Q4 2023 ICL Group Ltd Earnings Call
Operator: Our call will begin shortly. ICL.
Operator: Impact for a sustainable future. Hi, and thank you for joining ICL's Investor Relations Call. Our call will begin shortly. ICL.
Impact for a sustainable future.
[music].
Operator: Impact for a sustainable future. Ladies and gentlemen, thank you for standing by, and welcome to the ICL Analyst Conference Call. Our presentation today will be followed by a question and answer session, at which time, if you wish to ask a question, you'll need to raise your hand using your mobile or desktop application and wait for your name to be announced. Once again, you will need to raise your hand using your mobile or desktop application and wait for your name to be announced.
ICL impact for a sustainable future.
[music].
Ladies and gentlemen, thank you for standing by.
And welcome to the ICL Analyst Conference call. Our presentation today will be followed by the answer by a question and answer session at which time.
If you wish to ask a question you need to raise their hand, using your mobile or desktop application and wait for your name to be announced once again, you will need to raise their hand, using your mobile or desktop application and wait for your name to Vienna.
Operator: I must advise you that this call is being recorded today. I'd like to hand the call over to our first speaker today, Peggy Riley-Tharp, Vice President of Global Investor Relations. Please go ahead, Matt.
Advised that this call is being recorded.
I'd like to hand, the call over to our first speaker today, Peggy Reilly Tharp, Vice President of Global Investor Relations.
Please go ahead Matt.
Peggy Reilly Tharp: Thank you. Hello everyone. I'm Peggy Riley Tharp, Vice President of Global Investor Relations. I'd like to welcome you and thank you for joining us today for our quarterly earnings. The event is being webcast live on our website at icl-group.gov. Earlier today, we filed our reports with the securities authorities and the stock exchanges in the U.S. and Israel. Those reports, as well as the press release, are available on our website. There will be a replay of the webcast available after the meeting, and a transcript will be available shortly thereafter.
Thank you Hello, everyone and thank you Riley Tharp, Vice President of Global Investor Relations.
To welcome you and thank you for joining us today for our quarterly earnings call.
The event is being webcast live on our website at ICL Dash group Dotcom.
Earlier today, we filed our reports with the securities authorities and the stock exchanges in the U S and in Israel.
Reports as well as the press release are available on our website.
There will be a replay of the webcast available after the meeting and a transcript will be available shortly thereafter.
Peggy Reilly Tharp: The presentation, which will be reviewed today, was also filed with the securities authorities and is available on our website. Please be sure to review the disclaimer on each slide. 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 financial information discussed on this call at any time.
The presentation, which will be reviewed today was also filed with the securities authorities and is available on our website. Please be sure to review the disclaimer on slide two 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 financial information discussed on this call at any time.
Peggy Reilly Tharp: We will begin with a presentation by our CEO, Mr. Raviv Zoller, followed by Mr. Avyar Amlahov, our CFO. Following the presentation, we will open the line for the Q&A. Mr. Zoller, please.
We will begin with a presentation by our CEO. Mr. Zoller, followed by Mr. Avi out I'm gonna have our CFO.
Following the presentation, we will open the line for the Q&A session Raviv. Please.
Raviv Zoller: Thanks, Peggy, and welcome, everyone. I'd like to begin with a brief update on the situation in Israel. While we continue to face various operational challenges in the fourth quarter, which were caused by the war, our efforts to minimize disruption and maintain good production levels were successful. Additionally, the majority of our employees who had been called up for service have now returned to full-time work at ICE. Going forward, we expect the situation in the Red Sea to remain challenging, not only for ICL and other fertilizer and chemical companies but also for some of the world's largest shipping and oil companies. Annually, almost 15% of global seaborne trade passes through the Red Sea.
Thanks, Peggy and welcome everyone.
I would like to begin with a brief update on the situation in Israel.
While we continue to face various operational challenges in the fourth quarter, which were caused by the war our efforts to minimize disruption and maintain good production levels were successful.
Additionally, the majority of our employees, where it has been called off the service with no return to full time work at ICU.
Going forward, we expect the situation in the Red Sea to remain challenging not only for ICL in other fertilizer and chemical companies, but also for some of the world's largest shipping and oil companies.
Annually, almost 15% of global seaborne trade process through the Red Sea.
Raviv Zoller: However, major shipping companies are now using a much longer route around Southern Africa instead, which is likely to result in higher costs and higher prices. Throughout 2023, but especially in the fourth quarter, we were able to manage the areas under our control effectively while swiftly reacting to a changing external environment. The team did an excellent job of managing our supply chain despite the war, political tensions, and market volatility. In addition, we continue to gain efficiencies and drive down costs across the business. So overall, we were able to deliver solid performance in 2023 after a record 2022. Now, if you will please turn to slide three for a brief overview of 2020.
However, major shipping companies are now using a much longer route around southern Africa, instead, which is likely to result in higher costs and higher prices.
Throughout 2023, but especially in the fourth quarter, we were able to manage the areas under our control effectively while swiftly reacting to changing external environment.
The team did an excellent job of managing our supply chain, Despite war political tensions and market volatility.
In addition, we continue to gain efficiencies and drive down costs across the business. So overall, we were able to deliver solid performance in 2023 after a record 2022.
Now if you'll please turn to slide three for a brief overview of 2023.
Raviv Zoller: For the full year, we reported sales of $7.5 billion with adjusted EBITDA of $1.8 billion. Throughout 2023, we continued to focus on cash flow and generated operating cash flow of more than $1.6 billion and $818 million of free cash. We prioritized cash flow and agility throughout the year, and these efforts became even more critical after October 7th as we navigated production and logistical challenges while accelerating additional efficiency. For 2023, we delivered $0.55 of adjusted earnings per share and distributed an annual dividend of $0.27 per share, almost 5%, as part of our longstanding policy to pay out up to 50% of adjusted net income to our shareholders.
