Israel Chemicals Joins Fertilizer Boomers

LONDON - Israel Chemicals has joined the club of fertilizer and potash companies that have reported staggering growth in the second quarter, thanks soaring prices and strong demand from emerging markets.

The producer of potash and phosphate fertilizers and specialty chemicals rose 2.04 New Israeli Shekel (57 cents), or 3.4%, to 61.35 New Israeli Shekel ($17.15), after announcing that its net income increased more than five fold during the second quarter, soaring to $703.2 million, or 10 cents a share, from $129.0 million, or 54 cents a share, a year earlier. Analysts had been expecting net profits of around $485.0 million.

The company said a strong rise in the demand for potash and phosphates had helped offset rising raw material, energy and transportation costs, as well as the appreciation of the New Israeli Shekel against the American dollar. Total sales for the quarter more than doubled to $2.0 billion.

Israel Chemicals joins fertilizer producers, including Terra Nitrogen (nyse: TNH - news - people ), Potash Corp (nyse: POT - news - people ) of Saskatchewan, and Bunge (nyse: BG - news - people ) in reporting strong profits in the second quarter. (See "Fertilizer Stocks Sprout Gains.")

Demand for fertilizers has been booming as the world's population grows and becomes wealthier, particularly in emerging markets. This has left middle-class consumers with more money to spend on food, including products like meat, increasing demand for grains for animal feed when global supply is already tight. At the end of July, fertilizer-maker Mosaic (nyse: MOS - news - people ) said it expected demand for potash to grow by a further 7.0%, in 2009, with demand from India being a significant factor. (See "Potash Prices Push Higher.")

In a note to investors, Citigroup analyst Sophie Jourdier said Israel Chemical's "very strong" results had benefited from the sale of 200 kilo tons of potash and phosphate rock in inventories. According to Jourdier, the company also benefited from the long-term contracts it had with sulfur suppliers, which meant that it was largely immune to the nearly tenfold increase in sulfur prices over the past year.

Israel Chemicals (other-otc: ISCHF - news - people ) produces low-cost fertilizers and has benefited from its strong links to emerging markets in China, India and Brazil, which account for nearly half its annual sales.