Investor Presentation. April 2018

Transcription

1 Investor Presentation April 2018

2 Safe Harbor This Presentation (references to which and to any information contained herein shall be deemed to include information which has been or may be supplied in writing or orally in connection herewith or in connection with any further enquiries) is provided for the sole purpose of providing general information to assist the recipient in deciding whether it wishes to proceed with a further investigation for investing in Israel Chemicals Ltd. and/or its affiliates (hereinafter jointly referred to as the Company or ICL ). This Presentation shall not form the basis of, or be relied upon in connection with, any contract or commitment whatsoever, and it does not purport to be comprehensive or to contain all the information that the recipient may need in order to evaluate the Company and/or its assets. No representation, warranty or undertaking, express or implied, is given by ICL and/or any member of the ICL Group or their respective directors, officers, employees, agents, representatives and/or advisers as to or in relation to the accuracy, completeness or sufficiency of the information contained in this Presentation or as to the reasonableness of any assumption contained therein. To the maximum extent permitted by law, the Company and its respective directors, officers, employees, agents, representatives and/or advisers expressly disclaim any and all liability which may arise from this Presentation and any errors contained therein and/or omissions therefrom or from any use of this Presentation or its contents or otherwise in connection therewith. No representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any valuations, forecasts, estimates, opinions and projections contained in this Presentation. In all cases, recipients should conduct their own investigation of any analysis of the Company and/or its assets and the information contained in this Presentation. Nothing in this Presentation constitutes investment advice and any opinions or recommendations that may be contained herein have not been based upon a consideration of financial situation or particular needs of any specific recipient. Any prospective investor interested in buying Company s securities or evaluating the Company and/or its assets is recommended to seek its own financial and other professional advice. This Presentation and/or other oral or written statements made by ICL during its presentation or from time to time, may contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Whenever words such as "believe," "expect," "anticipate," "intend," "plan," "estimate", predict or similar expressions are used, the Company is making forward-looking statements. Such forward-looking statements may include, but are not limited to, those that discuss strategies, goals, financial outlooks, corporate initiatives, existing or new products, existing or new markets, operating efficiencies, or other non-historical matters. These forward-looking statements and projections are not guarantees of future performance and are subject to a number of assumptions, risks, projections and uncertainties, many of which are beyond the Company s control, which could cause actual results, performance or achievements to differ materially from those described in or implied by such statements or projections. Because such statements deal with future events and are based on ICL s current expectations, they could be impacted or be subject to various risks and uncertainties, including those discussed in the "Risk Factors" section and elsewhere in our Annual Report on Form 20-F for the year ended December 31, 2017, and in subsequent filings with the Tel Aviv Securities Exchange (TASE) and/or the U.S. Securities and Exchange Commission (SEC). Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can provide no assurance that expectations will be achieved. Except as otherwise required by law, ICL disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events or circumstances or otherwise. Readers, listeners and viewers are cautioned to consider these risks and uncertainties and to not place undue reliance on such information. Certain market and/or industry data used in this Presentation were obtained from internal estimates and studies, where appropriate, as well as from market research and publicly available information. Such information may include data obtained from sources believed to be reliable, however ICL disclaims the accuracy and completeness of such information which is not guaranteed. Internal estimates and studies, which we believe to be reliable, have not been independently verified. We cannot assure that such data is accurate or complete. Included in this presentation are certain non-gaap financial measures, such as Adjusted Operating income and Adjusted Net income, designed to complement the financial information presented in accordance with GAAP because management believes such measures are useful to investors. These non-gaap financial measures should be considered only as supplemental to, and not superior to, financial measures provided in accordance with GAAP. Please refer to our Annual Report on Form 20-F for the year ended December 31, 2017 filed with TASE and the SEC for a reconciliation of the non-gaap financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with GAAP. 2

