ICL Group Ltd. Q1 FY2023 Earnings Call

Ladies and gentlemen, thank you for being here and welcome to the ICL Analyst Conference Call. Our presentation today will be followed by a question-and-answer session. I must inform you that this call is being recorded today. Now, I would like to turn the call over to our first speaker, Peggy Reilly Tharp, Vice President of Global Investor Relations. Please proceed, ma'am.

Thank you. Hello, everyone. I'm Peggy Reilly Tharp, Vice President of Global Investor Relations. I'd like 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-group.com. Earlier today, we filed our reports with the securities authorities and the stock exchanges in the U.S. and in 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. The presentation which will be reviewed today is also filed with the securities authorities and is available on our website. Please be sure to review the disclaimer on Slide 2. 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. We will begin with the presentation by our CEO, Mr. Raviv Zoller, followed by Mr. Aviram Lahav, our CFO. Following the presentation, we will open the line for the Q&A session. Raviv, please.

Thank you, Peggy, and welcome, everyone. Earlier today, we announced solid first-quarter results. Our brief overview starts on Slide 3. Sales for the quarter were $2.1 billion, down 17% from the sales we reported at this time last year, which were significantly affected by sanctions on Belarus and the global reaction to the Ukraine war. Along with the anticipated price reduction this year, we also shifted the shipment of about 100,000 metric tons of potash to India into the second quarter. Adjusted EBITDA for the first quarter was $610 million, also lower year-over-year, as prices have moderated considerably over the past 12 months. Like others in our industry, we are navigating high-cost inventories, a process that began toward the end of last year and is expected to continue into the second quarter. As a result, we have implemented cost efficiencies throughout our supply chain and are aiming for further initiatives this year. Once again, general and administrative costs decreased year-over-year. Despite the decline from peak commodity prices in 2022, we maintained a focus on consistent cash generation, delivering operating cash flow of $382 million and free cash flow of $220 million, both record highs for the first quarter. After the quarter ended, we announced a new $1.55 billion sustainability-linked credit facility, which Aviram will discuss shortly. In the first quarter, we also returned value to shareholders, reporting adjusted diluted earnings per share of $0.23 and declaring a quarterly dividend of $0.11 per share. Last year, ICL benefited from higher prices that significantly increased cash, even after making necessary investments in operations and settling past tax disputes, while paying out a dividend representing 50% of net income. We believe ICL offers investors a balanced combination of outstanding commodity assets and a diverse range of specialty products, providing exposure to various end markets globally. Through our Growing Solutions, Phosphate Specialties, and Industrial Products segments, we deliver resources to feed and protect the world, alongside our new expansion into battery materials for electric vehicles and energy storage. This combination helps us achieve our long-term strategic objectives, and we will continue to capitalize on opportunities arising from geopolitical developments, global sustainability challenges, and current market conditions to enhance long-term value creation. Let's look at the key metrics on Slide 4. Although sales were down year-over-year as expected, they increased significantly compared to the first quarter of 2021, and we expect normal growth to continue through this year, particularly in the second half. Adjusted EBITDA decreased from last year but was more than double that of the first quarter of 2021, with notable growth from our specialties businesses. The EBITDA margin for the quarter was 29%. On Slide 5, you can observe that specialty sales followed a similar trend to our consolidated results. As anticipated, specialties EBITDA also declined compared to last year due to reduction in high-price inventory and maintaining discipline in our flame retardants business. We expect this pattern to persist into the next quarter as we continue destocking, with margins likely to resume an upward trend in the second half of the year and beyond. Additionally, we saw year-over-year growth in free cash flow and a significant increase compared to the first quarter of 2021, and we are pleased with this improvement as we align with our planned growth in specialties. Our adjusted diluted earnings per share was more than double what we reported in 2021. Now, let's proceed to our segment review starting with Industrial Products on Slide 6. First-quarter sales were $361 million, with EBITDA of $105 million, as demand for flame retardants decreased year-over-year. The weakness in electronics, which picked up in the latter part of last year, is continuing as expected. We believe this situation will persist in the near term, with expectations for market conditions to improve in the second half of the year. Long-term demand for flame retardants is anticipated to keep pace with the electronic replacement cycle and grow due to the continued rise in electric vehicles and energy storage solutions. The building and construction markets also remained weak in the first quarter as global interest rates remain high. However, new buyers are adapting to increased mortgage rates and