For the full year, we reported sales of $7 5 billion with adjusted EBITDA of $1 $8 billion.
Throughout 2023, we continue to focus on cash flow and generated operating cash flow of more than $1 6 billion.
$818 million of free cash flow.
We prioritize cash flow and agility throughout the year and these efforts became even more critical after October seven as we navigated production and logistical challenges while accelerating additional efficiency measures.
For 2023, we delivered <unk> 55 of adjusted earnings per share and distributed an annual dividend of <unk> 27 per share almost 5%.
As part of our long standing policy to payout up to 50% of adjusted net income to our shareholders.
Raviv Zoller: The efficiency and cost savings initiatives we put in place early in 2023 were delivered ahead of schedule, and Aviram will talk a bit more about the second phase of our efforts, which we initiated in the fourth quarter. While we made some tough decisions to better position ourselves for the future, we also maintained our focus on expanding our strategic partnership. As a result, we gained market share across some of our key specialties. We ended the year with fourth-quarter sales of $1.7 billion and adjusted EBITDA of $357 million.
The efficiency and cost savings initiatives, we put in place early in 2023 were delivered ahead of plan and they'll be Ronald talk a bit more about the second phase of our efforts, which we initiated in the fourth quarter.
While we made some tough decisions to better position ourselves for the future. We also maintained our focus on expanding our strategic partnerships.
As a result, we gained market share across some of our key specialties businesses.
We ended the year with fourth quarter sales of $1 7 billion and adjusted EBITDA of $357 million.
Raviv Zoller: I would ask you to turn now to slide four and a three-year look at some key financial initiatives. While sales were down year-over-year as expected, they were up versus 2021, and this includes our specialty students. Let's start with a review of our divisions and begin with industrial products on slide five. For 2023, sales were $1.2 billion, with EBITDA of $277 million.
I would ask you to turn now to slide four and a three year look at some key financial metrics.
While sales were down year over year as expected there were up versus 2021 and this includes our specialty sales.
Let's start with a review of our divisions and begin with industrial products on slide five for.
For 2023 sales were $1 2 billion with EBITDA of $277 million.
Raviv Zoller: While the past year was a challenging one for our flame retardants business, the IP team still delivered EBITDA margin of 23%. We ended the year with fourth-quarter sales of $300 million, and this is the first time in the past year that we have seen sequential quarterly growth. For the fourth quarter, EBITDA was $56 million, up more than 30% sequentially. However, while elemental bromine prices stabilized somewhat in the last few months of the year, they remain well below historical highs.
While the past year was a challenging one for our flame retardants business. The IP team still delivered EBITDA margin of 23%.
We ended the year with fourth quarter sales of $300 million.
And this is the first time in the past year that we have seen sequential quarterly growth.
For the fourth quarter, EBITDA was $56 million up more than 30% sequentially.
While elemental bromine prices stabilized somewhat in the last few months of the year, they remain well below historical highs.
Raviv Zoller: For 2023, the electronics end market was soft, and building and construction remained challenged. However, as I mentioned last quarter, the bottom is behind us. While the housing market is starting to get better in some regions, it is going to take time before we see a full recovery.
For 2023, the electronics end market was soft and building and construction remain challenged.
However, as I mentioned last quarter, the bottom is behind us.
While the housing market is starting to get better in some regions. It is going to take time before we see a full recovery.
Raviv Zoller: Other end markets were more robust, as our clear brine fluids, which are used by the oil and gas industry, delivered record sales and profit for the year. Our Specialty Minerals business, which targets food, pharma, and other end markets, also delivered record profits for 2020. As mentioned early last year, when we saw that end market recovery was unlikely in 2023 for industrial products, we put in place savings and efficiency goals, which we achieved while maintaining our long-term customers. During the first three quarters of the year, the IP division worked through high-priced inventory and improved working capacity.
Other end markets were more robust is our clear brine fluids, which are used by the oil and gas industry delivered record sales and profit for the year.
Our specialty minerals business, which targets food pharma and other end markets also reported record profit for 2023.
As mentioned early last year, when we saw the end market recovery was unlikely in 2023 for industrial products, we put in place savings and efficiency goals, which we achieved while maintaining a long term customer strategy.
During the first three quarters of the year VIP Division worked through high priced inventory and improved working capital and.
Raviv Zoller: In the fourth quarter, production began ramping up again, and while it was down for the full year, we still managed to keep our costs in line for the year. Compared to the first half of 2023, we expect to be running at close to full capacity for most of 2025. Turning to slide six in our phosphate solutions division, where we reported strong performance versus a record 2022 with sales and EBITDA on plan. For 2023, we reported more normalized sales and EBITDA of $2.5 billion and $550 million, respectively. This resulted in an EBITDA margin of 22% for the full year. For the fourth quarter, EBITDA was $133 million, or 24% on sales of $544 million.
In the fourth quarter production began ramping up again and while it was down for the full year, we still managed to keep our costs in line for the year.
Contrary to the first half of 2023, we expect to be running at close to full capacity production for most of 2024.
Turning to slide six of our phosphate solutions Division, where we reported strong performance versus the record 2022 with sales and EBITDA on plan.
For 2023 reported more normalized sales and EBITDA of $2 5 billion and $550 million respectively.
This resulted in an EBITDA margin of 22% for the full year.
For the fourth quarter, EBITDA was $133 million or 24% on sales of $544 million.
