(Updates with closing price in fourth paragraph.)
Oct. 27 (Bloomberg) -- Israel Chemicals Ltd., which may have to pay billions of shekels to help preserve the Dead Sea site, expects 2011 to be a “very good year” as it focuses on demand from emerging markets, the chief executive officer said.
“We are very strong in potash in China, India and Brazil,” Chief Executive Akiva Mozes told Bloomberg TV in an interview broadcast yesterday. “These markets are booming and increasing demand all the time. All drivers are motoring.”
The company, known as ICL, said Aug. 21 it will build two factories with a partner in India to expand fertilizer production. Second-quarter net income soared to $426 million from $298 million a year earlier as sales rose 27 percent. Profit for 2011 may jump 59 percent to $1.62 billion, according to the median estimate of four analysts compiled by Bloomberg.
ICL shares advanced 2.5 percent to 46.22 shekels at the 4:30 p.m. close in Tel Aviv. The shares have surged 18 percent since reaching this year’s low on Oct. 4, paring the drop for 2011 to 24 percent. ICL is underperforming peers and the benchmark TA-25 Index, which has declined 12 percent this year. Potash Corp. of Saskatchewan Inc., the world’s largest crop- nutrient maker by market value, has lost 2.8 percent in the period, while Mosaic Co., the biggest maker of phosphate fertilizer, has retreated 20 percent.
ICL may be required to pay as much as 5 billion shekels ($1.37 billion) to preserve the Dead Sea tourist site as the government seeks to save hotels from flooding. Potash production involves pumping water from the Dead Sea into evaporating pools leaving salt residues, which are raising the level of water in the ponds.
The salt-harvesting situation may lead to a review of the state’s share in ICL’s profits, resulting in “significant harm to investors,” Guil Bashan, analyst at I.B.I.-Israel Brokerage & Investments Ltd. in Tel Aviv, wrote in a Sept. 11 report. “Investors are preferring shares that this tax uncertainty is not weighing on,” Bashan said by telephone.
Finance Minister Yuval Steinitz is considering setting up a committee to consider an “excess-profit tax” on ICL’s Dead Sea Works unit after Assistant Attorney General Avi Licht suggested a tax “similar to the new legal arrangement imposed on the gas and oil producers.” Parliament passed a law in March to raise the government’s share of energy profit to as much as 62 percent after record gas finds off the country’s coast.
“We are in talking terms now to settle all outstanding matters,” Mozes told Bloomberg. “Hopefully we will do so. But there is no danger to ICL.”
--With assistance from Inal Ersan in Dubai. Editors: James Kraus, Claudia Maedler
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