3 Corporate Overview

4 Potash & Magnesium Leading Global Fertilizer and Specialty Minerals Company Essential Minerals Segment Phosphate Agriculture Specialty Fertilizers ICL Industrial Products Specialty Solutions Segment Advanced Additives Industrial Food Specialties 2017 SALES**** $5,109M 2017 ADJUSTED OPERATING INCOME**** $526M 2017 FREE CASH FLOW $405M 2017 SALES BY BUSINESS LINE * &**** Specialty Solutions (Industrial) Industrial Products 22% Food Specialties 11% Advanced Additives 10% Specialty Fertilizers 12% Phosphates 19% Potash & Mg. 25% Essential Minerals (Agro) 2017 OPERATING INCOME BY BUSINESS LINE (US$ M) ** &**** Industrial Products 303 Food Specialties Specialty 51 Fertilizers 56 Advanced Additives 85 Potash & Mg 282 Phosphates, 23 Note: Sales and operating income according to Organizational Structure as of Q All numbers are rounded. * Before setoffs and inter-segment eliminations. ** Before G&A expenses. *** Calculated based on average Market Cap. For full year MARKET CAP (March 25) $5.36bn DIVIDEND YIELD*** 3.3% EMPLOYEES DEC 2017 ~12,500 4

5 ICL management Over 300 years of ICL experience Johanan Locker, Executive Chairman 2 year in ICL Asher Grinbaum, Acting CEO 42 years in ICL Kobi Altman, CFO 3 years in ICL Osi Sessler, SVP ICL Israel & IR 14 years in ICL Charles Weidhas, COO 10 years in ICL Ofer Lifshitz, President, ICL Essential Minerals Eyal Ginzberg, 21 years in ICL SVP, Global Technology Officer 20 years in ICL Rani Loebenstein, SVP, Global CR 3 years in ICL Yakir Menashe, EVP Global HR 11 years in ICL Lisa Haimovits, SVP General Counsel & Company Secretary 8 years in ICL Eli Glazer, President, ICL Specialty Solutions 34 years in ICL Hezi Israel, EVP BD & Strategy 10 years in ICL Noam Goldstein, EVP Potash & Magnesium 31 years in ICL Yakov Kahlon, EVP Phosphates 21 years in ICL Eli Amon, EVP Specialty Fertilizers 26 years in ICL Alon Gil, EVP Sales, Marketing & Logistics 23 years in ICL Anat Tal, EVP Industrial Products, 25 years in ICL James Moffatt, EVP Advanced Additives 12 years in ICL 5 5

6 ICL Today AGRICULTURE Semi- Specialty Fertilizers Specialty Fertilizers Phosphate Potash Advanced Additives Food Specialties Industrial Products INDUSTRIAL 6 6

7 Diversified Company, Integrated Along the Value Chains 7 7

8 Our Strategic Direction Core Minerals Advanced Crop Nutrition 8

9 ICL Essential Minerals Profile 2017 FINANCIALS $3.0Bn 2017 SALES* $359M 2017 OPERATING INCOME** OF ICL SALES IN 2017*** 56% 44% 56% 2017 SALES VOLUME Potash Phosphate Fertilizers Polysulphate 2017 PRODUCTION Potash Phosphate Rock Phosphate Fertilizers 5,039 K ton 2,291 K ton ~300 K ton 4,773 K ton 4,877 K ton 2,094 K ton * Before setoffs and inter-segment eliminations. ** Before G&A expenses. Before setoffs and inter-segment eliminations. *** Proforma after divestments of fire safety and P2S5 businesses All numbers are rounded SALES* BY BUSINESS LINE 22% 34% Potash & Magnesium Specialty Fertilizers EMPLOYEES WORLDWIDE ~ 7,600 Essential Minerals Specialty Solutions 44% Phosphate 9

10 Mineral Asset Base: Low Cost Dead Sea Production A high quality and practically inexhaustible source of potash, bromine and magnesium Low cost Near-infinite reserve life Logistical advantages: stockpiling ability, geographical position Operational excellence measures to increase production to million tonnes Short mine-to-port distances, proximity to emerging markets US Europe IL China India Brazil 10

