ICL Reports Q3 2015 Results

- Sales of $1.38B compared to $1.56B for Q3 '14 due to sales of non-core businesses, currency fluctuations and decreased sales volumes -

- Adjusted operating income of $242M compared to $262M for Q3 '14 as lower volumes and lower potash prices were partially offset by improved potash margins and contribution from phosphates and specialties operations -

- Continued strategic progress to strengthen ICL's global platform -

12 Nov, 2015, 06:45 ET from ICL

TEL AVIV, Israel, Nov. 12, 2015 /PRNewswire/ -- ICL (NYSE  & TASE: ICL), a global manufacturer of products based on specialty minerals that fulfills essential needs of the world's growing population in the agriculture, food and engineered materials markets, today reported its financial results for the third quarter ended September 30, 2015.

ICL's lower sales in the quarter stemmed primarily from the sale of non-core businesses, decreased sales volumes, mainly in the fertilizers segment, the devaluation of the euro against the dollar, the fire at the SSP facility at ICL Rotem and lower bromine, bromine compounds and magnesium products sales as a result of the ramp up period following the employee strike which concluded during the second quarter. Operating income was impacted by lower potash, phosphates and bromine products volumes, as well as lower potash prices, partially compensated by favorable currency rates, reduced operating costs, higher phosphate and bromine products prices, and lower costs for shipping, energy and labor.

Q3 Financial Highlights:


PRINCIPAL FINANCIAL RESULTS

THREE MONTHS ENDED SEPTEMBER 30


2015

2014


USD 
millions

% of

sales

USD 
millions

% of

sales






Sales

1,379


1,560


Operating income

197

14

262

17

Adjusted operating income *

242

-

262

-

Net income attributable to the
Company's shareholders

121

9

179

11

Adjusted net income
attributable to the Company's
shareholders *

154

-

179

-

Adjusted EBITDA*

339

-

354

-

Cash flows from current
operations

124


295


Adjusted EPS on a fully diluted
basis - $/share

$0.12


$0.14



*See adjusted EBITDA calculation and reconciliation between operating profit and adjusted operating profit in the Financial Appendix to this release.  

ICL's President & CEO, Stefan Borgas, stated, "The third quarter was marked by our major effort to compensate for lower potash prices by executing our operations at lower costs. We also benefited from the end of the strike at two of our Israeli facilities. We achieved major progress in our strategic efforts to widen and deepen our sources of raw materials as well as our global operating platform by finalizing the establishment of our large-scale phosphate JV in China which positions us strategically in the fast growing Asian market for phosphate fertilizers and other phosphate downstream products."

Mr. Borgas continued, "We also made the decision to expedite our transition from potash to Polysulphate at our ICL UK facility due to the latter's major potential and lower production costs, as well as our depleting economical reserves of potash at the UK mine, illustrates our sharp focus on evolving our global business to meet the challenges confronting us and to take advantage of market opportunities. We look forward to benefiting from our strategic progress in future quarters, including our acquisition activity and groundbreaking R&D efforts to create new markets for the minerals which we have access to, such as our new range of food additives based on whey proteins and our bromine-based energy storage battery, while ever mindful of the need to achieve maximal operating efficiency in order to maximize returns for our shareholders."

Implementation of Strategy
During or immediately following the third quarter, ICL reached several key milestones in its 'Next Step Forward' strategy by achieving progress related to several of its strategic growth initiatives. 

Operational excellence: During the quarter the company continued to execute on its cost-cutting efforts and to ramp up its operations following the strike in Israel earlier in the year. Bromine production levels are fully ramped up to targeted levels, and potash production levels at ICL Dead Sea are on track to achieve 3.9 million tonnes of annual production capability by year end. Efficiency plans are now in full force with positive results evident throughout the company.   

China: Completion of formation of phosphate JV: After the quarter, ICL completed the establishment of a joint venture with Yunnan Phosphate Chemicals Group, China's leading phosphate manufacturer. The joint venture ("YPH JV"), which includes a world‑scale phosphate rock mine producing about 2.5 million tonnes of phosphate per year together with large-scale activities in the phosphate sector, is expected to transform ICL into a leading player in the Chinese phosphate market. The YPH JV's global-level joint manufacturing platform includes activities across the value chain, from upstream mining and bulk sales of phosphates to the manufacture of downstream specialty products, as well as of phosphates for special applications in the food and engineered materials markets. The JV is expected to increase ICL's phosphate platform by 50%, secure its long-term phosphate resources, expand its phosphate end-to-end business model with a focus on Asia. The JV also includes R&D activities in China, and it is currently engaged in 11 R&D projects in the food, engineered materials, agro and process improvements. As a result, ICL will become the world's leading specialty phosphate player by improving the cost competitiveness of its phosphate operations.

