ICL Group Q3 2024 Earnings Call Transcript

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Provided by Quartr
November 11, 2024

There are 10 speakers on the call.

Operator

Good day, everyone, and welcome to the ICL Third Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session. Please note this call is being recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Peggy Reilly Tharp.

Operator

Please go ahead.

Speaker 1

Thank you. Hello, everyone. I'm Peggy Reilly Tharp, Vice President of Global Investor Relations for ICL Group. I'd like to welcome you and thank you for joining us today for our earnings conference call. This event is being webcast live on our website at icl group.com and there will be a replay available a few hours after the live call and a transcript shortly thereafter.

Speaker 1

Earlier today, we filed our reports and presentation with the securities authorities and the stock exchange in Israel. And tomorrow, once the SEC EDGAR website reopens, we will do so in the U. S. Those reports as well as the press release and our presentation are available on our website as of this morning. Please be sure to review the disclaimer on Slide 2.

Speaker 1

Our comments today will contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. The company undertakes no obligation to update any information discussed on this call at any time. We will begin with a presentation by our CEO, Mr. Ravi Zoller, followed by Mr.

Speaker 1

Rabaham Nadal, our CFO. After the presentation, we will open the line for the Q and A session. And I would now like to turn the call over to Raviv.

Speaker 2

Thanks, Peggy, and welcome, everyone. I would like to begin by providing a brief update on the situation in Israel, which is now in its 14th month. We have continued to address the challenges caused by the war, including fluctuations in the number of reservists called service and ongoing logistics related issues. We remain committed to delivering against our 2024 plan, while continuing to manage all areas under our control and preparing for potential external risks and scenarios. Now, if you will please turn to Slide 3 for a brief overview of 3rd quarter results, which continued the positive trend we saw in the first half of the year.

Speaker 2

Sales of $1,753,000,000 were up for the 3rd consecutive quarter, while adjusted EBITDA of $383,000,000 was up for the 4th consecutive quarter. EBITDA was also up 11% on a year over year basis as EBITDA margin expanded from 19% to 22%. Throughout the 1st 9 months of 2024, as always, we maintained our focus on cash generation. As a result, our free cash flow strengthened throughout the year with the year to date free cash flow of $572,000,000 Adjusted earnings per share has also improved during quarter this year. And for the Q3, we delivered adjusted EPS of $0.11 up 10% on a sequential basis.

Speaker 2

In the Q3, our specialty driven business divisions, Industrial Products, Phosphate Solutions and Growing Solutions reported a 37% year over year increase in EBITDA. For the Q3, our potash business division represented approximately 30% of total EBITDA versus nearly 50% in the same quarter last year. We continue to return value to our shareholders via our industry leading dividend and next month we will distribute another dividend payment of approximately $0.05 per share. We also maintained our focus on expanding ICL's innovative product by plan across all of our specialties driven businesses during the quarter. In addition to our focus on strong cash generation, we continue to target cost savings and efficiency efforts as well.

Speaker 2

I would ask you to turn now to Slide 4 and to look at both year over year and quarter over quarter trends for some key financial metrics. As you can see, we once again delivered quarter over quarter improvement across the board. Consolidated adjusted EBITDA was up on both a quarterly and annual basis and our specialties driven business divisions achieved improvement in both sales and EBITDA versus both prior periods. Let's start with a review of our divisions and begin with our Industrial Products business on Slide 5. For the Q3 of 2024, sales of $309,000,000 were up 16% year over year.

Speaker 2

Over the same timeframe, EBITDA increased 55 percent to $65,000,000 EBITDA margin of 21% improved versus 16% in the prior year when the bromine market reached its bottom, driven by scale and efficiencies. In the Q3, we continue to reap benefits from our efforts to gain market share in flame retardants with higher volumes for both brominated and phosphorus based solutions. Sales of clear brine fluids for use in the oil and gas industry decreased year over year due to a normal shift in the oil and gas drilling cycles in Europe and the Eastern Hemisphere. Specialty Minerals sales increased year over year driven by higher volumes for industrial applications and steady demand from the food and pharma end markets. The new product pipeline, which spans from apparel to construction and into battery materials is expected to benefit from an expansion into the North American energy storage supply chain through a phosphorus compound for use in the production of LiPF6, a critical raw material for lithium ion batteries.

