ICL Group (NYSE:ICL) reported modest third-quarter sales and earnings growth as higher prices and a shift toward higher-margin products helped offset rising raw material, freight and currency costs.
The company reiterated its 2026 EBITDA forecast of $1.5 billion to $1.7 billion and said it is targeting a result above the midpoint. Management also expects its cost transformation program to begin delivering savings in the first quarter of 2027.
Third-quarter sales rose 3% from a year earlier to $1.9 billion, while adjusted EBITDA increased 1% to $402 million. Adjusted net income rose 2% to $126 million, or $0.10 per share. Gross margin improved 30 basis points to 32.9%, its highest level since the fourth quarter of 2024, CEO Elad Aharonson said.
Operating cash flow was $256 million and free cash flow was $66 million. CFO Asaf Alperovitz said inventory increased, primarily reflecting temporarily softer demand for commodity phosphates and the effect of higher sulfur costs on inventory values.
Industrial Products Growth Offsets Potash Cost Pressures
Industrial Products sales rose 18% year over year to $347 million, and EBITDA climbed nearly 50% to $100 million. Alperovitz attributed the gains to higher bromine prices and solid performance in key business lines. Brominated flame retardants benefited from pricing and electronics demand, while phosphorus-based products saw improved construction demand.
Potash sales rose 4% to $469 million, but EBITDA fell approximately 7% to $157 million. Higher prices and volumes could not offset increased energy and transportation costs and exchange-rate headwinds, Alperovitz said.
The average potash price was $370 per ton, up 5% from a year earlier but down 2% from the prior quarter. Alperovitz said a greater share of sales went to India and China under annual contracts, which generally carry prices below prevailing spot prices.
Phosphate Solutions generated $589 million in sales and $118 million in EBITDA. Specialty food and industrial phosphates recorded higher sales, but phosphate fertilizer quantities and profitability declined amid lower demand and higher sulfur prices.
Growing Solutions sales were $538 million, with EBITDA of $44 million. Alperovitz said demand remained weak in Brazil, where customers delayed purchases and shifted toward less-premium products. European sales also faced pressure from weaker demand tied to farmer affordability.
Sulfur Costs to Weigh on Fourth Quarter
Average sulfur spot prices rose more than 220% year over year in the third quarter, according to Alperovitz. He said the October average declined approximately 12% from the third-quarter level, with lower purchase prices expected to begin benefiting results in the first quarter of 2027.
During the question-and-answer session, Aharonson cautioned that the lag between sulfur purchases and consumption means fourth-quarter results will reflect higher sulfur costs than the third quarter. He described sulfur as the main near-term headwind, while noting relatively favorable bromine prices and stable potash conditions.
Aharonson said he expected phosphate fertilizer demand to increase in 2027 as farmers return after some skipped the 2026 season because of affordability. He also said he did not expect a dramatic change in potash conditions between the third and fourth quarters.
Cost Savings and Reorganization
ICL expects its ELEVATE program to deliver more than $350 million in annual EBITDA improvement by the end of 2028 and more than $150 million in annual improvement by year-end 2027. Alperovitz said savings should begin in the first quarter of 2027 and increase gradually. Aharonson said he had a high level of confidence in achieving the 2027 target but did not provide a quarterly breakdown.
The company plans to reorganize its segments on Jan. 1, 2027. Food, beverage, health, nutrition and wellness products will move into a new Nutrition Solutions segment, while commodity phosphates and potash will form Essential Minerals. Industrial phosphate products will join Industrial Products, and Growing Solutions will remain focused on specialty crop nutrition.
ICL maintained its 2026 potash sales-volume forecast of 4.5 million to 4.7 million metric tons and its expected adjusted tax rate of approximately 30%. It also reported a $63 million third-quarter dividend, equivalent to 50% of adjusted net income.
About ICL Group (NYSE:ICL)
ICL Group Ltd. is an Israel-based specialty minerals and chemicals company. Its business draws on resources including potash, phosphate and bromine to produce products for agriculture, food, industrial and other markets. The company supplies crop nutrition products and specialty fertilizers, as well as phosphate ingredients used in food and other applications. Its industrial products include bromine-based compounds, flame retardants, water-treatment chemicals and specialty minerals. ICL also develops materials for energy storage and other advanced applications.