11 Mineral Asset Base: Potash, Phosphate and Polysulphate TM Sites Potash and Polysulphate TM : ICL Iberia, ICL UK Logistical advantages: focus on domestic markets, close to ports, hub centre in Europe Synergies and optimization within production sites Cost per tonne reduction Optimization measures: ICL UK shift to polysulphate, labor reduction of ~50% compared to 2015 Significant reduction in loss expected in 2018, profitability from 2020 ICL Iberia site consolidation, logistics upgrade, 2018 efficiency plan to include labor reduction Phosphates: ICL Rotem, YPH JV Backward integration to Specialty Solutions Optimization measures: Cost reduction through efficiency and operational excellence (maintenance, production process, energy) Early retirement plans Shift to specialties Rock production optimization Significant reduction in the JV s operating loss in 2017, breakeven expected for

12 Optimization Measures to Reduce Costs and Maintain Production Optimization ~10-15% Reduction in potash cost per tonne over 5 Years ~5M Tonne Maintain stable Potash production Shift Phosphate and UK to Specialty 12

13 Polysulphate as a Flagship of Our Semi-Specialty Business A PREMIUM NICHE FERTILIZER WITH UNIQUE BENEFITS Mineral Attributes ICL s Advantages Sole producer Existing infrastructure 15% Other Market position Multi-nutrients Extended Availability Natural fertilizer 14% K 6% Mg 17% Ca 48% S Market Demand Outlook K Tonnes 3,000 2,000 1, LT potential 13

14 From One Mineral to A World of Value Added Products Polysulphate PK PluS Polysulphate NPK+Poly NPK+Micro NPS+Zinc NPS Potash Plus NPK + Coated PK PluS Polysulphate NP-APP SOP+ Poly NPK+Poly NPK+Micro NPS+Zinc NPS Potash Plus NPK + Coated PK PluS Polysulphate Granulated MOP NP-APP SOP+ Poly NPK+Poly NPK+Micro NPS+Zinc NPS Potash Plus NPK + Coated PK PluS Polysulphate Granulated MOP+Zinc Granulated MOP NP-APP SOP+ Poly NPK+Poly NPK+Micro NPS+Zinc NPS Potash Plus NPK + Coated PK PluS Polysulphate E 2019E 2020E 2021E 14

15 Semi-Specialty Growth Target Growth From ~$100M to ~$400M Increase in Semi-Specialty sales within 5 years 15

16 ICL Specialty Fertilizers Profile OPTIMAL PLANT NUTRITION: LESS IS MORE! Foliar Fertilizer EMPLOYEES WORLDWIDE FY2017 RESULTS $692M $56M SALES** OPERATING INCOME*** ~ 900 Fertigation/ Soluble Fertilizers REVENUE BY GEOGRAPHIES* REVENUE BY MARKET SEGMENT* Controlled Release Fertilizers MEAI 25% Americas 17% Horticulture & Turf 28% Europe 47% ASIAPAC 11% Specialty Ag. 62% Chemicals & other 10% * FY2017 ** Before setoffs and eliminations. *** Before G&A expenses. 16

17 Fast Growing Industry Driven by Global Trends Controlled Release Fertilizers Soluble Fertilizers Market Dynamics (Mt) Potential market by 2026: 4.5 Mt Market Dynamics (Mt) Potential market by 2026: 5.7 Mt China share of the growth: ~70% 10% China share of the growth: ~40% 6 % Potential 10yr Growth Potential 10yr Growth Source: IFA publications, RAMS & Co analysis 17

18 Global Trends Driving Shift Towards Specialty Fertilizers Regulatory Pressure Environmental Trends Changing Food Chain Population growth, urbanization & reduction in arable land per capita New Grower Practices 18