The following table illustrates ICL's increased phosphate production capability following the formation of the YPH JV, including YPH JV's capabilities stemming from existing operations that were folded into the JV:     

Production capability

YPH JV

Total ICL***

Change (total ICL vs.
ICL pre-JV)

Phosphate Rock

2.5mt*

6.5mt

63%

Fertilizers

850kt**

2.7mt

45%

Specialty Fertilizers

115kt

895kt

15%

Phosphoric Acid

700kt

1.3mt

117%

Purified Phosphoric Acid

60kt

290kt

26%

     - Incl. Expansion Plans

160kt

410kt

64%

*   Million tonnes

** Thousands tonnes

*** Including 100% of the JV's production capability

UK: Transition to Polysulphate operation:  Following the quarter, ICL's Board decided on the gradual transition of ICL UK from its high-cost production of potash to lower-cost production of Polysulphate, of which there is estimated to be approximately 200 million tonnes of resources. The move stems from the company's lowered estimates of economically viable potash reserves at its UK mine, its estimation that it can increase its operating profits by focusing on the production and marketing the substantial market potential of Polysulphate. The mineral contains four nutrients, is environmentally friendly in its natural form, approved for organic agriculture and suitable for chloride sensitive crops. It is also used as a raw material in the production of specialty fertilizers. ICL is the world's sole marketer of Polysulphate. The Polysulphate is a unique, effective and cost-effective solution for sulphur-depleted soils. The competitive price of the fertilizer, in addition to its attractive profit margins, stems from the relatively low cost of its production process as the product requires no chemical intervention and is readily available at ICL's potash mine in the UK without requiring the need for additional major investment.  The company expects to cease production of potash at ICL UK by 2018 and intends to invest approximately £40 million to upgrade and adjust ICL UK's mining infrastructure to produce Polysulphate.  ICL is also evaluating an additional investment of £40 million to build a granulation facility specifically for Polysulphate. ICL, which entered the Polysulphate market in 2012, plans to improve its production capabilities and sales to the level of one million tonnes by 2020, with long-term potential for up to three million tonnes. As a result, the company expects to double its operating income at ICL UK by 2020 based on current prices and anticipated cost production volumes and cost structure.

Financial Results

Sales: For the third quarter of 2015, sales totaled $1.38 billion, compared with $1.56 billion in the prior-year, a decrease of 11.6%. The decrease was primarily related to sale of non-core businesses which led to a decrease in sales of approximately $84 million, currency devaluation against the dollar (mainly the euro devaluation) in the amount of approximately $74 million, a decrease in quantities sold, mainly fertilizers, in the amount of $42 million, a decline in sales due to the impact of the fire at ICL Rotem in the amount of approximately $33 million, and a decrease in sales volumes of bromine, bromine compounds and magnesium products as a result of the ramp up period following the employee strike at ICL Dead Sea and ICL Neot Hovav in the amount of $30 million. This decrease was partly offset by the first-time consolidation of acquired companies which led to an increase in sales of $65 million and an increase in selling prices, mainly of phosphate fertilizers, bromine-based flame retardants and elemental bromine which contributed $17 million

Reported operating income and adjusted operating income: Reported operating income for the third quarter of 2015 totaled $197 million, 24.8% less than $262 million recorded for the third quarter of 2014. Adjusted operating income for the third quarter of 2015 totaled $242 million, 7.6% less than $262 million for Q3 2014. Q3 2015 adjusted operating income excludes primarily the impact of the employee strike on the bromine and magnesium operations in the amount of $9 million, a provision for retroactive charges for electricity in the amount of $16 million, an expense relating to a damage caused to external contractors due to the strike in the amount of $8 million, a provision in the amount of $5 million in respect of prior periods resulting from an arbitration decision, a provision for legal claims in the amount of $5 million and the impact of the fire at Rotem net of insurance compensation in the amount of $2 million. (See table, "Adjustments to Reported Operating and Net Income" in the Appendix.)