inflation, which, while still elevated, seems to be easing. Serving various end markets has distinct characteristics, as seen in 2020 when demand for flame retardants in consumer electronics surged, while our clear brine fluids business faced significant challenges. Currently, demand from the oil and gas sector is robust, and we noticed a sales increase to the Middle East following the Abraham Accords. Our specialties minerals business achieved record quarterly results as well. Moving to Slide 7, in our Phosphate Solutions division, we reported sales of $714 million and EBITDA of $170 million. For the quarter, Phosphate Specialties outperformed expectations and accounted for 60% of sales and roughly 50% of EBITDA. Demand from global food customers remained strong, although industrial demand was softer due to challenges in building and construction, particularly in Europe where economic issues persist and competition from China is increasing. Despite these challenges, Phosphate Specialties achieved record first-quarter free cash flow, even while dealing with force majeure at a major supplier that resulted in higher raw material costs. Our investment in St. Louis for a cathode active materials plant for high-quality LFP batteries is progressing well, and we expect to break ground later this year while finalizing our general contractor and engaging with automakers and potential partners about future strategic collaborations. This expansion into battery materials enhances our upstream position in Specialty Phosphates and establishes a significant growth platform. The timing is optimal for this move, as our vision and ambition align with attractive markets and a solid plan to gain a first-mover advantage in the North American LFP cathode active materials market. On Slide 8, our potash results showed sales of $583 million and EBITDA nearing $300 million. The average potash price per ton was $541, down from $642 in the first quarter of last year, yet still high compared to historical levels. Production aligned with last year after we finished our annual maintenance shutdown in the Dead Sea in March. However, deliveries decreased due to an unexpected delay in the India contract settlement. During the first quarter, we successfully completed a sealing project for the feeder canal at the Dead Sea, which caused concerns last year. Unfortunately, we also experienced a fatal accident at the Cabanasses mine in Spain at the beginning of March. Safety is our paramount concern, and we implemented extraordinary safety protocols before gradually resuming operations, estimating the production loss at about 30,000 metric tons. Moving on to Slide 9, our Growing Solutions business generated first-quarter sales of $564 million, matching the same period last year despite a slow start to the spring season in Europe and North America. EBITDA of $45 million was impacted by high-priced inventory and raw materials throughout the supply chain. While we continued to prudently reduce inventory in the first quarter, this effort extends into the second quarter. We are assessing new efficiencies, optimizing operations, and developing innovative products, reflecting actions such as the earlier shutdown of our production facility in Summerville, South Carolina, after reviewing ways to enhance production and improve cost structures in North America. Meanwhile, our Boulby polysulphate mine in the UK achieved record quarterly production of nearly 260,000 metric tons. Our FertilizerPlus products, based on organic polysulphate, also experienced a price increase during the quarter, alongside other promising new products recently launched. I would like to discuss how 2023 is shaping up on Slide 10. In our Industrial Products division, we anticipate improvement in the second half of the year, aided by supply chain destocking, a recovery in the Chinese economy, and new momentum in electric vehicle deliveries. For our Phosphate business, we remain committed to multiple long-term battery material solutions, including the LFP expansion in St. Louis. We are highly optimistic about the potential in this new sustainable market, which we view as a central component of our long-term strategic growth. In our potash business, we foresee an increase in production and sales as global stocks-to-use ratios are low, and farmer affordability remains above average. Aviram will provide more insights into macro trends shortly. These trends are also advantageous for our Growing Solutions business, where we plan to keep introducing innovative and sustainable solutions, such as our Keep Green biofertilizer in Brazil and eqo.x controlled release fertilizer in Europe. Lastly, for the first quarter, it's worth noting that it was our second-highest ever for sales, adjusted operating income, and adjusted EBITDA. While we do not expect the short-term upward trajectory seen last year during peak prices, we anticipate continuing to execute our long-term growth strategy in specialties as we advance through 2023. As always, I want to thank the entire ICL team worldwide for their hard work and contributions. Achieving progress towards our long-term goals would not be possible without our dedicated workforce. I'm also pleased to announce that ICL was recently recognized as one of the best companies to work for by BDI, the largest business information group in Israel. We ranked first in the industrial sector and second among the top 35 companies on the Tel Aviv Stock Exchange; we've made impressive progress overall, moving up to 14th from 21st last year, and significantly improving from 84th place five years ago. I will now hand the call over to Aviram.