Speaker 2

On Slide 6, you will see our potash division results for the Q3 of 2024 with sales of $389,000,000 and EBITDA of $120,000,000 Our average potash price was down $45 CIF per ton year over year, while total sales volume was down approximately 220,000 metric tons for the same timeframe. As I mentioned earlier, at our Dead Sea operations, we continue to face intermittent challenges related to the war. We have continued to adapt to fluctuations in staffing and remain flexible in the face of shipping constraints, which presents a challenge for ICL and other gold companies. In Spain, we are benefiting from ongoing operational and efficiency efforts, which have driven record Q3 production. For 2024, we intend to limit our total annual product sales volumes to the 4,600,000 metric tons, which have already been committed.

Speaker 2

This is similar to 2023 volumes and in anticipation of improving conditions in 2025. Turning to Slide 7, in our phosphate solutions division, where 3rd quarter sales were $577,000,000 EBITDA of $140,000,000 increased on a year over year basis, while EBITDA margin expanded to 24% from 20%. In the quarter, growth in specialties market share more than offset lower prices related to a decrease in cost inputs. On a portfolio basis, we continue to expand into new and adjacent products in the food, industrial and pharma end markets. On a regional basis, we saw continued growth at YPH, our joint venture in China with increased demand for battery grade phosphate.

Speaker 2

We are 2 months away from completing our customer innovation and qualification center in St. Louis, which will allow us to begin qualifying battery materials product for customers. This big step forward puts us in an optimal position for growth in the Western Hemisphere as it will allow us to prove our products at scale and strengthen our customer relationships. For our commercial LFP plant in North America, we continue to align our construction timeline and capital spend to match anticipated customer demand. Looking more globally, we are now selling specialty phosphate solutions to a battery customer in Argentina and we're also looking at battery material partnership opportunities in Europe.

Speaker 2

In terms of commodity phosphates, prices firmed in the Q3 with tight stock positions in key markets. Turning to Slide 8 and our growing solutions business division, where Q3 2024 sales of $538,000,000 were somewhat down year over year, while EBITDA of $64,000,000 increased more than 70% for the same timeframe. EBITDA margin of 12% expanded significantly versus the prior year, driven by efficiency efforts and improved product mix. Our strategy of offering innovative products targeted to meet regional needs continue to prove itself as we delivered our 3rd sequential quarter of sales and EBITDA growth. In China, we recently signed a 5 year agreement with one of the top agricultural distribution companies.

Speaker 2

The agreement is valued at approximately $170,000,000 is for specialty water soluble fertilizers, which have seen a substantial increase in demand in China. In North America, we have made good progress on the integration of custom ag formulators, a provider of liquid adjuvants and enhanced nutrients as well as various other specialty products. I would now like to wrap up with a few highlights on Slide 9. While I'm pleased that we delivered sequential EBITDA improvement for the 4th consecutive quarter, our future growth relies on our passion to strive forward and to disrupt our own markets when necessary. This attitude has enabled us to continuously enhance our already robust product pipeline with innovative new solutions.

Speaker 2

Simultaneously, we have worked to manage costs and drive efficiency efforts. There are no sacred cows at ICL and 2 additional small sites will close this quarter for efficiency considerations. We have also worked together to leverage opportunities across business segments and we will continue to do so as we look to target new and adjacent end markets through innovative product solutions. One example of this is our battery materials business. We have the potential to leverage our expertise in a variety of ways and to expand our presence as a global leader in this space through new products and offerings.

Speaker 2

In North America, our customer innovation qualification center is nearing completion and we currently expect commercial production to begin in 2027. Another example of our dedication to innovation is Agmatics, our Agtech digital startup, which was recently recognized by Fortune as one of the 10 companies that are changing the world and was featured in an important scientific publication in Nature on regenerative agriculture. The new RegionIQ platform helps agronomists and suppliers implement environmentally friendly crop strategies and enables them to tailor regenerative practices to specific crops and conditions. These are just two examples that demonstrate how ICL is working to improve lives and protect the planet and neither would be possible without the hard work, dedication and support of each and every ICL employee. To all of our team, I say thank you.