Net income and adjusted net income: Net income for the third quarter of 2015 totaled $121 million compared to $179 million for the comparable period in 2014, a reduction of 32.4%. Adjusted net income for Q3 2015 was $154 million compared to $179 million for the Q3 2014, a reduction of 14%, mainly due to the decrease in operating profit and due to a $29 million increase in financial expenses mostly from changes in the fair value of financial derivatives and revaluation of net short‑term financial liabilities.

Cash flow: Cash flow from operating activities in Q3 was $124 million, a reduction of about $171 million versus the prior year. The decrease stemmed mainly from the decline in net income, an increase in working capital payment of royalties relating to prior periods and payments to retired employees. Cash flow used for investment in property, plant and equipment, investments, short term deposits and business combinations totaled $161 million, approximately $80 million lower than the prior year.

Segment Review

ICL Fertilizers

Key Developments:

  • Favorable cost developments: Potash adjusted operating profits grew as reduced costs for transportation, energy and labor, combined with increased production at ICL Dead Sea and ICL UK facilities and depreciation of the euro, Israeli shekel and the UK pound against the dollar more than offset lower sales volumes and prices. Lower costs at ICL Rotem in Israel helped to partially offset the impact of a recent fire at one of its facilities. Record production of phosphoric acid and near record production of phosphate rock during the quarter also contributed to lower costs per tonne for phosphate rock, phosphoric acid and phosphate fertilizers.
  • JV with China's YPH: Following the completion of the quarter, ICL completed the establishment of its joint venture with YPH, China's leading phosphate manufacturer in China. (See "Implementation of Strategy" above.)
  • Transition of ICL UK to Polysulphate production: During the quarter a re‑examination was made with respect to the economic viability of potash reserves at ICL UK, which resulted in a reduction in the potash ore reserves from 16.9 million tonnes of ore in December 2014 to 7.5 million tonnes as of September 30, 2015. This change is the result of continuing mining activities, changes in geological interpretation and no new conversion of resources to reserves from ongoing exploration activities. In light of the updated reserve estimates and assuming annual potash production capacity of about 600 thousand tonnes (MOP) and no conversion of resources into reserves, the potash production activities at ICL UK are expected to conclude in 2018. As a result, potash production facilities will be depreciated over a period that is three years shorter than the original estimate and, accordingly, depreciation expenses will increase by $12M per year until 2018 year end. Immediate restructuring, mainly through labor reduction, is expected to contribute $30 million annually, starting from 2H 2016. ICL UK operations will be transformed from high-cost potash production to lower-cost production of Polysulphate (See "Implementation of Strategy" above.).
  • Potash production at ICL Dead Sea: Following the resumption of production to pre-strike levels in Q3, annual potash production capability at ICL Dead Sea is expected to be fully ramped up to 3.9 million tonnes by year end.

Results of Operations
Below is a percentage breakdown of the segment's sales, reported and adjusted operating income for the quarter by areas of operation (before setoffs of inter-segment sales):


7-9/2015

7-9/2014


USD
millions

% of

sales

USD
millions

% of

sales






Sales





Potash

387

-

450

-

Fertilizers and Phosphate

380

-

424

-






Reported operating
income





Potash

114

29

131

29

Fertilizers and phosphate

31

8

37

9






Adjusted operating
income





Potash

135

35

131

29

Fertilizers and phosphate

39

-

37

 

-

Note: Sales in the ICL Fertilizers segment include sales of potash from Israel, Spain (ICL Iberia) and England (ICL UK), as well as sales of phosphate and specialty fertilizers mainly from Israel and Europe.

Potash:
The decrease in potash sales in the third quarter of 2015 compared to the corresponding quarter in 2014 stems from a decrease in quantities sold, the devaluation of the exchange rates of the euro and the pound against the dollar, and a decline in selling prices which led to a decrease in sales.

Decreased reported operating income in Q3 2015 stems primarily from a decrease in quantities sold, an expense relating to damage caused to external contractors due to the strike at ICL Dead Sea, a decline in selling prices, a provision for system-wide electricity costs in Israel relating to prior periods, the update of a provision for arbitration with respect to royalties relating to downstream products in respect of prior years, and increase in expenses in connection with implementing the Company's strategy, including the acceleration of depreciation at ICL UK, and a provision for legal claims. These were partly offset by a decrease in the cost of goods sold due to, among other things, lower sales volumes, lower shipping expenses, a decrease in energy expenses, lower labor costs, and the favorable impact of changes in currency exchange rates.