Thank you, Raviv, and to all of you for joining us today. Let us get started on Slide 12. While the world is in a different place than it was a year ago, there are still a number of multiple factors impacting ICL, our customers and suppliers. While inflation is declining, it is still a concern for some end markets consumers who need to make decisions about what purchases to prioritize. However, as our Phosphate Specialties sales show, food remains resilient on a global basis. For our industrial end markets customers and the building and construction businesses, elevated interest rates continue to pressure homebuyers. However, global monetary policies remain dynamic. China appears to be rebounding faster than anticipated. As the second largest economy in the world, a more rapid recovery will benefit a wide variety of end markets and businesses including the electric vehicle market. When it comes to currencies, the U.S. dollar is softening from the peaks it hit last year. While this is true for some currencies, the dollar continues to appreciate versus the shekel, which is actually a benefit to ICL. Turning to the agriculture portion of the spectrum, we see crop prices remain elevated, while farmer affordability continues to improve as fertilizer prices have come down. While overall raw material prices are declining for fertilizers and many of our other products, high-priced inventory remains in the market. This is not unique to ICL and many in our industries and businesses and other industries and end markets are in the same position. As Raviv already discussed, this destocking began towards the end of last year, and we continue to work through high-cost inventories in the first quarter with these efforts expected to extend through the second quarter. On Slide 13, you can see some of the trends I just discussed with inflation rates generally trending down globally, while interest rates remain persistently elevated. In the first quarter, China's economy grew 4.5%, the fastest pace the country has seen in the past year as it looks like they're recovering from their emergence out of COVID restrictions. Turning to Slide 14, where we have a collection of key agricultural metrics. As you can see, commodity crop and fertilizer prices stabilized in the first quarter, resulting in an improvement in farmer sentiment from both the first quarter of last year and the start of this year. Moving from the world of agriculture to the world of energy on Slide 15 where you can see data we first introduced at our Investor Day last October. Since that time, there has already been an increase in the forecast for electric vehicle adoption, as countries around the world have implemented new environmental standards for cars and trucks with subsidies to help ease the transition for consumers. Automakers have responded with BMW, Ford, Stellantis and Volkswagen, all pledging to have 50% of their production based on electrification by 2030, while GM and Honda have set goals to be 100% electric by 2035 and 2040, respectively. There is real momentum behind these efforts. As Raviv already discussed, we're excited to be entering the battery materials market at this opportune time. If you will now turn to Slide 16, on the left side, you can see the sales bridge from the first quarter of last year to this year. For Industrial Products, we saw slower flame retardant sales. And as Raviv discussed, we saw 100,000 metric tons of potash shipments to India shift from the first quarter to the second quarter. On the right side of the slide, you can see the breakout by quantity, some of which will be shifting to the second quarter, and also price. Potash accounts for over 100% of the negative price effect on EBITDA year-over-year, and together with flame retardants for most of the negative quantity effect on sales and EBITDA. Turning to Slide 17 for our adjusted EBITDA which was $610 million, down year-over-year but more than doubled our EBITDA in the first quarter of 2021. As the market leader in bromine, our Industrial Products business took a disciplined approach in the first quarter, and this will continue into the second quarter in anticipation that long-term contract customers will increase orders in the second half of the year. I would now like to review a few highlights on Slide 18. At quarter end, our net debt to EBITDA ratio was at 0.56x. As Raviv already mentioned, in the first quarter, we delivered record operating and free cash flow of $382 million and $220 million, respectively. Which brings us to Slide 19, and our first quarter dividend of approximately $146 million or $0.11 per share, bringing our dividend yield for the past four quarters to 9.2%. After the first quarter ended, we announced that we had entered into a $1.55 billion sustainability-linked revolving credit facility agreement despite the facility replacing our existing $1 billion credit facility with similar financial terms. We are pleased to expand on our commitment to sustainability by enhancing this facility to include targeted and specific sustainability metrics and milestones across three key performance indicators, which have been designed to align with ICL sustainability, strategy, and goals. This new facility will provide us with enhanced financial flexibility, as we continue to invest in our business and target new opportunities, both internally and externally, while continuing to expand and innovate. As Raviv discussed, we are making the most of our cash generation which has continued from 2022 into 2023. Finally, on Slide 20, we are reiterating our 2023 guidance calling for adjusted EBITDA of between $2.2 billion and $2.4 billion in total, and for our specialties businesses to contribute approximately $1.1 billion of that amount. And with that, operator, we can begin the Q&A.