Raviv Zoller: For the year, our phosphate specialties business represented the majority of phosphate solutions sales and eBay. Our food business remained strong in 2023 as end markets were generally resilient on a global basis. Our industrial phosphates business also had a good 2023, with prices stabilizing and volumes picking up at year-end. Our battery materials expansion remains on track, and late in 2023, we announced plans to build a customer innovation and qualification center. This facility is expected to become a hub for ICL, its partners, and its customers as the company looks to make significant advancements in its battery materials R&D capability.
For the year, our phosphate specialties business represented the majority of phosphate solutions sales and EBITDA.
Our food business remained strong in 2023 end markets were generally resilient on a global basis.
Our industrial phosphates business also had a good 2023 with prices stabilizing in volumes picking up at year end.
Our battery materials expansion remains on track and late in 2023, we announced plans to build a customer innovation and qualification center.
This facility is expected to become a hub for ICL its partners and its customers as the company looks to make significant advancements in battery materials R&D capabilities.
Raviv Zoller: In terms of EVs and energy storage, we're excited to now have a seat at the table in the United States, and our partnership efforts are gaining momentum. As you may recall, we entered into the LFP battery materials business in China as part of our YPH joint venture, and the joint venture had a solid 2023 for both specialty products and for commodities, and we added new capacity. In addition to achieving multiple production records, the team at YPH benefited from their ability to remain agile and to adapt production to meet changes and end market demand. The Chinese market is quite a dynamic place to do business, and we expect more of the same in 2020. On slide 7, you will see our put-out results, where the annual sales volume was more than 4,600,000 metric tons, higher than both production and the prior year.
In terms of Evs and energy storage, we're excited to now have a seat at the table in the United States and our partnership efforts are gaining momentum.
As you May recall, we entered into the OSP battery materials business in China as part of our <unk> joint venture and the joint venture had a solid 2023 for both specialty products stand for commodities and we added new capacity.
In addition to achieving multiple production records the team Ypa's benefited from their ability to remain agile to adapt production to meet changes in end market demand.
The Chinese market is quite a dynamic place to do business and we expect more of the same in 2024.
On slide seven you will see our <unk> results were annual sales volume was more than 4.600 million metric tons higher than both production and the prior year.
Raviv Zoller: Production in the fourth quarter was somewhat impacted by war-related issues in Israel, and in Spain, there were geological constraints as well as a production outage from a. In 2023, Porta's sales were $2,182,000,000, while EBITDA came in at $843,000,000. For the fourth quarter, sales were $474 million, and EBITDA was $168 million. Putash prices stabilized in the fourth quarter with an average CIF price of $345 per ton, similar to the third quarter of 2023 but down significantly versus the average price of $594 per ton in the fourth quarter of last year.
Production in the fourth quarter was somewhat impacted by war related issues in Israel and in Spain, the geological constraints as well as a production outage for maintenance.
In 2023 put us sales were $2 billion $182 million, while EBITDA came in at $843 million.
For the fourth quarter sales were $474 million and EBITDA was $168 million.
But as prices stabilized in the fourth quarter with an average price of $345 per ton similar to the third quarter of 2023, but down significantly versus the average price of $594 per ton in the fourth quarter of last year.
Raviv Zoller: For our Spanish operations and across our entire PODASH portfolio, we continue to pursue cost savings initiatives in the fourth quarter. For the full year, we overachieved against our plans, and we have set new targets for both cost savings and efficiency efforts for 2021. This year, we see market demand strengthening as fertilizer prices remain affordable. In addition, soil nutrient deficiency around the world remains an issue due to the underapplication of fertilizers over the previous two years.
For our Spanish operations and across our entire put us portfolio will continue to pursue cost savings initiatives in the fourth quarter.
For the full year, we overachieve against our plans and we have set new targets for both cost savings and efficiency efforts for 2024.
This year, we see market demand strengthening as fertilizer prices remain affordable.
In addition, soil nutrient deficiency around the world remains an issue due to under application of fertilizers over the previous two years.
Raviv Zoller: As a result, the industry expects to see global demand of more than 68 million metric tons in 2020. Finally, I would like to highlight that this was the second consecutive year of profitability for our magnesium business, even as prices trended down. Turning to slide eight in our growing solutions business, where sales for 2023 were $2,073,000,000. Well, even though it was $119 million.
As a result, the industry expects to see global demand of more than 68 million metric tons in 2024.
Finally, I would like to highlight that this was the second consecutive year of profitability for our magnesium business, even as prices trended down.
Turning to slide eight and our growing solutions business, where sales for $2023 2 billion to $73 million.
While EBITDA was $119 million.
Raviv Zoller: For the full year, the division delivered record-free cash flow, which was ahead of both last year and planned, as inventory reduction efforts helped drive improved working. For the fourth quarter, sales were $478 million, with EBITDA of $15 million. During 2023, higher quantities and reduced raw material costs were more than offset by significantly lower prices and application delays in Europe due to weather and in Israel due to the war. Growing Solutions responded by shifting plan maintenance from the first quarter of 2024 to the fourth quarter of 2023. In 2023, specialty ag volumes increased across key regions such as North America, Asia Pacific, Brazil, and the EU. The GF team delivered record sales for targeted products such as water-soluble NPKs and controlled-release fertilizers. We also had a record year for polysulfate production, as we reached more than 1 million metric tons.
For the full year the division delivered record free cash flow, which was ahead of both last year and plan as inventory reduction efforts helped drive improved working capital.
For the fourth quarter sales were $478 million with EBITDA of $15 million during.
During 2023 higher quantities and reduced raw material costs were more than offset by significantly lower prices and application delays in Europe due to weather in Israel due to the war.