Potash – Production, Sales and Closing Inventories

Thousands of tonnes

7-9/2015

7-9/2014

Production

1,318

1,305

Sales to external customers

1,126

1,234

Sales to internal customers

76

84

Total sales (including internal sales)

1,202

1,318

Closing inventory

587

814

The quantity of potash sold to external customers in the third quarter of 2015 was lower than in the corresponding period last year mainly due to a decrease in quantities sold in the US and India. Production of potash in the third quarter of 2015 was higher than in the corresponding quarter last year due to an increase in production in the UK.

Potash – Average Selling Prices


7-9/2015

7-9/2014

1-9/2015

1-9/2014

2014

Average potash selling
price - FOB

283

302

287

291

293

Fertilizers and Phosphates:
The decrease in sales in the third quarter of 2015 is attributable to a decrease in quantities sold, mainly as a result of the fire at the SSP production facility at ICL Rotem, offset by the first‑time consolidation of companies acquired, and due to fluctuations in currency exchange rates (mainly as a result of devaluation of the euro against the dollar). This decrease was partly offset by an increase in selling prices of phosphate fertilizers.

The decrease in operating income from phosphate fertilizers in Q3 derives mainly from lower sales quantities, mainly due to the fire at ICL Rotem (net of first‑time consolidation of the financial statements of companies acquired), the provision for system‑wide electricity costs in Israel, an increase in raw‑material prices, primarily for specialty fertilizers and expenses related to the implementation of the Company's strategic process. This decrease was partly offset by an increase in selling prices and insurance compensation for the fire at ICL Rotem.

                                                                                                                                                                                                                                                                                                                                                                                                   

Fertilizers and Phosphates – Production and Sales

Thousands of tonnes

7-9/2015

7-9/2015

Phosphate rock



Production of rock

964

975

Sales *

301

194

Phosphate rock used for internal purposes

813

744

Fertilizers



Production

352

447

Sales *

372

440

* To external customers

The quantity of fertilizers sold in Q3 2015 was lower than in the corresponding period last year primarily due to a decrease in quantities sold to Brazil. Manufacture of phosphate fertilizers and production of phosphate rock in the third quarter of 2015 was lower compared with the corresponding period in 2014 as a result of the fire at ICL Rotem during Q2 2015.

Fertilizer market trends:

  • Business Environment: During the third quarter, a number of macroeconomic events negatively impacted the fertilizer market leading to recent announcements of curtailments by both large and minor potash suppliers. These events include a decline in economic growth and the recent crisis in China's stock market; a drop in oil prices; weakening of agricultural commodities prices; weakening of currencies of emerging markets against the dollar (primarily Brazil, India, China and countries in Southeast Asia); slower growth in developing markets, such as, Russia, Brazil and southeastern Asia; and high government debt, mainly in European countries. On the other hand, economic recovery has begun in the important markets of US and Germany.
  • Agricultural commodities: Based on data of the U.S. Department of Agriculture published on November 10, 2015, the grains stock-to-use ratio is expected to be about 22.9% for the 2015/2016 agricultural year, similar to 22.8% in the 2014/2015 agricultural year.
  • Chinese Market: Potash imports into China in the first nine months of 2015 reached 6.1 million tonnes, an increase of about 9% compared with the corresponding period last year.
  • Indian Market: Potash imports into India in the first nine months of 2015 amounted to about 3.3 million tonnes, an increase of about 7.7% compared with the corresponding period last year.
  • Brazilian Market: Potash imports into Brazil in the first nine months of 2015 amounted to about 6.5 million tonnes, a decrease of about 8% compared with the corresponding period last year. The decrease is attributed primarily to a decrease in prices of agricultural commodities and the impact of a devaluation of the Brazilian currency, together with limited availability of credit to farmers.
  • Potash Shipments and Market Demand in 2015: ICL estimates that overall potash demand in 2015 will decline compared with 2014, mainly due to lower demand in North America and Brazil. Moreover, in India and China a slowdown in imports was recorded towards the end of the third quarter and is expected to continue in the fourth quarter. In China, the main reason for the decline is due to imposition of VAT at the rate of 13%, which led to an increase in potash prices and uncertainty. In India, the slowdown stems from a devaluation of the local currency and a decrease in consumption due to a shortfall in the Monsoon rains. The slowdown in potash demand globally triggered a downward trend in potash prices, and led to recent announcements by a number of leading producers that they will cut back their levels of production.
  • Phosphate Fertilizers: Global demand for phosphate fertilizers decreased during the third quarter of 2015 mainly due to lower demand in India, the world's largest importer of phosphates, as a result of the devaluation of the rupee against the dollar, high inventory levels and lower than average Monsoon rains. Lower demand was recorded in Brazil as well. Imports of phosphates into Brazil in the first nine months of the year fell by 8% to 2.2 million tons (in P2O5 terms). Phosphate prices decreased moderately due to low demand and an increase in exports from China. Recently, there has been an increase in demand in the US, as the fall season application approaches. In China, imposition of VAT at the rate of 13% had an adverse impact on local demand for phosphate fertilizers, although recently there has been increased interest in anticipation of the fall season application.
  • Specialty Fertilizers: The results of operations in specialty fertilizers were unfavorably impacted by continued competitive pressure and macroeconomic conditions.