Thank you. Our first question today comes from Alexander Jones from Bank of America. Please go ahead.

Great. Thanks so much for taking my questions. Two, if I can. The first just on the guidance that you mentioned, if I take the specialties EBITDA you did in Q1, which I think is just around 235 and multiply by 4, very simplistically, I get to less than 1 billion. And obviously, Q4 is usually smaller. So it would be great to get an idea of what gives you confidence in the 1.1 billion you're going for? Is anything you're seeing already in terms of the inventories that you're going to be selling in three, six months' time being low priced, or the order book in China improving, but more about what you expect to happen in terms of the order book improving in the second half of the year? And then the second question on capital allocation. Last quarter, we talked about a possible buyback, which you said at the time you're discussing and would revert to the market with a decision either way by Q1 results. So now we're here, it would be great to hear an update on what your reasoning was for not proceeding if that is the decision? Thank you.

All right. Thanks, Alex. So I'll start with specialties guidance. Our plan for the year assumed and continues to assume that in two of our divisions, in Industrial Products and in Growing Solutions, the first half of the year will be softer than the second half of the year. In fact, we mentioned in the past that we expect to get back to 2021 numbers this year in both those divisions. But the way that the year is expected to progress is that we'll be less than those levels in the first half of the year and then higher in the second half of the year. In terms of — on Phosphate Specialties, it will be more straight line for the year. So we don't expect a big change there. So that's where our assumptions are, and we don't see any significant evidence that things should behave differently. We have been disciplined in our bromine business. So if you look year-over-year, actually our prices went up, which means that we preferred value over volume and behaved discipline. And this is something that we expect that it's in our control. So that's on the specialty side. You want to add something?

Sure. Hi, Alex. On top of what Raviv just explained to us, I want to reiterate the issue of the inventory. So basically, we are working through, like many in the industry and I guess other industries as well, from high-cost inventory. That obviously is a result of purchases and production from last year. And when we look inside, we see that in all three specialty businesses on the agricultural side, the IP side, and to a lesser extent but since then on the phosphate side, our replacement cost for our inventory would be lower. Now this has impacted our Q1. It's one; if you look at the waterfall, the high-cost inventory is a part of why we came to 610 million of EBITDA and not beyond that. And our assumption, knowledge is that as the year progresses, this will have a lesser impact. And therefore, that's another contributing factor to the EBITDA of the specialties as we go along further into the year. We take the two, and I think you can paint for now the picture of what we're talking about.

