also examining a number of growth initiatives in the fields of agriculture, food and engineered materials.

ICL said it would distribute a dividend of $54.5 million after paying a dividend of $221 million for the second quarter.

Canada’s Potash Corp owns 14 percent of ICL. Attempts to increase its stake have been rebuffed by the Israeli government.

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