ICL Industrial Products 
Key Developments:

  • Bromine and Bromine Compounds Production: Full production ramp up to targeted levels achieved at the end of Q3.
  • Bromine and Bromine Derivatives Prices: ICL continues to be focused on expanding margins via cost reduction and increased prices. In Asia bromine and derivative prices are up versus last year as we continue with the implementation of our previously announced price increases.  Higher prices are also supported by reduced imports and stricter hazardous materials handling regulation by the Chinese authorities following the Tianjin port explosion. Bromine compounds prices in Asia were also supported by the increase in bromine prices.
  • ICL expects further margin improvement as the price increases become effective as contracts allow for Q4 2015 and 2016.
  • Bromine-based Battery for Energy Storage: ICL deployed a bromine-based battery developed by Primus Power that incorporates proprietary ICL-IP electrolyte technology. Located at ICL PP's Rancho Cucamonga, CA Fire Safety plant. the battery represents another  step in ICL's commitment to developing energy storage technologies and a promising new application for bromine. Bromine-based battery technology is ideally suited for the long-duration stationary market, and can help to efficiently and effectively store electricity, enabling power to be deployed when it is needed most.  The company anticipates that its deployment of the battery will yield a 16% reduction in the facility's annual electrical expenses via "peak shaving" with no impact on its operations. The development of the battery is among a number of applications in ICL IP's R&D pipeline which could create significant potential for growth in bromine demand.  
  • Polymeric Flame Retardants: There has been an increase in demand for FR122P, the new polymeric flame retardant used in insulation materials in the construction sector, as insulation materials producers in Europe replace HBCD. Albemarle and ICL have terminated their agreement for a proposed manufacturing joint venture of the product. Nevertheless, the parties intend to discuss a long-term supply arrangement pursuant to which ICL would supply the product to Albemarle.

Results of Operations:








7-9/2015

7-9/2014



USD

millions

% of

sales

USD

millions

% of

sales








Sales*

282

20**

328

21


Reported
operating income
(loss)

28

10

36

11***


Adjusted
operating income

36

-

36

11***


* Including revenues from inter-segment sales


** Percentage of the company's total sales


*** Percentage of the segment's total sales.

The decrease in sales in the third quarter stems from the impact of the ramp up period following the strike at ICL Neot Hovav and ICL Dead Sea, a decrease in quantities sold not derived from the strike, mainly of bromine‑based flame retardants, and the impact of the currency exchange rates, partly offset by an increase in selling prices, mainly of elemental bromine and bromine flame retardants.

Reported operating income in the third quarter of 2015 was impacted by the ramp up period following the strike at ICL Neot Hovav and at ICL Dead Sea and a provision for a legal claim. Adjusted operating income was favorably impacted, mainly by an increase in selling prices of bromine‑based flame retardants, and a decrease in energy and raw‑material prices, offset by the mix of the products sold and a decline in quantities produced and sold.

Market trends:

  • Bromine-based Flame Retardants: During the third quarter of 2015, a trend of declining demand for bromine‑based flame retardants for the printed circuit board market was discernable compared with 2014. This stemmed mainly from the economic situation in China and postponement of purchasing as a result of a fall in BPA (bisphenol A) prices while TBBA prices remained relatively stable at elevated levels. Demand in the television market weakened due to the general economic conditions and inventory destocking along the supply chain. In addition, demand has decreased for other bromine‑based products as a result of the weakening of demand in the Agrochemicals markets and strong competition in the polyester fibers industry. On the other hand, demand for flame retardants in the market for connectors for electricity and vehicles remained stable.
  • Phosphorus-based flame retardants: During Q3, sales of phosphorous‑based flame retardants were unfavorably impacted by the weakening of the euro against the dollar and as a result of an increase in competition from Chinese manufacturers.
  • Clear brine fluids: During the quarter there was relatively high demand for clear brine fluids for oil drilling, in light of demand in Africa, South America and the Gulf of Mexico, as opposed to a slowdown in the North Sea area. ICL anticipates demand for clear brine fluids to weaken as a result of the drop in oil prices.
  • Mercury emission control: During the quarter growth was recorded in sales of bromine compounds for mercury emission control (the company's Merquel product) as more power plants are treating their mercury emissions. 

