Israel Chemicals Profit Drops 9% on Meager Sales to China

Israel Chemicals Ltd. (ICL) reported a 9 percent drop in third-quarter profit as Potash Corp. (POT) of Saskatchewan Inc., the world’s biggest fertilizer maker, pursues a $13.5 billion takeover bid.

Net income fell to $395 million from $436 million in the year-earlier period, the company that extracts minerals from the Dead Sea to make fertilizer said in a statement to the Tel Aviv bourse today. That beat the $385 million median estimate of three analysts surveyed by Bloomberg. Sales fell 3.7 percent to $1.82 billion, compared with the $1.86 billion median estimate of four analysts.

“While demand for potash in Brazil was strong during the quarter, the company suffered from a lack of sales to China due to the expiration of the previous contract,” Richard Gussow, a senior analyst at Tel Aviv-based DS Securities & Investments Ltd. said today in an e-mailed note. “Investors are looking toward the potash contracts with China and India, which we believe will not be signed until early 2013. As a result the fourth quarter will be very weak.”

Potash Corp. recently announced mine closures and Mosaic Co. (MOS), the largest U.S. fertilizer producer, said this month it may reduce potash output amid lower-than-expected global demand for the crop nutrient. Delays in signing contracts in China and India have spurred other buyers to postpone their purchases because they expect prices for agricultural nutrients to decline, Mosaic said on Nov. 14. Israel Corp. (ILCO), which owns 52.3 percent of Israel Chemicals, said Oct. 31 that Potash Corp. was in merger talks.

Product Variety

The variety of products Israel Chemicals produces “moderated the negative effects of the global economy,” Stefan Borgas, the company’s president and chief executive officer, said in an e-mailed statement today. Israel Chemicals declared a dividend of $276 million for the quarter, to be paid on Dec. 19.

Israel Chemicals’ shares fell 1.7 percent to 44.96 shekels at the market close in Tel Aviv, the third-worst performer in the benchmark TA-25 index which advanced 0.3 percent.

Saskatoon, Saskatchewan-based Potash Corp. has a 14 percent stake in Israel Chemicals. The acquisition would make it the world’s biggest producer of the mineral compound used to make fertilizer.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net

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