March 16, 2016 / 2:23 PM / in 2 years

Israel Chemicals cuts costs on weak potash market, to pay dividend

JERUSALEM, March 16 (Reuters) - Israel Chemicals (ICL) said on Wednesday it was reducing capital spending and planned to cut 2016 costs by another $50 million due to a weak global potash market, but still decided to pay a fourth-quarter dividend.

ICL, one of the three largest suppliers of the crop nutrient potash to China, India and Europe, had previously said it would cut costs by $350 million this year versus 2013.

It said on Wednesday it planned to take steps to generate an additional $50 million in cash flow through improved working capital and other measures. ICL also intends to limit capital spending excluding acquisitions to $650 million a year over the next few years, down from a previous goal of $700-$800 million.

As a result, it said, the company’s debt levels should decline moderately starting this year.

“In light of the significant deterioration in the potash business environment and the continued weak outlook for the potash business, (ICL) has adopted a number of additional measures to strengthen its financial position and results,” ICL said.

It said it would pay a fourth-quarter dividend of $67 million, or 5 cents a share.

ICL, which has exclusive permits to extract minerals from the Dead Sea, last month said it earned 14 cents per diluted share in the October-December period.

ICL also said it had formed a search committee to find a replacement for its chairman after Nir Gilad said last month he would step down in September after nine years in office. Candidates will be chosen by May 1 and shareholders will vote for a new chairman in August.

ICL separately said it was considering a public bond offering in Israel but did not provide further details other than filing a shelf prospectus with local authorities. Standard & Poor’s Maalot rated the potential bonds ‘AA” for up to 1.25 billion shekels. (Reporting by Steven Scheer; Editing by Mark Potter)

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