Growing solutions responded by shifting planned maintenance from the first quarter of 2024 to the fourth quarter of 2023.
For 2023 specialty AG volumes increased across key regions, such as North America Asia Pacific, Brazil, and the EU.
The Ges team delivered record sales with targeted products, such as water soluble in pks and controlled release fertilizers.
We also had a record year for Paul sulfate production as we reached more than 1 million metric tons.
Raviv Zoller: In our Brazilian business, we gained market share in 2023, and when combined with China, these two important countries now represent approximately 40% of our growing solutions sales. During the year, Brazil continued to align with global procurement and logistics, which helped drive cost synergy. Meanwhile, in China, we have added fertilizer capacity. Turning to slide nine, I would like to quickly flash through some highlights from our sustainability efforts. While I would like to talk about each of these achievements, I would specifically like to call out that we decreased carbon emissions by a further 4 percent, were upgraded by MSCI, and secured a $1.55 billion sustainability-linked credit facility in 2023. As I mentioned last quarter, IC welcomed the new head of corporate development at M&A when Uri Perlman joined us. And as you can see on slide 10, we've already made an acquisition under his tenure. We added Nitro 1000, a manufacturer, developer, and provider of biologicals to our Growing Solutions portfolio in Brazil, which we acquired for approximately $30 million.
In our Brazilian business, we gained market share in 2023, and when combined with China. These two important countries now represent approximately 40% of growing solutions sales.
During the year, Brazil continued to align with global procurement and logistics, which helped drive cost synergies.
Meanwhile, in China, we added fertilizer capacity.
Turning to slide nine I would like to quickly flashed through some highlights from our sustainability efforts.
While I would like to talk about each of these achievements I would specifically like to call out that we decrease carbon emissions by a further 4% were upgraded by MSCI and secured a $1 55 billion sustainability linked credit facility during 2023.
As I mentioned last quarter ICU welcomed a new head of corporate development and M&A when <unk> joined us and as you can see on slide 10, we've already made an acquisition under his tenure.
We added 901000 manufacturer developer and provider biologicals to our growing solutions portfolio in Brazil, which we acquired for approximately $30 million.
Raviv Zoller: This meaningful addition of Biological's manufacturing capacity helps expand Growing Solutions' product offerings while positioning the company for further expansions into new and adjacent end markets. We expect to capitalize on additional inorganic growth opportunities in the near future. On the agricultural side of our business, we also partnered to expand into artificial intelligent crop nutrition solutions and to advance sustainable agriculture practices through our internal digital startup, AgMap. We also added new specialty products to our portfolio and expanded our new product distribution through additional partners. One example is our innovative FruitMag product, which is an ecological, sustainable, natural, and healthy solution to extend citrus fruit shelf life, and is part of our industrial products business.
This meaningful addition of biologicals manufacturing capacity helps expand growing solutions product offerings, while positioning the company for further expansions into new and adjacent end markets, we expect to capitalize on additional inorganic growth opportunities in the near future.
On the agricultural side of our business. We also partner to expand into artificial intelligence crop nutrition solutions and to advance sustainable agricultural practices through our internal digital startup agnostics.
We also added new specialty products to our portfolio and expanded our new product distribution through additional partnerships.
One example is our innovative <unk> product, which is an ecological sustainable natural and healthy solution to extend citrus fruit shelf life and as part of our industrial products business.
Raviv Zoller: We recently partnered with the European leader in post-harvest treatments to maintain the freshness and extend the life of fruits and vegetables so they reach the consumer at the peak of flavor, resulting in less food waste. On the energy side of our business, we also focused on partnership opportunities, and I have already discussed our Customer Innovation and Qualification Center for LSP Battery. If you turn to slide 11, I will share a little bit more about why these two areas of our business are so important. First, the economy is at a turning point. Interest rates have been going up for a few consecutive quarters, but they are now beginning to trend down. Generally, we see two key inflections.
We recently partnered with a European leader in post harvest treatments to maintain the freshness and extend the life of fruits and vegetables. So the reach the consumer at the pickle flavor, resulting in less food waste.
On the energy side of our business, we also focused on partnership opportunities.
Already discussed our customer innovation qualification center for OSP battery customers.
If you turn to slide 11, I will share a little bit more about why these two areas of our business are so important.
First the economy is at a turning point.
First rates had been going up for a few consecutive quarters, but they are now beginning to trend down.
Generally we see two key inflection points foods.
Unnamed Speaker: Food security has become a major issue, which is, of course, tied to sustainability. Energy storage and EVs, another sustainability opportunity, remain critical for advancing humankind. ICL is very well positioned to make an impact in both areas, as we are already feeding almost 400 million people daily, roughly 5% of the global population. We're investing in and growing our fertilizer and food specialties products and solutions so we can feed even more people today. For energy storage, we are expecting a surge in demand related to energy storage needs, easy adoption, and the increasing use of artificial intelligence to benefit both our phosphate solutions and industrial products business. We expect to be able to leverage our strengths in each of these areas through our strong balance sheet and considerable cash generation capability.
<unk> security has become a major issue, which of course is tied to sustainability.
Energy storage and Evs and other sustainability opportunities remain critical for advancing humankind.
ICL is very well positioned to make an impact in both areas. As we are already feeding almost 400 million people daily roughly 5% of global population.
We're investing in and growing our fertilizer and food specialties products and solutions. So we can feed even more people each day.
For energy storage, we are expecting a surge in demand related to energy storage needs easy adoption and the increasing use of artificial intelligence to benefit both our phosphate solutions and industrial products businesses.
We expect to be able to leverage our strength in each of these areas through our strong balance sheet and considerable cash generation capabilities.
