Sales for 3Q19 were US$1325 million compared to US$1371 million for 3Q18. The decrease resulted mainly from the delay in the signing of potash supply contracts in China and India and negative foreign currency impacts. Operating income of US$201 million remained stable and adjusted EBITDA of US$307 million increased by 4% over 3Q18. The resilient performance is attributed to the stable business environment in ICL's specialty businesses, as well as cost controls, which offset the negative impact of exchange rates and the commodity market headwinds. The company’s focus on cash generation also led to strong operating cash flow of US$368 million, 88% higher than 3Q18.
The potash division's sales decreased by 8% in 3Q19, while operating income increased by 6% compared to 3Q18. A 10% decrease in potash sales volumes, attributed to the delay in the signing of supply contracts in China and India, and a US$3/t year-over-year decline in the average realised price of potash, which derived mainly from the devaluation of the euro against the dollar, were more than offset by lower operating costs, mainly lower costs in the Polysulphate® operations at ICL Boulby and lower energy costs attributed mainly to the new power plant in Sodom. Potash accounted for 25% of ICL's sales and 41% of adjusted operating income in 3Q19, compared to 27% of sales and 39% of adjusted operating income in 3Q18.
Phosphate specialties sales of US$290 million were approximately 4% lower than 3Q18, mainly due to lower customer demand for Dairy Proteins in China, together with the devaluation of the euro and the Chinese yuan against the US dollar. Adjusting for foreign exchange impacts, revenues of the division’s phosphate salts and phosphoric acids were marginally higher compared to 3Q18, as a slight decrease of approximately 1% in sales volumes was offset by higher prices.
Phosphate commodity sales amounted to US$218 million, 4% lower than 3Q18. The decrease derived from lower sales of phosphate fertilizers, partly offset by higher sales of green phosphoric acid and phosphate rock. The weak market conditions in phosphate commodities led to a decrease of 11% in phosphate fertilizers sales volumes to 543 000 t.
Phosphate solutions accounted for 37% of ICL's sales and 16% of adjusted operating income in 3Q19, compared to 37% of sales and 20% of adjusted operating income in 3Q18.
ICL’s President & CEO, Raviv Zoller, stated: “ICL's diversified portfolio, our strong specialty businesses and the focus we continue to place on containing costs and generating cash, are reflected in our solid third quarter and YTD results. Our performance is highlighted by the challenges we overcame this quarter, including the delay in the signing of potash supply contracts and significant headwinds from the commodity business environment, as well as the negative impact from exchange rates following the devaluation of the euro and the Chinese yuan, which harmed our top line, and the strong Israeli shekel, which impacted our costs.”
Zoller added: “In Q3 we continued to execute our strategy and achieved several important milestones. We signed long-term agreements with bromine customers in Asia, which are expected to contribute about US$110 million to our revenues beginning in 2021. In addition, we made a breakthrough in the fast-growing meat alternatives market with the signing of several supply agreements, based on our proprietary Rovitaris® technology. This breakthrough is attributed to ICL's unique capabilities in food specialties, which we will continue to leverage for future growth. According to plan, during the fourth quarter, we will be executing a facility upgrade project at our Dead Sea potash facilities, and while this project is expected to negatively impact our potash production and sales volumes in Q4, it will enable us to benefit from improved production and costs next year and beyond. In China, we are on track with our construction of a new pure phosphoric acid plant that will allow us to shift from commodity phosphates to specialty products. I am confident that ICL is well positioned to overcome the challenges we face in the commodity markets and well prepared to benefit from the opportunities that are emerging in our businesses.”