Seven things every investor needs to know about ICL Group

Most professional investors will be aware that ICL Group is a global specialties-driven minerals company. It targets leadership in the bromine, phosphate and fertiliser markets – and is recognised as having a highly competitive potash business.

ICL was founded more than 100 years ago. It is now dual listed on the NYSE and TASE, has over 12,000 employees and a market cap of around $6.3bn at the time of writing. In 2023 it reported revenues of $7.5bn.

If its other core 2023 numbers – such as $1.8bn in adjusted EBITDA and a 4.7% dividend yield – make ICL sound attractive, here are seven more things every investor needs to know.

1. It is far more than a commodities business.

ICL has three specialties-driven divisions.

• Industrial Products is the global leader in bromine and sells flame retardants, clear brine fluids and nutraceuticals.
• Phosphate Solutions is focused on food and industrial applications and has captured around 20% of the specialty phosphate market.
• Growing Solutions delivers plant nutrition, including biologicals and organic fertiliser.

Together, these divisions accounted for 64% of sales in 2023.  Management’s strategy is to grow this with the expectation that two global trends – food security and energy storage – will increase demand for many products.

The wide range of customers and end applications also makes for a diversified portfolio of revenue streams.

2. The balance sheet is strong and stable.

ICL maintains a conservative set of accounts. It has $1.7bn of available resources, with a ratio of net debt to adjusted EBITDA of 1.3, according to its first quarter 2024 results. Yet, at the same time, it is also investing to grow, pursuing opportunistic strategic M&A and providing shareholders with, as far as we are aware, an industry-leading dividend yield.

Last year, ICL returned more than $357m to its shareholders and this year plans to return up to 50% of quarterly adjusted net income.

3. Innovation is a major focus.

ICL has 23 global R&D centres and invested $78m in innovation last year, $69m of which was within the three specialty divisions. Management says the invention of new products and processes are ingrained in its DNA – its internal accelerator is overseeing more than 2,300 projects, which are highly likely to add to the 700 patents ICL has already been granted.

4. Geography delivers a keen advantage.

ICL was founded at the Dead Sea and this natural resource provides the company with a competitive cost advantage. The Dead Sea’s potash supply is abundant and low cost. The bromine, meanwhile, is of the highest concentration, which makes it the least expensive in the world.

ICL is also the only company in the sector with a long-standing joint venture in China – an advantageous position as the electric vehicle revolution and wider energy transition continue to gather pace.

5. Diversification continues.

ICL’s battery materials business is still young. However, the company is extending its reach in this market, which is expected to have an annual growth rate of 25%, according to research commissioned by ICL.

In an initiative jointly funded by the US Department of Energy, ICL is building the first large-scale lithium iron phosphate battery materials plant in the US.

6. Flexible in changing winds.

While potash supply and demand appear better balanced than in recent years, geopolitics is affecting the cost and time of shipping.

Given its worldwide footprint – ICL has production sites in 13 countries and sales and distribution in over 30 – management says it is well positioned to divert volumes and maximise margins.

7. Owning its responsibilities

ICL’s greenhouse gas emissions decreased by almost 120,000 tons last year and are now down more than 22% since 2018. The Bloomberg ESG Index has declared the business industry leading for five years in a row and it is rated as a top place to work in the US, Brazil and Israel.

If you would like to meet ICL management or have questions about the company, please email Andrew Whipp.