ICL Performance Products 
Key Developments:

Excluding non-core activities which were fully divested in the first half of the year, sales and operating profit demonstrated growth supported by the successful integration of Prolactal's whey protein business and strong sales of forest fire prevention products.

Advanced Additives: lower sales due to competitive pressure in the US were partially offset by strong fire safety sales in North America and strong acid sales in Europe

Forest fire prevention products: Demand significantly increased due to historically high fire activity in Canada and the northwestern US during the third quarter, as well as a significant increase in customers' tanker capacity in the US.

Results of Operations:






7-9/2015

7-9/2014



USD

millions

% of

sales

USD

millions

% of

sales


Sales*

419

      30**

451

    29**


Operating income

59

 14***

66

 15***


* Including revenues from inter-segment sales






** Percentage of the company's total sales






*** Percentage of the segment's total sales





The decrease in sales is attributed to the sale of non‑core businesses, devaluation of the euro and the Brazilian real against the dollar and a decline in selling prices, offset by an increase in quantities sold, including the first‑time consolidation of companies acquired.

The decline in operating income in the third quarter stems mainly from the sale of non-core businesses, a decline in selling prices, an increase in shipping expenses and an increase in operating expenses in connection with update and implementation of the Company's strategic plan and additional processes offset by increased quantities sold and a decline in raw-material and energy prices.    

Market trends and other developments:

  • Food Specialties: Sales were favorably impacted during the third quarter as a result of the integration of Prolactal. This was partly offset by lower sales in Eastern Europe, the financial crisis in Russia and weaker sales in North America as large food companies experienced slower sales as consumer preferences and the market become more diversified. ICL Food Specialties' continues implementing its strategy targeted to meet consumer demand for healthier food with higher protein content while maintaining favorable texture and stability.
  • Advanced Additives: Demand for ICL's Advanced Additives remained relatively stable in the third quarter. The US phosphoric acid market continues to experience competitive price pressure from increased imports from China. An upcoming ban of STPP used in automatic dishwasher detergents in Europe has resulted in reformulations and a decline of STPP volumes. Sales of phosphoric acid were favorably impacted by the contribution of Fosbrasil which was acquired at the end of 2014.
  • P2S5: ICL PP's P2S5 business declined from the prior year primarily due to lower volume as a result of maintenance shutdowns in Europe, which are expected to impact North America in the fourth quarter, as well as a generally weaker market.

Dividends
The Company's Board of Directors today declared that a dividend totaling $84 million, or $0.07 per share, will be paid on December 15, 2015, in respect of its third quarter 2015 results.

About ICL
ICL is a global manufacturer of products based on specialty minerals that fulfill humanity's essential needs primarily in three markets: agriculture, food and engineered materials.

ICL produces approximately a third of the world's bromine, and is the sixth largest potash producer, as well as the leading provider of pure phosphoric acid. It is a major manufacturer of specialty fertilizers, specialty phosphates and flame retardants. ICL's mining and manufacturing activities are located in Israel, Europe, the Americas and China, and are supported by global distribution and supply networks.

The agricultural products that ICL produces help to feed the world's growing population. The potash and phosphates that it mines and manufactures are used as ingredients in fertilizers and serve as an essential component in the pharmaceutical and food additives industries. The food additives that ICL produces enable people to have greater access to more varied and higher quality food. ICL's water treatment products supply clean water to millions of people as well industry around the world. Other substances, based on bromine and phosphates help to create energy that is more efficient and environmentally friendly, prevent the spread of forest fires and allow the safe and widespread use of a variety of products and materials.

ICL benefits from a number of unique advantages, including its vertically integrated activities and complementary and synergistic downstream operations for the production of unique end products; its balanced and varied product portfolio in growing markets; broad presence throughout the world and proximity to large markets, including in emerging regions.

ICL operates within a strategic framework of sustainability that includes a commitment to the environment, support of communities in which ICL's manufacturing operations are located and where its employees live, and a commitment to all its employees, customers, suppliers and other stakeholders.