Speaker 2

And with that, I would now like to turn the call over to Aviram.

Speaker 3

Thank you, Aviv, and to all of you for joining us today. Let us get started on Slide 11 and take a look at some key market metrics. Since we are truly global company serving a variety of end markets, we look beyond fertilizer prices to a wider array of macro indicators. Starting with inflation, where the U. S.

Speaker 3

And EU saw decreases in the 3rd quarter, while China, Brazil and Israel also increases, which ranged from 20 to 60 basis points. Interest rates decreased versus the prior quarter in the U. S, EU and U. K, remained steady in Israel and India and increased in Brazil. Global industrial production was stable in the quarter with improving trends expected into the next few quarters.

Speaker 3

On a sequential basis, housing starts picked up slightly in the U. S. In both the second and third quarters this year. Turning to Slide 12, the key fertilizer market metrics. Across the board, grain prices ended the Q1 lower, while farmer sentiment significantly softened.

Speaker 3

However, data for October showed a surprising pre election bounce in sentiments as farmers expressed some optimism that the economic conditions will improve and that there will not be an extended downturn in the farm economy. Potash and phosphate prices continue to diverge with potash prices maintaining their descent, while phosphate prices increased slightly versus the Q2 and significantly year over year, While ocean freight rates decreased in the quarter, reaching the lowest level since the Q3 of 2023, at ICL, we continue to see higher overall logistical costs. On Slide 13, you can see some key market metrics for energy storage and electric vehicles. While both are growing at roughly the same pace over the next few years, the most significant increase in demand is still expected later in the decade. As Raviv mentioned, in addition to our current North American battery materials project, which is aligned with our customers' current expected production timelines, we are also looking at battery material expansion opportunities in other regions.

Speaker 3

If you will now turn to Slide 14 for a look at our Q3 sales bridges. On the left side, you can see the year over year change for each of our business divisions with potash having an outsized impact on the year over year decrease in sales, which came in at $1,800,000,000 Turning to the right side of the slide, you can see the impact of fuel prices, especially for potash and the effect exchange rates had on sales. In addition, due to onetime logistics adjustments, which will allow for greater flexibility of allocation between ports and Israel going forward, we deferred approximately 120,000 metric tons of potash sales volumes to China. On Slide 15, you can see the impact lower potash prices had on our Q3 2024 EBITDA of $383,000,000 We were able to offset lower prices in general through higher quantities and lower raw material costs in our specialties driven businesses. Turning to Slide 16, you can see that even as potash prices continued to decrease in the Q3, ICL remained a leader in terms of average realized price.

Speaker 3

Once again, we maximize the profitability of our cost efficient resources. Demand for potash is currently constructive due to soil replenishment needs, and we are seeing some firming in the global market. On Slide 17, I would like to remind you of ICL's leadership position in the global bromine market. While bromine prices have been under pressure for more than a year, the Dead Sea remains the most cost competitive source of bromine and accounts for approximately 12 thirds of global supply capacity. If you turn to Slide 18, you can see how our business breaks out on both the regional basis and business division.

Speaker 3

As a truly global company, we maintain solid foundations in Europe and North America while participating in high growth markets like Brazil, China and India. As a truly diverse company, our 4 business segments serve a wide array of end markets from automotive to food and beverage to pharma and beyond. Before we wrap up, I would like to share a few highlights on Slide 19. We continue to prioritize cash generation and ended the quarter with available resources of approximately $1,700,000,000 Our cost savings and efficiency efforts are ahead of our expectations. Our net debt to adjusted EBITDA rate at quarter end was 1.2x and S and P recently reaffirmed our BBB- rating with a stable outlook.