Unnamed Speaker: We plan to use this enviable position to both advance our organic and inorganic ambitions towards the inflection points that are expected. All of this can't happen without the strong team at ICO, and I would once again like to thank the entire ICO family of employees all around the world for their hard work and contributions in 2022. This was an especially challenging year for the team in Israel as we dealt with an unprecedented assault on our country. However, teams around the world came together to support us as true business partners, and, With that, I would now like to turn the call over to. Thank you, Raviv, and to all of you for joining us today. Let us get started on slide 13, with the external macro environment.
We plan to use this enviable position to both advance our organic and inorganic ambitions towards the inflection points that are expected.
All of this can't happen without a strong team at ICL and I would once again like to thank the entire ICL family of employees all around the world for their hard work and contributions in 2023.
This was an especially challenging year for the team in Israel as we dealt with an unprecedented assault on our country.
However, the teams around the world came together to support us as true business partners and friends.
And with that I would now like to turn the call over to <unk>.
Thank you Rajiv and to all of you for joining us today.
Does get started on slide 13, with the external macro environment.
Unnamed Speaker: Inflation rates have declined from recent peaks in 2022 and are now generally stable. Interest rates remain elevated, but they are also generally stable. The expectation is that there will be a gradual return to global growth beginning this year. The construction market is forecasted to begin rebounding, but as Raviv mentioned earlier, it is going to take time before we see a full recovery, with the exception of Rice. Grain prices remained relatively stable in the fourth quarter, and farmer sentiment improved as well.
Inflation rates have declined from recent peaks in 2022 and that allowed generated stable interest rates remain elevated but are also generally stable.
Spectation is that there will be a gradual return to global growth beginning this year.
Construction market is forecasted to begin rebounding, but as Amit mentioned earlier it is going to take time before we see full recovery.
With the exception of rice grain prices remained relatively stable in the fourth quarter and farmer sentiment improved as well.
Unnamed Speaker: While potash and phosphate prices diverged a bit in the fourth quarter, both were down from the high prices we saw in 2022. Not surprisingly, freight rates have been increasing with disruptions in the Red Sea and in Panama. Suez Canal shipments have plummeted, and in the first six weeks of 2024, more than 620 container vessels have been rerouted around southern Africa's Cape of Good Hope. In total, container tonnage crossing the Suez Canal fell by 82% since December 1st.
Potash and phosphate prices divert a bit in the fourth quarter, both were down from the high prices we saw in 2022.
Not surprisingly freight rates have been increasing with disruptions in the Red Sea and in Panama.
Suez Canal shipments have plummeted and in the first six weeks of 2020 for more than 620 container vessels have been rerouted around Southern Africa, Jacob would hope in total container tonnage growth through the Suez Canal fell like 82% since December 1st Meanwhile, the panel.
Unnamed Speaker: Meanwhile, the Panama Canal is navigating a historic water crisis. Thus far, the solution has been to limit the number of ships that make the crossing each day, but that comes with a cost. If you turn to slides 14 and 15, you will see some of the macro and agricultural trends I just discussed. On slide 16, you can once again see the expected trend for electric vehicles over roughly the next decade. In addition, this quarter, you see the expected increase in demand for white phosphoric acid, technical MAP, and for global LFP phosphate through 2028. ICL is well-positioned to benefit from these long-term trends as it expands into commercial solutions for the energy storage system market. If you now turn to slide 17 in our full-year sales bridges, on the left side, you can see the year over year decline for each of our segments, following the record 2022 and resulting in 2023 sales of $7.5 billion. As you can see, three of our businesses remain solidly above $2 billion in annual sales.
Mcconnell is navigating a historic water crisis desktop the solution has been to limit the number of ships that made the crossing each day, but that comes with a cost.
If you would turn to slides 14, and 15, you will see some of the macro and agriculture trends I just discussed.
On Slide 16, you can once again see the expected trend for electric vehicles over roughly the next decade. In addition, this quarter, you'll see the expected increase in demand for white phosphoric acid technical MIP and for global LSP phosphate through 2028.
ICL is well positioned to benefit from deep long term trends as we expand into commercial solutions for the energy storage system market.
If you turn to slide 17, and our full year sales bridges on the left side you can see the year over year decline for each of our segments falling directly to 2022, and resulting in 2023 sales of $700 billion.
As you can see three of our businesses remained solidly above $2 billion in annual sales on the right side of the slide while quantities were down slightly you can see the overwhelming impact prices ethanol sales as commodities, whether at all time highs in 2022.
Unnamed Speaker: On the right side of the slide, while quantities were down slightly, you can see the overwhelming impact prices had on our sales as commodities were at all-time highs in 2022. On slide 18, you can also see the impact prices had on our annual adjusted EBITDA of $1.8 billion. Lower prices, especially POTUS prices, had a significant impact. For the year, we benefited from lower raw material and transportation costs and also from the savings and efficiency programs we successfully executed. As Raviv mentioned, we have already begun the second phase of our effort, which we initiated in the fall of water.
On slide 18, you can.
And also see the impact prices has on our annual adjusted EBITDA of $1 8 billion lower prices, especially potash prices had a significant impact for.
For the year, we benefited from lower raw material and transportation costs and also from the savings and efficiency program, we successfully executed.
Raviv mentioned, we have already begun the second phase of our efforts, which we initiated in the fourth quarter.
Unnamed Speaker: On slide 19, we have our fourth quarter sales bridges, and I would like to call out two areas. First, the impact of lower prices, with the majority attributable to potash. Second, the improvement in quantities in the fourth quarter, as we experienced continued solid demand for some of our end markets, like phosphate specialties, and improving demand for others, like industrial products. Turning to slide 20, our adjusted EBITDA for the fourth quarter, where you can once again see the significant impact from lower prices. In the second half of the year, quantities trended upward, while cost inputs trended downward, putting us on good footing for 2024. Even as Potter's prices were down for the fourth quarter and full year, ICL remained the leader in terms of average real-est price, which you can see on slide 21.
