* Q3 adjusted EPS $0.12 vs $0.13 forecast, revenue down 11.6
pct
* Shifting UK plant to production of potash to polysulphate
* ICL to invest at least 40 mln pounds in UK facility
(Adds details, CEO/analyst comments, share reaction)
By Steven Scheer
JERUSALEM, Nov 12 (Reuters) - Israel Chemicals (ICL)
ICL.TA reported a larger than expected decline in quarterly
profit, weighed down by lower potash prices and sales, and said
it would halt production of potash from its UK plant within 3
years.
ICL ICL.N , which has exclusive permits to extract minerals
from the Dead Sea, said on Thursday it earned 12 cents per
diluted share excluding one-time items, compared with 14 cents a
year earlier. Revenue dipped 11.6 percent to $1.38 billion.
The company, one of the three largest suppliers of the crop
nutrient potash to China, India and Europe, was expected earn 13
cents a share on revenue of $1.4 billion, according to Thomson
Reuters I/B/E/S.
Chief Executive Stefan Borgas said that in the third quarter
ICL largely compensated for the negative impact of lower potash
prices and volumes through significant cost cuts.
"The results are littered with exceptionals," said Liberum
analyst Sophie Jourdier in a note to clients. But, she added,
"We believe the worst is most likely behind ICL. Strike action
has ended, tax clarity is improving and cost savings are being
implemented."
ICL's second quarter performance was marred by a workers
strike that wiped out $253 million of sales and $112 million of
profit in the April-June period.
With potash reserves dwindling, ICL has decided to end
production of potash in the UK by the end of 2018 and shift to
producing polysulphate, a product to help sulphur-depleted soil
that is cheaper to produce.
"This is not driven by market volumes but by the near-term
end of the reserves," Borgas told a conference call of analysts,
adding that potash demand into 2016 appears "stable".
He estimated its UK mine has about 200 million tonnes of
polysulphate resources and ICL plans to spend 40 million pounds
to upgrade and adjust the facility and possibly another 40
million pounds for a granulation plant.
ICL expects annual sales of polysulphate to reach 1 million
tonnes by 2020 with a longer term potential of 3 million tonnes.
ICL, controlled by conglomerate Israel Corp ILCO.TA ,
declared a dividend for the second quarter of $84 million, or 7
cents a share.
The company is locked in a battle with the Israeli
government over a plan to tax mining firms aimed at boosting
state coffers by 500 million shekels ($129 million) a year. In
protest, ICL has frozen or put under review nearly $2 billion in
domestic projects, while expanding activities outside Israel. It
said all future investments will be based on merit.
"The environment for having a stable basis to make
investment decisions is still pretty shaky," Borgas said.
The tax plan, which cleared parliament's finance committee
last week, is expected to be voted on by the full parliament on
Nov. 19.
ICL's New York-listed shares were down 1.4 percent at $5.10
in morning trade.
($1 = 3.8845 shekels)