Israel Chemicals Q3 profit falls

Israel Chemicals, a fertilizer and specialty chemicals maker, posted a surprise fall in third-quarter profit, hit by logistics problems in India and a slowdown at Israeli ports.

"Most of the potash sales in the quarter were from old contracts with China and India at lower prices than in the spot market and therefore the average price was only $360 per tonne of potash," IBI Investment House analyst Guil Bashan said.

The decline in the price for potash was expected, but export volumes of 1.212 tons, though up from 939,000 a year ago, disappointed due to one-time factors, analysts said.

These issues are not expected to have an impact in the fourth quarter or beyond, Meitav brokerage analyst Gilad Alper said, adding that he was focusing on the underlying trends.

"On this front we are bullish. ICL yields about 5% in dividends and is uniquely defensive thanks to the ethanol industry," he said. "Moreover, as long as growth in China continues unabated, we see the demand-supply balance for grains tightening further."

Alper, who rates ICL "buy" with a NIS 67 (about $18.5) price target, said revenue at the company's industrial division was soft due to the Gulf oil spill.

Canada's Potash Corp, the world's largest fertilizer producer, owns 13.9% of ICL.

Revenue up

The second-largest company on the Tel Aviv Stock Exchange with a market value of $19 billion, ICL reported quarterly net profit of $242.9 million, compared with $256.6 million a year ago when it benefited from a one-time tax gain of $26 million.

Revenue rose to $1.394 billion from $1.347 billion a year ago, with higher volumes partly offset by a drop in the price of potash and phosphate rock and the weakening of the dollar.

Analysts had expected ICL to earn $266.1 million on revenue of $1.448 billion, according to a Reuters poll.

ICL, which is controlled by Israel Corp , said logistics difficulties in India hit potash sales, as did a slowdown at Israel's ports and religious holidays in September.

The company is also the world leader in bromine flame retardants for the electronics industry.

During the quarter sales of flame retardants grew due to stronger demand for consumer electronics, automobiles and building supplies. As a result of increased demand, and also due to the rising prices of competing products from China where bromine resources are becoming depleted, selling prices rose.

"On the other hand, demand for the company's drilling fluids declined temporarily due to the ecological crisis in deep wells in the Gulf of Mexico, which created a halt in drilling activities in the region," it said.

The company said it would pay a dividend of $170 million or NIS 0.49 per share, on January 12, compared with $177 million for the second quarter.

ICL benefits from exclusive concessions to extract minerals from Israel's Dead Sea, a source of potash, bromine, magnesium chloride and sodium chloride. It also mines phosphate rock from Israel's Negev Desert and potash and salt from its mines in Spain and Britain.

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