Yes, both raw material, transportation, and energy costs are decreasing. I'm glad you brought this up because I had promised to update shareholders. Even without your question, I would have shared this information. We had a productive discussion at the Board level regarding the potential for increased returns to shareholders. The general agreement is that we are satisfied with our 50% dividend policy, which resulted in $1.1 billion returned to shareholders last year, and we plan to maintain that. Over the long term, we believe this normalized return is appropriate. It is also recognized that during unusually profitable years, like 2022 and arguably 2023, there is potential to consider additional returns to shareholders as part of optimal capital allocation. However, recent developments must also be taken into account. A key point is our expansion into the cathode material business, which has created exciting new opportunities that will demand greater capital investment, starting with our first cathode material plant in St. Louis. Our negotiations with potential customers and partners suggest we will be moving more quickly and aggressively because of these new opportunities. Therefore, before making final decisions about capital allocation, we will have further discussions based on new information management will provide regarding our needs over the next 12 to 24 months. In summary, while we do not expect any changes to our long-term return policy for shareholders, we are positively considering special distributions based on exceptional profitability. Currently, our focus is on identifying alternative uses for capital. We've analyzed the actions of some competitors and agreed that reverting to decisions made a year ago to repurchase shares at peak prices was not the best capital allocation choice. We believe we acted wisely last year, utilizing our capital more effectively. We are confident we will make sound choices once we have all the relevant data. There are several dynamic factors and rapid developments arising from our discussions with top automakers and OEMs, indicating significant demand for our offerings. This is promising news for the company's growth potential. We are transitioning from a value company to a growth company, and regarding specialties, this represents a major growth area. We see substantial opportunities related to electric vehicles, projecting revenues of up to $4 billion and EBITDA of up to $1 billion by 2030. Achieving these targets will require investment and consideration of various factors. Our top priority remains maximizing value for shareholders. I hope this addresses your question.

Thank you.

Thank you. Our next question comes from the line of Mubasher with Citi. Please go ahead.

Hi. I hope you can hear me. Just a couple of questions, please. First one is on the volume development in Industrial Products. You're talking quite positively about the second half. Just wanted to kind of gauge where that confidence comes from? And if that's why I assume that's predominantly market-driven in terms of recovery, just trying to understand what gives you the confidence that there will be such a stark recovery in the second half given nearly 30% volume decline in the first quarter? I know the comps get a little bit easier, but still just some comments around that would be helpful. And then just some thoughts around the comments you just made on the cathode materials side. I think you've talked about highlighting what the CapEx needs could be. I assume this is done within the framework of the 400 million that's been previously announced? Or is it just more timing in the sense that you're going to spend that money quicker than previously anticipated? And just on that project, are you able to highlight any single round returns for that project? Or if you already contracted out volumes and you kind of go from sales or from take or pays on the production from that client? Thank you.