Speaker 3

And of course, we are once again distributing 50% of adjusted net income to our shareholders in December. We will pay out $68,000,000 as a dividend to our shareholders, keeping our trailing 12 month dividend yield at 4.6%. Finally, if you will turn to Slide 20, I would like to update you on our 2024 guidance. For our Specialties Driven Business division, which includes DASL Products, Groin Solutions and Phosphate Solutions, we now expect EBITDA to be between $0.95 to $105,000,000,000 in 2024. This is up from our previous guidance of $800,000,000 to $1,000,000,000 As Raviv mentioned earlier, for 2024, we intend to limit our total annual potash sales volumes to 4.6 1,000,000 metric tonnes, which is in line with 2023 volumes and in anticipation of improving conditions in 2025.

Speaker 3

We continue to expect our effective tax rate for 2024 to be approximately 28%, which was our rate in the Q3. And with that, we can begin the Q and

Speaker 4

A. Thank

Operator

We'll take our first question from Raghib Parikh with Barclays. Please go ahead. Your line is open.

Speaker 4

Hi, everyone, and congrats on the results. I'm obviously coming back again. And the first question that we have is, do you have any preliminary specialty outlook for 2025 given that 2024 is coming together much better than initially anticipated? I have a follow-up for after that.

Speaker 5

Okay. So as you can imagine, first of all, hi, how are you? And I hope we get to touch base. We have yes, we do have preliminary thoughts about 2025. It hasn't firmed up, let's say, budget for 2025, but we would definitely, I mean, the ideas and the axioms for 2025, if I go industry by industry, would suggest that we see basically further stabilization or firming up around the potash starting from that, hopefully continuation of the good track record that we have on phosphate and its derivatives on industrial products.

Speaker 5

As you know, a lot of it depends on the market side and the demand that's going to firm up. We believe that during the year demand should be picking up. We are not waiting for the demand. As you know, we are supplying basically at full steam, but this should drive prices up. And finally, on the growing solutions side, we are hopeful that we continue the very positive journey that we embarked upon and 2025 is going to be a better year there.

Speaker 5

So again, we're going to work on it. We don't have a version that we're ready to share at this time but the trends basically look okay. Anything I missed, Aviv? No, it's perfect. Okay.

Speaker 5

So that's 25. And of course, once we have a better picture, as always, we'll find a way to share it and it will culminate in the guidance that obviously we will give when we come out with Q4 and 2024. We will also, of course, give the guidance for 2025 as we did in the previous 2 years.

Speaker 4

Okay. Thanks, Abraham. And then also just on geopolitics, do you see, is the impact still just on increased shipping costs or is there issues getting tons out in the area? And then what's your take on the Belarus notion to cut 10% of production? Thanks so much.

Speaker 6

Okay. So thanks for the question. Geopolitics, of course, nobody has a crystal ball, but the main issue for us is logistics and shipping. And during the Q3, we made certain adjustments to make sure that if necessary, we could get all our product out of 1 port instead of 2. That has a certain cost to it.

Speaker 6

We saw if you look at the bridge of quarter versus quarter last year there was an increase of $13,000,000 in transportation costs. So a huge chunk of that has to do with the adjustment to move out of one port. So we're hoping, of course, that in the coming months, things will work out to the better and we lose that we lose that problem that we don't like to face. But in terms of our abilities, we're much more flexible now because we can actually ship all of our product from one port. It means that part of the adjustment that was made this year was that we're shipping more to the Western hemisphere than we did before.

Speaker 6

So the negative is that we have less flexibility on our shipping destinations. The positive is we get better we actually got a better return from the Western Hemisphere. And given that the current situation is that we see that the price for the beginning of next year when we sell product for January, we get better return than the spot price, then we prefer to defer product to any product left, which is not a whole lot to next year. So that's on geopolitics and transportation. In terms of the Belarussia, we don't really know.

Speaker 6

There were certain things said. There are a lot of rumors in the market that if things were said, there probably is reason for that. But we don't actually know. We do understand that the marginal price of shipping products from Belorussia to China by train is at its very low which means there isn't any profitability there or at least that's what we understand. So if that's the case, then I guess the Belarusians have to do something.

Speaker 6

And what exactly they do is the big question. But all in all, the trends in the potash market look like prices are firming, the eastern prices are firming in all markets other than China, but inland China also looks like it's getting tightened. And Brazil future sales are at a higher price than the spot sales. So all in all, it looks like production market is firming. The only place where I don't know at this point is Europe off season and we don't see any particular demand.