19 Our Strengths Leader in Key Markets Access to P and K resources, unique access to Polysulphate Wide Portfolio with well established brands & unique products Profound agronomic knowledge & strong professional sales force Advanced P and K chemistry Advanced and flexible manufacturing technologies Efficient Supply Chain 19

20 Building Leadership in Advanced Crop Nutrition Solutions R&D Infrastructure Precision Ag Business Development 20

21 Leveraging Precision Ag to Grow sales Digitization of Farms -Sensing, Analytics and Connectivity Solutions Big data insights New products New customers Prediction Models: Pest Out Water Stress Yield Weather Sensing Prediction Software Platforms ERP Farm Management Agronomy Digital Ag: Reduce Inputs & Increase Yield Equipment Autonomous Task Assist or Replacement Aerial Imagery Drones Satellites a More sales Crop Soil Sensors Moisture ph Temperature 21

22 Digital Package to Enhance Sales Mobile App Remote sensing of nutrient deficiencies Data analytics used to offer tailored products Integration of data to an Ag platform In-soil temperature sensor Prescription tool: what fertilizer to apply when? 22

23 Specialty Fertilizers Growth Targets Growth through Leadership in Advanced Crop Nutrition Create best-in-class innovative platform Over $1BN Sales within 5 Years Improve Operating Margin 23

24 ICL Specialty Solutions Profile 2017 MAIN FINANCIAL RESULTS*** SPECIALTY SOLUTIONS SALES DISTRIBUTION*** $2.4B SALES* NA 29% EMEA 36% $438MOPERATING INCOME** % SALES BY BUSINESS UNIT*** Food Specialties Industrial Products Advanced Additives 25% 51% 24% EMPLOYEES WORLDWIDE ~ 3, PHOSPHATE VALUE CHAIN SALES* Phosphate Food Additives 36% Food Specialties Phosphate Acids 26% Industrial Phosphates * Before setoffs and eliminations 17% ** Before G&A expenses *** Proforma adjusted for divestment of fire safety and P2S5 businesses All numbers are rounded SA 8% Advanced Additives 2017 IP SALES BREAKDOWN Specialty Minerals Phosphorus Compounds 19% 14% Industrial Products 27% 40% Asia/Pacific 27% Brominated FRs Other Brominated Solutions 24

25 ICL Bromine Value Chain Main Strengths A high quality and practically inexhaustible source of bromine Low cost Near-infinite reserve life Compound business with full backward integration to elemental bromine largest iso-tank fleet in the world Largest elemental bromine and bromine compound producers globally The Dead Sea provides the highest concentration of Bromine The Largest capacity (KMT)* Global Bromine Capacity, by producer 2016 Bromine demand by industry Market utilization rates: 70-80% Other Biocides 7% Mercury Control 4% China USA (ALB & LXS) ALB (Dead Sea) ICL (Dead Sea) Clear brine fluids 15% Brominated organic intermediates & Industrial 34% Flame Retardants 41% * Source: ICL estimates, MarketsandMarkets

26 Strong Market Position A Robust Base For Our Future Highest concentration of Bromine in the World Full phosphate chain from Rock to Salts: largest global merchant marketer of Purified Phosphoric acid Variety of single, multi blends and agglomeration technology in food ingredients 26

27 Continuous Quest For Global Opportunities Value over volume in phosphate specialties as done in the bromine value chain Potential in China dilution of bromine resources and environmental regulation; grow WPA and salts Drive innovation based on global trends Bolt on acquisitions 27

28 Specialty Solutions Segment Long-Term Targets Maintain strength. Provide stability. Outgrow the market Expand margins 28

29 ICL in the Future Semi- Specialty Fertilizers Specialty Fertilizers Phosphate Advanced Additives Potash Food Specialties Industrial Products 29 29