Right. Thanks. So let's start with the flame retardant market; mind you that about 70% of our business is contracted for long term. So we don't — we're not that worried about the market share. So in an environment where there's hardly any spot activity, and that wasn't the case in recent months, we're not running after business and trying to endanger our long-term value over volume business. What is transpiring here is a cyclical situation. And we've been through quite a lot of cycles. Last time the market was in this place was during COVID, in the beginning of COVID. And typically, these kinds of cycles take three or four quarters. And that's where we are. We are quite a few months into the cycle. The reason we're confident about recovery is that ultimately, there are purchases of television sets and PCs and definitely electric vehicles, even though in the short term maybe because subsidies were halted in China and there were some issues in the supply chain, the long-term trend is definitely significant growth of electric vehicles. We're confident that the long-term growth of electric vehicles and the cyclical nature of consumer purchases is going to bring back the demand. We also see the destocking. We're very much aware of the data regarding destocking in these products. We're in good touch with our customers and we know where they're at. And it's not to say that we have an exact date on when exactly the change is going to come. But we have a very good idea about it. And of course, we could be surprised but we're not going to be surprised in a major way. So that's on flame retardants. And just to give you an idea, most of the volume loss, if you will, in flame retardants was around electronics. It was about $80 million in the quarter. Again, we didn't have to lose that volume. We actually did less business and at higher prices. But we didn't participate in the spot market and we didn't lose market share. We didn't lose any customers. We don't expect to lose customers. Our long-term contracts provide for security around volumes. But at the same time, given the market, we're not pushing our customers to take more volume than they need. And they don't need a lot at this point. And we expect that later this year, they will purchase the volumes that they need to purchase according to the agreements. Getting back to the cathode material, yes, we announced a $400 million investment out of which $200 million will be a DoE grant. But what we're talking about now is more than that. We're going to need more than 30,000 tons in one plant. So that means that in terms of investments, we're talking about more than one plant and maybe more than two plants. I don't want to — I want to be very careful about what I say and the information that is going to be available is going to be available in the coming months. It's not going to be a long time until we can go public with it. The type of business that we're talking about is basically offtake agreements. So when we build a plant, we have a customer for the plant. Some customers would prefer 100%, we prefer 80% or 90%, because we want to be able to serve more than one customer. So that's also part of the partnership arrangement. And like I said, once we have the information that we can provide, we will provide and it's not a timing issue because we know the timing, we're going to invest the $400 million by 2025. And the additional production capacity is not going to come after 2025. It's going to come in parallel. We have the land available. We have the permits available. We have the renewable energy available. We have the passion to be number one in the U.S. market. And there's a window of opportunity in order to be number one, we have to move fast and be very decisive about it. And that's what we intend to be. I hope that answers.

Very helpful. Thank you.

Thanks, Mubasher.

Thank you. Our next question today comes from Ben Theurer from Barclays. Please go ahead.

All right, I hope this works. Perfect. Good afternoon to you. And thank you very much for taking my question. Two quick ones. So the first, if we kind of look at the guidance you've reaffirmed and there were certain signs during the quarter where you've actually held up relatively well, particularly on potash, but also to a degree on phosphate. And we've talked a little bit about the cadence. But I wanted to see if you can give us a little bit the scenarios, upside-downside case as to the higher end of your guidance range versus the lower end of the guidance range where you see the risks and opportunities within your outlook currently? And then I have a quick follow-up as well. Thank you.

All right. So first of all, not everything went perfect. One big – thanks for your question, Ben, I forgot to say. First of all, on potash, we were expecting the India contract to be concluded at the end of February, beginning of March. And we were expecting it to be concluded at 450. That creates a little bit of change in our view, but not really significant because the India contract is 422. But at the same time, transportation costs went down, and also exchange rates work in our favor. So that's a very small change. At the same time, we also delivered 100,000 tons less than we expected in the first quarter because of the last-minute delay in the India contract. We deferred 100,000 tons to Q2. So that also changed the way we performed in the quarter versus what we expected. And also on Growing Solutions, our numbers came in a few million dollars less than we expected. Again, Aviram talked about the inventory issue. We thought it would be a little better. So our Q1 is almost on budget, not entirely 100%. In terms of what the other scenario could be, we think that potash prices are pretty stable right now around the U.S. Europe, of course, prices are going down slowly and surely, but they're still way above other markets. And in India, of course, they're stable. There's still some downside risk from China and Brazil, and I'll explain in a minute. So we took into account certain flexibility and what can happen in the second half of the year, especially in the fourth quarter. And I'll get back to the explanation on the market. In Brazil, it's like two different markets now; ICL is not selling product less than the Indian price. But Ukrainians and Russians are in some places selling at lower prices. And we're not sure how that will play out. It won't have a large effect on us, because we've sold most of our product for Brazil this year. So there's not a lot outstanding. But as a spot market, it could affect other markets. Then another thing that still needs to be seen has to do with China and in the Asian market, there is no China price. We didn't expect a China price before the end of the second quarter. At the same time, it's not clear when there will be a price and if there will be a price. So what happens in China could also have an effect on us. So I would say that out of the range, there's at least a significant part of the range that has to do with what will happen with Chinese prices, because we still have a few hundred thousand tons to sell to China this year. And the other less significant part of the range has to do with when does the change on part of our specialties come, how late in the second half of the year the recovery happens? And we think we can identify the range. But of course, it's not exact science. So there's some uncertainty there. So I would say in general, prices in China and Asia for potash in the latter part of the year and specialty recovery in the second half of the year. Those are the things that we knew from the outset would be there, and they're still there. It hasn't changed since the beginning of the year and our original guidance. I hope that helps.