Speaker 6

But in all other regions, there's significant potash demand given the need for soil replenishment. So things are looking good on the potash side with or without Belarusian news.

Speaker 4

Awesome. Thank you so much.

Speaker 6

Thank you.

Operator

Thank you. Our next question comes from Alex Jones with Bank of America. Please go ahead. Your line is open.

Speaker 7

All right. Thanks very much for taking my questions. 2, if I can. The first one, the guidance for the year on specialties EBITDA. Could you talk about what the sensitivity is within that range, the CHF 100,000,000 sort of top to bottom and what would drive that to the bottom end or the top end, please?

Speaker 7

And then the second question specifically on industrial products. If I look at the pricing this quarter, it was sequentially improved, still down 6% year on year, but much better than the double digit declines you'd reported in recent quarters. Is that indicative of a trend? Should we expect pricing to return positive into next year from what you're currently seeing in the market or any comments you have there would be helpful.

Speaker 5

Which part of the business, Alex, if I may?

Speaker 6

Industrial products.

Speaker 5

Industrial IP.

Speaker 6

I'll start with the second question. I'm not sure that I heard the first question. So I'll pass it on

Speaker 5

to you.

Speaker 6

On industrial products, the price is relatively stable and there's a little bit of seasonality like for now, there's a little bit of price going up because of winter stoppage in China. But the prices have pretty much stabilized in the past few months and there's no meaningful change in price in recent months. There is a little bit less of sales of clear brine fluids in the quarter has to do again with seasonal effects, nothing real. In terms of output, we're almost at full output. So I guess as long as we're at full output, there's no reason for too much price appreciation.

Speaker 6

Price appreciation will probably appear once demand strengthens on the electronic side. Real estate is going to take a little more building real estate is going to take a little longer. I didn't actually hear the whole first question.

Speaker 7

I can

Speaker 5

do it. Hi, Alex, and thank you for the question. Basically, when we look at Q4, the way it is shaping up, in many ways, it should be a similar quarter. I'm talking EBITDA wise now to Q3 and Q4. Maybe to some extent, this will be a bit seasonality will kick in, maybe a little bit lower than we saw.

Speaker 5

Obviously, a lot of the differential visavis the quarter will potentially come from the potash which Aviv spoke about and also Rylee spoke about. So if I 0 in on the 3 business divisions that comprise the specialty side of the business, then I would say that if I look at them each, all of them should be to some degree seasonally adjusted, not as strong as Q3. The differences are not that big. And if we do the math and we compile Q4 to what we came out in the 3 quarters, this one that we are reporting today in hand, then we should be firmly in the territory of our new guidance. So what can drive it to the Apple side is results that will be somewhat better in the different markets, each of them with their own story, which could drive it a little bit down, would be obviously the other side.

Speaker 5

But we feel pretty well with the guidance that we shared with the market, which is definitely better than what we saw after Q2. That's also on the back of obviously the Q3, which we're coming out today, which is basically a good quarter. We normally tend to be, as you all know, quite conservative and we take extra care to fulfill our obligations to the market. So, they will have it.

Speaker 6

And maybe just to add on the Q4 that typically the seasonality is right to the last moment. So an industrial product, there's a real question on how December looks and also growing solutions typically at the end of the year, we see a drop in the strength of demand. So we see typically Q4 is a little weaker than Q3.

Speaker 5

Also, there's Brazil, if I may just depend a quick note, which Aviv just reminded me is basically the Brazilian market, which obviously in the second half of the year has a lot of importance in the Southern Hemisphere, of course. And Brazil is obviously, it's so important from the agriculture point of view, but it's quite volatile. So I think adding to what Raviv said, a lot will be determined how strong is the very end of the year and that will now obviously only in the early days of 2025. But we seem to be well on track.

Speaker 8

Thank you.

Speaker 6

Welcome. Thank you. Thank you, Alex.

Operator

Thank you. Our next question comes from Joel Jackson with BMO Capital Markets. Please go ahead. Your line is open.