On slide 19, we have our fourth quarter sales bridges, and I would like to call out two areas first the impact of lower prices with the majority attributable to potash.
The improvement in quantities in the fourth quarter as we experienced continued solid demand for some of our end markets like phosphate specialties and improving demand for light industrial products.
Turning to slide 20, and our <unk>.
<unk> EBITDA for the fourth quarter, whether you can once again see the significant impact from lower prices in the second half of the year quantities trended upward while cost inputs trended downward putting us on good footing for 2024.
Even as potash prices were down for the fourth quarter and full year ICL remained the leader in terms of average realized price, which you can see on slide 21.
Unnamed Speaker: Our site gives us the ability to quickly shift in and out of the market based on profitability and maximize our cost efficient resources. On slide 22, you can see where ICL is positioned in the global bromine model. As many of you know, the Dead Sea is the premier source of bromine and accounts for approximately two-thirds of global supply capacity. It is also the most competitive source of bromine, as it has the highest concentration, which means the least amount of brine must be extracted and evaporated to produce bromine, resulting in lower energy costs.
Our size gives us the ability to quickly shift in and out of market based on profitability and to maximize our cost efficiency resources.
On Slide 22, you can see what ICL is positioned in the global bromine market as many of you know the dead Sea the premier source of bromine and accounts for approximately two thirds of global supply capacity.
It is also the most competitive source of bromine as it has the highest concentration which means the least amount of Brian must be extracted that evaporated to produce bromine.
<unk> and lower energy costs, while bromine prices have been under pressure with remain profitable thanks to our enviable cost position.
Unnamed Speaker: While bromine prices have been under pressure, we've remained profitable thanks to an enviable cost position. In 2023, we will focus on cost across our business, and I would like to highlight a few of our recent initiatives, which can be found on slide 23. In the first phase, we achieved significant savings for 2023 via operational execution. The second phase included the instructional efforts taken in the fourth quarter, which have set the stage for additional savings in 2024.
In 2023, we focus on cost across our business and I would like to highlight a few of our recent initiatives, which can be found on slide 23 in the first phase we achieved significant savings for 2023 via operational execution. The second phase included the structural efforts taken in the fourth quarter.
Which have set the stage for additional savings in 2024.
Unnamed Speaker: In 2023, we consolidated to North American production sites and also our industrial products R&D efforts. We brought on new leadership at our structured dairy protein business and took some other protein-related actions. We also rolled out an early retirement program, and while we had to make some tough decisions, we are better positioned for the future. As a result of our savings and efficiency activities, we were able to decrease SG&A by approximately 8% year-over-year in 2023, which you can see on slide 24. The actions we took throughout the year, including our de-stocking effort, helped in part to drive our strong cash conversion, and we ended the year with available resources of $1.9 billion. Our net debt to adjusted EBITDA rate at year-end was 1.1 times. During 2023, we announced that we had entered into a $1.55 billion sustainability-linked revolving credit facility agreement. This five-year facility replaced our previous $1 billion credit facility with similar financial terms.
In 2023, we consolidated two north American production sites and also our industrial product R&D efforts.
We brought on new leadership at our restructured dairy protein business and took some other protein related actions. We also rolled out an early retirement program and why we had to make some tough decisions we are better positioned for the future.
As a result of a saving and efficiency activities, we were able to decrease SG&A by approximately 8% year over year in 2023, which you can see on slide 24.
Actions, we took throughout the year, including our Destocking effort.
In part to drive a strong cash conversion and we ended the year with available resources of $1 9 billion.
Our net debt to adjusted EBITDA rate.
<unk> was one one times during 2023, we announced that we had entered into a $1 55 billion sustainability.
Sustainability linked revolving credit facility agreement with <unk>.
Five year facility replaces our previous $1 billion credit facility with similar financial <unk>.
Unnamed Speaker: For the year, we paid out more than $350 million in dividends, resulting in a trailing 12-month yield of 4.7%. Finally, if you will turn to slide 25, I will share our 2024 guidance with you. We are making a change to our guidance practice beginning this year, and we believe this change provides greater transparency for our shareholders as these new metrics are less impacted by fertilizer commodity prices given the extreme volatility in recent years. Going forward, we'll be providing EBITDA guidance for all of our businesses other than Potash, which we call our specialties-driven business segments. This includes industrial products, run solutions, and all of the fossil solutions, as our BAS businesses are now predominantly specialties-focused.
For the year, we paid out more than $350 million in dividends, resulting in a trailing 12 month yield of four 7%.
Finally, if you will turn to slide 25, I will share our 2020 full guidance with you.
We're making a change to our guidance practice beginning of this year and we believe this change provides greater transparency for our shareholders.
New metrics are less impacted by fertilizer commodity prices given the extreme volatility in recent years.
Going forward, we will.
Providing EBITDA guidance for all of our businesses other than potash, which we call our specialty driven business segments. This includes industrial products <unk> solutions and all of the phosphate solutions.
As our <unk>.
Businesses is now predominantly specialty focused for 2024, we expect adjusted EBITDA for these three businesses to be between $7 billion to $9 billion for our potash business, we'll be providing sales volume guidance for 2024, and we expect this to be between.