Yes, that helps. Thank you.

Ben, this is Aviram. I think these are the main factors obviously articulated by Raviv. I'd like to draw your attention that also China as a market, we're also a manufacturer in China. It seems that we are on track. And that's what we factor in to deliver our budget for 2023. In China, the YPH part, again, the signs from China these days are good. Initially, the first quarter was on the vehicle side, on EV side was down, but it's picking up now. There's a lot of topics that relate to on China to the extent to which they opened their market, so that's maybe one more thing I would single out that we need to look at. And the final piece, which would give us quite a lot of comfort at this time is the phosphate side. We assume that it will continue to be strong, is currently very strong on the specialty side, and it is holding up.

You're right. I should have mentioned that our phosphate results are beyond our original budget. So that's the way that we made our budget in the first quarter.

Thank you. Our next question today comes from the line of Vincent Andrews from Morgan Stanley. Please go ahead.

Hello. Can you guys hear me now?

Yes, we can hear you.

Hi. This is Will Tang on for Vincent. Thanks for taking my question. You mentioned Boulby reaching record production this quarter even as maybe fertilizer demand more broadly seems weaker than expected. Can you talk about kind of the demand drivers for polysulphate which may be different from commodity fertilizers, and I guess the current profitability and the outlook for the business there?

The main drivers are good solubility, sulfur content, and the fact that it's an organic fertilizer. So more customers are getting to know the product and have gone through extensive field trials. So we can guarantee very good results. Having said that, it's not a gigantic market. It's less than 1 million tons a year. So fortunately for us, we're alone in that market and we're developing it well. And we see that as commodity prices are going down, the poly prices are going down marginally. Okay. There's a potash component. So that tends to cause some reduction in price. But in general, prices are holding up nicely. By the way, poly, it's not just the pure product. It's also a whole family of products that we call FertilizerPlus that we're developing, and we combine the polysulphate with other micronutrients and other characteristics.

Got you. And then maybe a different question here. But I guess, given the incident at ICL Iberia, what are your expectations for the production ramp-up schedule there? I think previously, last time you spoke on it and talked about maybe reaching 1 million tons run rate by the end of 2023. Has that changed at all? And then wondering if you could go into more detail on what you guys are expecting for that?

It hasn't changed. But at the same time, until we get there, we'll have some more pain. It has to do not just with the incident. This incident didn't take us back a lot other than make us feel terrible. What the real issue is the geology there. And the main thing that we have to get through is that we're working our way towards a mining area that's going to last for a very long time and is much more rich in mineral than where we currently are. And unfortunately, we've been working our way for the past year or so. We still have about 9 to 10 months until we get to where we want to get. So we're behind our ambitions all the time, and will for sure be below our higher expectations this year. But the other side of that is that even though we will be a few tens of thousands below, in terms of our overall sales forecast, it's not going to change because we started the year with the inventory. So we are going to be able to sell 4.7 million to 4.8 million tons that we forecast for the year.

Got it. That's super helpful. Thank you.

Thank you.

You have no further questions. Please proceed.

All right. So I just want to thank you all for participating in our call and continue to following us and give us your support. And we look forward to getting back to you next quarter and reporting on our results and continuing to deliver on our plans. Thank you very much, and take care.

Thank you very much.