Speaker 9

Hi. Good afternoon. I'm going to ask a few questions 1 by 1. Good morning or good afternoon. Could we talk about when you raised the specialties guidance for the year here by about $100,000,000 Can you break that down as much as you can between specialty phosphates, commodity phosphates, bromine and potash and especially excuse me not potash but growing solutions, have 100 as in group, have the business group by about 100?

Speaker 6

Yeah. So growing solution is going to be a little weaker than Q3 and industrial products is going to be a little weaker than Q3 like we mentioned before because of seasonality. We don't want to break through.

Speaker 9

Well, I but sorry to interrupt, but what I'm saying is for the full year over the 2 quarters Q3 and Q4, you've said it's 100 more. So I'm sort of asking across the second half of the year, not the repeating the question the prior person asked about Q4, sorry.

Speaker 6

Yes. So again, on industrial products and growing solutions, we see Q4 being a little weaker than Q3. And phosphate solutions will be relatively similar to Q3. We don't break up specialties and commodities and phosphate for a simple reason that we leave ourselves the flexibility to sell whatever makes sense in the market. We're short on both specialties and commodities.

Speaker 6

So we look at the best alternative at the time and beer still has almost 2 months to go. So it's too early to break them up.

Speaker 9

Maybe I could ask it differently versus 3 months ago between going solutions, phosphate and IP, which business has surprised you most to the upside?

Speaker 5

I think that the surprises that we got, some of them surprised. Surprise was in phosphate. Phosphate is enjoying a good period, a good period versus obviously the last year on a good period versus what we internally budgeted. And I think we all understand the macro side that is contributing to that. And that is both the commodities and the specialty side without going into the breakdown there.

Speaker 5

What we I'm not sure it surprised us, but what we are getting more and more confident with and happy with is what's going on on the agriculture side in the company. The strategy basically has always been there to differentiate and to grow the specialty fertilizer side, to grow the biostimulants, etcetera side and it is working and we see that we are getting a healthy margin. And that is I'm not sure it's a surprise, Joel, but it's we're very happy with it. On the industrial products, basically, we also had a good quarter. And this is, as we know now, it's a fight inside a market that the demand is not healthy yet.

Speaker 5

So we are supplying obviously at high capacity, but the selling prices is nowhere near. But notwithstanding that, we were able to deliver a solid quarter. I'm not sure it surprised us but we were happy with it. So there you have basically the 3, if I sum up, it's the 3 divisions that they did better and I think it's a highlight of the quarter itself.

Speaker 9

That's helpful. And my final question is, in your release and presentation, you use language like you intend to limit total potash sales this year to 4,600,000 tonnes in expectation of improved conditions. Now, if I look at your last four quarters of production, you've done about 4,500,000 tons. The run rate is lower in 1st 3 quarters of 2024. So it looks like you don't have the production to do more than 4.6.

Speaker 9

You said in expectation of improved conditions. What does that mean? Are you talking about all your holding back volume to get better price next year, but we just talked about what the production has been. Is this improved conditions and logistics? I'm just trying to understand what the exact message you're putting out there today in terms of production, sales, discipline, anything you want to talk about?

Speaker 6

So the message is simple. Currently, we're we're capable of producing about 4.65 this year, and we're capable of selling about 4.75. But at this point, it doesn't make sense to sell any more than we've already committed. So the reason is twofold. 1 is because prices are firming for next year.

Speaker 6

So we actually have already sold for January February. And second is that due to the current If it doesn't improve then it's also the logistics which are very significant. Just so you understand in order to in order to transport to the east in some cases the cost double if we send the product out of the port that is further from the plant. So it makes sense from both of those perspectives. And at a certain point we decided to stop and actually part of the fact that we're stopping means that we're actually capable of less production.

Speaker 6

We would have been capable of more production but we added additional preventive maintenance because in the past year or so because of a lot of people being on reserve duty, then we had to take some calculated risks and do less preventive maintenance and you can't keep on going that way for a long time without paying a dear price. So we took some preventive preventing steps this year this quarter. It's actually not this quarter. It's September October. And due to that, our maximum production for this year could be a little over 4.6.

Speaker 6

It was more than that a little while ago, but we're comfortable with what we did because we sort of cleaned up everything that needed to be done in order to minimize the risk going forward. Hope that answers.