Unnamed Speaker: For 2024, we expect adjusted EBITDA for these three businesses to be between $0.7 billion and $0.9 billion. For our potash business, we'll be providing sales volume guidance for 2024, and we expect this to be between 4.6 million metric tons and 4.9 million metric tons. Fourth quarter 2023 business segment EBITDA should give a good sense of our EBITDA at current prices, and we expect every $20 change in the average potash seed price from current levels to result in a $100 million impact on EBITDA. Finally, for 2024, our effective tax rate is expected to be approximately $30,000.
$4 6 million metric tons, and $4 9 million metric tons fourth quarter 2023 business segment EBITDA should give a good sense of our EBITDA at current prices.
We expect every $20 change in the average book of steel prices from current levels to result in a $100 million impact.
The impact to EBITDA finally for 2024, our effective tax rate is expected to be approximately 30% before I turn the call over for Q&A I would like to note that <unk> has been appointed Vice chair of the International felt the Libra Association and all of ICL congratulate him.
Unnamed Speaker: Before I turn the call over to the audience for Q&A, I would like to note that Raviv Zoller has been appointed Vice-Chair of the International Fertilizer Association, and all of ICL congratulates him on his well-deserved recognition. And with that, we conclude today. Thank you. To ask a question, please raise your hand using your mobile or desktop application and wait for your name to be announced.
Okay.
Cognition and with that you don't get them.
Thank you in order to ask a question. Please raise your hand, using your mobile or desktop application and wait for name Cabana.
Operator: Once again, please raise your hand using your mobile or desktop application and wait for your name to be announced. Our first question today comes from the line of Ben Theurer of Berkeley. Please go ahead. Ben, are you able to unmute yourself?
Once again, please raise your hand, using your mobile or desktop application and wait for your name to be announced.
Our first question today comes from the line of Ben viewer of Barclays. Please go ahead.
But I know youre able to mute yourself.
Alright, this should work now.
Benjamin M. Theurer: All right, this should work now. Thank you very much, and I hope you can hear me. So two quick ones. First of all, congrats on the results that clearly came in, I guess, a little better even than what you expected. But if we look at the growing solutions business, and you've obviously talked about the puts and takes here and the impact, and it feels like that the fourth quarter, 23, was very challenging. And also, obviously, 23, even in context to 21, and prior years on a full year basis, has been meaningfully impacted. So as you look around, and if you consider your guidance and your outlook, what do you think growing solutions is going to be able to contribute within the broader context of ICL's splitted guidance? And where do you see, let's say, what I call "upside risk"?
Thank you very much and hope you can hear me so.
So two.
Two quick ones so first of all.
On the results actually came in I guess, a little better even than what you expected but.
If we look into the growing solutions business and you've obviously talked about the puts and takes here and the impact and it feels like that the fourth quarter <unk>. It was very challenging.
And also obviously 'twenty three even in context to 'twenty one in prior years on a full year basis.
Has been meaningfully impacted.
As you look around and if you consider your guidance and your outlook.
What do you think growing solutions is going to be able to contribute within the broader context of icl's splendid guidance and where do you see let's say call. It upside risks where are still certain risks to the downside prevailing in that segment that would be my first question and then I have a very quick follow up thanks.
Unnamed Speaker: So where are still certain risks to the downside prevailing in that segment? That will be my first question, and I have a very quick follow-up. Thank you. All right. Thanks, Ben.
Alright, Thanks, Ben Thanks for your question.
Unnamed Speaker: Thanks for your question. Growing Solutions went through a significant destocking process given the inventory situation and raw material prices going down in conjunction with product prices going down. And actually, towards the end of the year, the situation was better. We had a headwind in the fourth quarter coming from two places.
Drilling solutions.
Most of this year went through significant destocking process, given the inventory situation.
Raw material prices going down.
In conjunction with.
Product product prices going down.
Absolutely towards the end of the year. The situation was better we had a headwind in the fourth quarter coming from two places one the war in Israel caused delay of.
Unnamed Speaker: One, the war in Israel caused a delay in the local application of fertilizers in the fourth quarter. That's not big numbers, but it affected production schedules. And at the same time, in Europe, also because of the bad weather for a different reason, the window of application got delayed. And what we did, the division reacted by pulling up maintenance schedules, planned maintenance schedules. So the bad news is we had a worse fourth quarter than we expected. The good news is we're in better shape for the beginning of 2024 because we have some of that maintenance completed, and demand is back. And we have a good start for this year.
Local application of fertilizers in the fourth quarter.
Not big numbers, but it affected production schedules.
<unk>.
And the same time in Europe also because of the bad weather for a different reason.
The window for application got it got delayed and what we did the division reacted by pulling up maintenance scheduled planned maintenance schedules. So the bad news is we had.
Worse fourth quarter than we expected.
The good news is we're in better shape for the beginning of 2024, because we have.
Some of that maintenance completed in <unk>.
Demand is back.
We have a good start for this year.
Unnamed Speaker: I think that Growing Solutions is in a good place in terms of its current inventory position. It had, by the way, a record cash flow year for 2023. So that destocking didn't contribute too much to our P&L results, but it contributed nicely to cash flow. And I'm glad that we went through the destocking and not delayed it further. And for 2024, we expect significant improvement from the division.
I think that growing solutions is in.
In a good place in terms of.
Its current inventory position.
It had by the way record cash flow year for 2023, so that destocking.
Didn't contribute too much to our piano.
<unk> results, but it contributed nicely to cash flow.
And I'm glad that we went through the destocking and not delayed further.
For 2024, we expect significant improvement from from the Division, we see potential upside in Europe on another potential upside in Brazil, where we actually grew market share this year things.
Unnamed Speaker: We see a potential upside in Europe, another potential upside in Brazil, where we actually grew market share this year. Things are going well in China, where we're also very small, but we're still growing market share. And we have two new production facilities in China, which will help us grow further. We're also growing nicely in India.