ICL is a public company whose shares are dual listed on the New York Stock Exchange and the Tel Aviv Stock Exchange (NYSE and TASE: ICL). 46% of ICL's equity is held by Israel Corp., 13.8% by Potash Corporation of Saskatchewan and the remainder by the public. 

The company employs approximately 14,000 people worldwide, and its sales in 2014 totaled US $6.1 billion. For more information, visit the company's website at www.icl-group.com.

Forward Looking Statement

This press release contains statements that constitute "forward-looking statements", many of which can be identified by the use of forward-looking words such as "anticipate", "believe", "could", "expect", "should", "plan", "intend", "estimate" and "potential" among others. Forward-looking statements include, but are not limited to assessments and judgments regarding macro-economic conditions and the Group's markets, operations and financial results, including the production levels at ICL Dead Sea ;the estimated resources of Polysulphate, estimated investments in ICL UK's infrastructure to produce Polysulphate, estimated sales of Polysulphate products, the impact on ICL UK's operating income and the expected contribution of restructuring in ICL UK; and the estimates regarding the net impact of the revised Sheshinski recommendations. Forward-looking assessments and judgments are based on our management's current beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, market fluctuations, especially in ICL's manufacturing locations and target markets ;the difference between actual resources and our resources estimates ;changes in the demand and price environment for ICL's products as well as the cost of shipping and energy, whether caused by actions of governments, manufacturers or consumers ;changes in the capital markets, including fluctuations in currency exchange rates, credit availability, interest rates ;changes in the competition structure in the market; and the factors in "Item 3. Key Information—D. Risk Factors" in the Company's annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on March 20, 2015 Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update or revise them or any other information contained in this press release, whether as a result of new information, future developments or otherwise.

ADJUSTED EBITDA FOR THREE MONTHS AND NINE MONTHS
ENDED SEPTEMBER 30







Calculation of adjusted EBITDA was made in millions of dollars, as follows:








7-9/2015

7-9/2014

1-9/2015

1-9/2014

2014

Net income attributable to the Company's shareholders

121

179

413

378

464

Depreciation and amortization

90

87

257

264

356

Financing expenses, net

49

20

79

91

157

Taxes on income

34

68

139

130

166

Non-recurring items*

45

-

148

174

202

Total adjusted EBITDA

339

354

1,036

1,037

1,345







(*) We disclose in this report financial measures entitled Adjusted EBITDA, Adjusted operating income and Adjusted net income attributable to the Company's shareholders. We use Adjusted EBITDA, Adjusted operating income and Adjusted net income attributable to the Company's shareholders to facilitate operating performance comparisons from period to period. Adjusted EBITDA is defined as the net income to Company shareholders plus depreciation and amortization plus financing expenses, net and taxes on income and plus certain items as presented in the reconciliation table on page 6 of the company's financial reports, which were adjusted for the operating income and net income attributable to the Company's shareholders.

We believe Adjusted figures facilitates company‑to‑company operating performance comparisons by backing out potential differences caused by variations such as capital structures (affecting financing expenses, net), taxation (affecting taxes on income) and the age and book depreciation of facilities, equipment and intangible assets (affecting relative depreciation and amortization), which may vary for different companies for reasons unrelated to operating performance. Adjusted figures are non‑IFRS measure for reporting our total Company performance. Our management believes, however, that disclosure of Adjusted figures provides useful information to investors, financial analysts and the public in their evaluation of our operating performance. Adjusted figures should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, operating income or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of our profitability or liquidity. Adjusted EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, Adjusted figures, as presented in this report, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

ADJUSTMENTS TO REPORTED OPERATING AND NET INCOME

FOR THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30








7-9/2015

7-9/2014

1-9/2015

1-9/2014

2014

Operating income reported GAAP figures

197

262

619

583

758

Employees strike impact  

17

-

265

24

17

Capital gain from divestitures of non-core businesses

-

-

(223)

-

-

Impairment of assets in U.S and Europe

-

-

34

-

71

Early retirement provision

-

-

42

-

-

Income from entry into consolidation

-

-

(7)

-

(36)

Provision in respect of prior periods resulting from
an arbitration decision

5

-

5

149

149

Fire at Rotem plant

2

-

12

-

-

Electricity retroactive charges

16

-

12

-


Provision for legal claim

5

-

8

-


Other




1

1

Total adjusted operating income

242

262

767

757

960

Financing expenses, equity in results of
investees and taxes, including the tax impact
of the adjustments