Speaker 9

Thank you.

Speaker 6

Thank you, Joel.

Operator

Thank you. We will move next with Kevin Estak with Jefferies. Please go ahead. Your line is open.

Speaker 8

Hi, Hi, good morning. Good afternoon, everyone. I guess with respect to the innovation platform, I'm just curious what your guys' appetite maybe for investing in like white spaces. So for example, like if you go forward with the line gene editing for fruits, vegetables, etcetera, I guess could ICL get into that space as a way to maybe hedge risk on, I mean, improvements in nutrient efficiency?

Speaker 6

Could you repeat the question because it was difficult for us to hear?

Speaker 8

Oh, apologies. Basically just curious to know, like more about, I guess, your appetite in investing in white spaces. So if you move forward in like gene editing, right, for fruits, vegetables, wheat, rice, etcetera, Just wanted to know what you guys if you guys would invest in those areas basically to hedge the risk against increasing nutrient efficiency.

Speaker 5

So, okay. I'll take that. I'll try to answer you And I'm taking it a little bit broader maybe than you meant, so you will keep me in line. So basically, as you know, starting from the near setup of the growing solutions, it's our flag to be innovative and to differentiate ourselves. That's a given.

Speaker 5

2nd is we are investing in areas that we believe that will be significant or very significant in the future of agriculture and that obviously is the area of the biologicals, some in delivery systems, in better uptake inside the plant, etcetera. However, and that's a big however, what we do is applied R and D. We are taking steps, gradual steps to build up the portfolio. What we are not doing is to do lead probes and go into areas which today are really exploratory. And we will come into, I guess, we will come into these areas, but we are setting the limits of FGS but we are not going into things which are today quite remote from the core of our essence.

Speaker 5

And that's why if I understand you correctly, you're talking about white spaces. It's really, really going to the forefront of inter alia gene editing and things like that, which I know from my past that companies have gone into. But it's, I would say it's in the chemical space, it has a way to go there. I mean, it's not as advanced obviously as the pharma world. And the long answer to a short question was we are careful to build block after block in our innovation and not jump too far ahead that we don't have the pool together yet.

Speaker 5

Is that okay? Thank you.

Speaker 8

And then I guess my last

Speaker 5

Yeah. Go ahead.

Speaker 3

Yeah. That was helpful. Yeah. I appreciate it.

Speaker 5

Yeah.

Speaker 8

Yeah. And I guess just apologies if you've covered this already, but I guess near term, do you guys have a sense of how much Chinese bromine capacity has exited the market, if any?

Speaker 6

We think very little has actually completely exited, but there's quite a lot of production tons that are muted now. So it could be a matter of time until some exits. So the answer is, there's about, I'd say all in all about 60,000 to 70,000 tons that's been muted so far. But in terms of bankruptcies or actually companies leaving the market, probably about 15,000 tons so far. Again, these are rough estimates.

Speaker 6

They're not accurate, but they're pretty accurate.

Speaker 5

It's basically Chinese ownership It's not in China.

Speaker 6

Correct. Yes. Some of those tons are non Chinese.

Speaker 5

They're high cost tonnage. So our, let's say, assumption basically is when the prices stick around the low end and we have such a great cost position which is superior to everybody else. There's a limit of time and there's a limit of prices that those Chinese can sustain. That's exactly the strategy that we're deploying and we see the

Speaker 8

results. Thank you very much.

Speaker 2

Thank you.

Operator

Thank you. And we show no further questions at this time. I will turn the call back to Ravi Zoller for closing comments.

Speaker 6

Okay. So thank you very much for joining us for our conference call for Q3. I want to thank ICL employees for their great contribution to a fine quarter. We're very positive about the way we're positioned for future growth now with the markets looking the way they are. And hopefully when the geopolitical constraints go away, we're ready to take off.

Speaker 6

So looking forward to reporting back to you on Q4 results and full year results. Thank you very much for joining us today and have a great rest of the day.

Speaker 5

Thank you.

Operator

And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

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Earnings Conference Call
ICL Group Q3 2024
00:00 / 00:00
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