Things are going well in China, where we'll also were very small, but we're still growing market share and we have two new production facilities in.
In China, which will help us grow further we're also growing nicely and in India. So once the results improve in Europe and the wars.
Unnamed Speaker: So once the results improve in Europe and the war is over, I can't say it's over, but we're back to the usual course of business in Israel pretty much. So we're in a different position in 2024. So I actually expect a dramatic improvement in Growing Solutions results for this year, for 2024 back to 2021 and above, like March. Perfect. That was very complete.
I can't say, it's over but.
We're back we're back to the usual course of business in Israel pretty much so.
We're in a different position in 2024 as I actually expect the dramatic improvement in growing solutions results for this year for.
For 2024 back to 2021 and above like margins.
Alright perfect.
That was very complete thank you very much and then.
Benjamin M. Theurer: Thank you very much. And then, just to clarify and a little bit on what you're seeing in terms of the demand in Poland for your product and some of the implications on shipments through the Red Sea. Have you seen the situation easening, or are there still issues similar to what we talked about back in November during the last conference call? Just to understand how the trade flow is going currently through the region for your products that go out of Israel. Thank you. Okay, thanks again.
Two two.
To clarify a little bit on what youre seeing in terms of the demand.
Potash for your product and some of the implications.
On shipments drove the Ritchie have you seen.
The situation is inning or are there still issues similar to what we've talked about back in November during the last conference call just to understand how the trade flows going current Vicksburg, reaching for your products that go out of Israel.
Okay. Thanks again.
Unnamed Speaker: Like we said in a recent call, we had two main issues with this war. One was that many people were on reserve duty, which stretched us, especially on the maintenance side, and caused us to lose even some production. But that's over because most of the folks are back from reserve duty, and we're not stretched anymore.
Like we said in our in our recent call.
The two issues are two main issues from this war one was.
Many people being on reserve duty, which stretched us, especially on the maintenance side and caused us to lose some production.
So that's over because most of it most of the folks are back from reserve duty and we're not stretched anymore in terms of the red situation. The situation is still hasn't cleared itself up.
Unnamed Speaker: In terms of the Red situation, the situation still hasn't cleared itself up. It's become a global issue, not just a local issue. And there are forces from both sides, and there are forces protecting ships going through the Red Sea, but still, most shipping companies don't want to sail through the Red Sea. So what this is doing effectively, we still got all of our product in the fourth quarter and all of our product in the first quarter that we wanted to go through the Red Sea. But there's definitely pressure on shipping companies not to go through the Red Sea. By the way, the pressure is not only on us, of course.
It's become a global issue not just the local issue.
There are forces from both sides and there is a there.
Air Force's protecting.
Ships going through the Red Sea, but still most ship most shipping companies don't want to sell to the Red Sea. So what that is doing effectively we still got all of our product and in.
In the fourth quarter and all of our product in the first quarter that we wanted to go through the Red Sea to go through the Red Sea, but there is definitely pressure on.
Shipping companies not to go through the Red Sea by the way the pressures not only on us of course.
Unnamed Speaker: And I don't think that the situation will get better in the next few weeks until the war settles in one way or the other. Of course, shipping costs are going up both in the Red Sea and beyond. There's the Panama Canal issue, there's the Black Sea issue, and the overall result is a hike in transportation costs. I think that if it continues for the next few weeks, we will see that being transferred to customers because I know that to some destinations it's not as economical to ship products, and that will take a toll on customers in the East. For example, if you look at Eastern European shipments coming out of the former Soviet Union to India, then they have to go around Europe and around Africa at tremendous cost.
And I don't think that the situation will get better in the next few weeks until the war settles in one way or the other of course shipping costs are going up both in the Red Sea and beyond.
Theres the Panama Canal issue there is the black sea issue.
The overall result is.
Hike in transportation cost.
I think that if it continues in the next few weeks, we will see that being transferred to customers.
Because I know that to some destinations.
It's not as economical to ship products and that will take a toll on.
On customers in the east for.
For example, if you look at.
Eastern European shipments coming out of the former Soviet Union into India.
Then.
They have to go around Europe, and around Africa at tremendous cost and.
Unnamed Speaker: And when that becomes uneconomical, and of course, prices will have to come up in order to induce those supplies to come to the East. So in the short run, in the short term, it's still an issue. This raises transportation costs. If it continues, then these transportation costs will translate into higher product costs. In the long term, obviously, it has to go away one way or the other. So it's not clear what the long-run implications would be.
When that becomes non economical and of course prices will have to come up in order to induce those supplies to come to the east. So in the short run in the short term, it's still an issue as racist transportation cost. If it continues then these transportation costs will translate into higher product costs.
In the long term obviously it has to go away one way or the other so.
Not clear what the long run implications would be at this point.
Benjamin M. Theurer: Very good. Thank you very much for that. Thank you. Thank you. As a reminder, in order to ask a question, please raise your hand using your mobile or desktop application and wait for your name to be announced. If you have no further questions, please proceed. Okay, that was a short one. Okay, so thanks to those of you who joined us. We appreciate your taking the call and listening to our report, and we look forward to reporting again. Thanks again to all ICO managers and employees, and have a great rest of the day.
Okay very good thank you very much for that.
Thank you.
Thank you.
Reminder, in order to ask a question. Please raise their hand, using your mobile or desktop application and wait for your name to be announced.
You have no further questions. Please proceed.
Okay that was a short learning curve.
Okay. So thanks to those of you who joined.
We appreciate you taking the call and listening to our report and we look forward to reporting again, thanks, again to our CLO managers and employees.
And.
Have a great rest of the day.