88

83

244

176

265

Total adjusted net income

154

179

523

581

695

 

ICL CONSOLIDATED STATEMENT OF INCOME



Three Months Ended

Nine Months Ended


September 30

September 30


2015

2014

2015

2014






Sales

$    1,379

$      1,560

$      3,978

$      4,708

Cost of sales

891

982

2,708

3,025

Gross Profit

488

578

1,270

1,683

Selling, transportation and marketing

(166)

(216)

(472)

(645)

General and administrative

(83)

(78)

(237)

(226)

Research and development

(21)

(23)

(57)

(67)

Other (expenses) income

(21)

1

115

(162)

Operating Income

197

262

619

583

Financing expenses, net

(49)

(20)

(79)

(91)

Share in earnings of equity-accounted investees

8

7

13

19

Income Before Income Taxes

156

249

553

511

Provision for income taxes 

(34)

(68)

(139)

(130)

Net Income 

122

181

414

381

Attributable to the non-controlling interest

(1)

(2)

(1)

(3)

Attributable to the shareholders of the company

$       121

$         179

$         413

$         378

Net Income per Share





Basic

$      0.10

$        0.14

$        0.33

$        0.30

Diluted

$      0.10

$        0.14

$        0.33

$        0.30






Dividends Declared per Share 

$      0.07

$        0.10

$        0.23

$        0.21

 

ICL CONDENSED CONSOLIDATED STATEMENTS

OF FINANCIAL POSITION



September 30,

December 31,

As at

2015

2014




Assets



Current assets



Cash and short term investments

$                  293

$               247

Trade receivables 

883

1,039

Inventories 

1,184

1,335

Prepaid expenses and other current assets

324

519


2,684

3,140

Non-current assets



Property, plant and equipment 

4,013

3927

Investments in equity-accounted investees

164

185

Other assets

302

293

Intangible assets

1,031

803

Total Assets

$               8,194

$            8,348







Liabilities



Current liabilities



Short-term debt and current portion of long-term debt

$                  501

603

Trade payables

544

585

Derivatives and other accured charges

532

781

Current tax liabilities

83

36


1,660

2,005

Non-current liabilities



Dbentures and other long term debt

2,460

2303

Deferred income tax liabilities

339

260

Employee benefits

584

659

Other non-current liabilities and deferred credits 

120

121

Total Liabilities

5,163

5,348




Shareholders' Equity

3,005

2974

Non-controlling interest

26

26

Total Liabilities and  Equity

8,194

8,348

 

ICL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended

Nine Months Ended


September 30

September 30


2015

2014

2015

2014






Operating Activities





Net income

$        122

$          181

$            414

$             381

Depreciation and amortization

90

87

301

264

Other adjustments to reconcile net income to cash provided by





operating activities 

(9)

(47)

(110)

(36)

Changes in non-cash operating working capital 

(79)

74

(90)

(26)

Cash provided by operating activities

124

295

515

583






Investing Activities





Additions to fixed and intangible assets

(164)

(207)

(469)

(655)

Business acquisitions, net of cash acquired

-

(16)

(188)

(88)

Other investment activities

3

(18)

428

(5)

Cash used in investing activities

(161)

(241)

(229)

(748)






Financing Activities





Proceeds from long-term debt obligations

140

153

802

1,001

Repayment of long-term debt obligations

(2)

(100)

(685)

(284)

Dividends paid to shareholders

(53)

(47)

(263)

(720)

Short term credit from banks and others, net

(57)

(38)

(49)

180

Cash used in financing activities

28

(32)

(195)

177

Increase (Decrease) in Cash and Cash Equivalents

(9)

22

91

12

Cash and Cash Equivalents, Beginning of Period

231

178

138

188

Net effect of currency translation on cash and cash equivalents

(10)

(11)

(17)

(11)

Cash and cash equivalents included  as part of assets held for sale


(12)


(12)

Cash and Cash Equivalents, End of Period

$        212

$          177

$            212

$             177

 

PRESS CONTACT     




INVESTOR RELATIONS CONTACT    






Amiram Fleisher                      




Limor Gruber 

Fleisher Communications  




Head of Investor Relations, ICL

+972-3-6241241                         




+972-3-684-4471     

amiram@fleisher-pr.com                




Limor.Gruber@icl-group.com

SOURCE ICL



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