30 Financial Overview

31 Other Data Essential Minerals Specialty Solutions Total Q4 and FY2017 Business Performance Strong Q4 and full year performance: Growth of 20% in adjusted operating income (~160% in Q reported operating income) supported by the recovery in the potash market and G&A reduction FY 2017: stable sales, operating margins expansion and higher free cash flow generation, despite continuous challenging commodity business environment Execution of prudent capital allocation and successful divestments, contributed to solid financial position $ millions FY2017 FY2016 Q Q Total Sales** 5,109 5,118 1,361 1,338 Reported Operating Income 503 (87) Adjusted Operating Income Specialty Solutions Sales*** 2,341 2, Specialty Solutions Operating Income* Essential Minerals Sales*** 3,008 3, Essential Minerals Operating Income* Free cash flow**** External potash sales (thousand tonnes) 4,687 4,818 1,375 1,632 Average potash selling price - FOB Note: See Adjusted Operating Income and Net Income Reconciliation in the Q press release for a reconciliation of Adjusted operating income to operating income and Adjusted net income to net income. Numbers may not add up due to rounding and set offs. Annual numbers are presented as pro forma after adjusting for divestment of fire safety and P2S5 businesses * Operating income attributed to segments before G&A and other expenses. ** Total Sales include sales from Specialty Solutions, Essential Minerals, Other Activities, and Eliminations. *** Segment Sales before setoffs and inter-segment eliminations. **** Free cash flow =operating cash flow purchases of property, plant and equipment and intangible assets + dividends from equity-accounted investees (also included in other ). 31

32 Prudent Capital Management Leading to Strong Cash Flow Generation We Exercise Strict CapEx* Management While Still Investing in Future Growth $ million CapEx Depreciation and Ammortization 2013A 2014A 2015A 2016A 2017A 2018E leading to a continuous positive Free Cash Flow** generation $ million A 2014A 2015A 2016A 2017A 2018E -27 * Additions to PP&E (Non cash) ** Free cash flow =operating cash flow purchases of property, plant and equipment and intangible assets + dividends from equity-accounted investees (also included in other ). See reconciliation table at the appendix. 32

33 Supportive Financial Position to Implement Our Strategy Net Debt/ EBITDA* $3,268M $3,037M 2.2 Core Minerals Advanced Crop Nutrition ~$2,100M Net debt reduction Support M&A and growth proforma post divestments** Infrastructure development and improvements from on-going operating cash flow generation * EBITDA is proforma of the divested businesses of Fire Safety and Oil Additives ** Calculated as: 2017 net debt - ~$900M expected net proceeds from divestments 33

34 Committed to Maintaining Financial Stability While Investing in Growth Drive long-term value creation Deliver solid shareholders return Reduce debt level FINANCIAL STABILITY 34

35 Key Takeaways Diversified Company, Integrated Along the Value Chains Low Cost Dead Sea Production, Geographically Advantaged Asset Base Focus on Core Minerals and Advanced Crop Nutrition Strong Cash Flow Generation and Prudent Capital Management 35

36 Thank You

37 Specialty Fertilizers Conventional Fertilizers Food Specialties Advanced Additives Industrial Products Specialty Solutions Positioned to Benefit from Growing Global Trends Trend Environmental Regulations & Sustainability Renewable Energy & Energy storage Food Security Electric / Smart Vehicles & Home Automation Growing Middle Class in Emerging Markets Limited Clean Water Supply 37

38 Effective Tax Rate $ million Adjusted income before tax Income tax rate (including resource tax) 26% 24% Carryforward losses not recorded for tax purposes % 29% Other items: Exchange rate impact (mainly ILS vs USD) 18 1 Reduction in tax rates (mainly US 2017, Israel 2016) (13) (32) Other (mainly deferred tax adjustments) (10) (16) Adjusted income tax Actual Effective tax rate 30% 20% Reported Effective tax rate 31% N/A See Q press release for a reconciliation of Adjusted operating income to operating income 38

39 ICL Maturities as of December 31, 2017 USD millions 1,200 1, Available credit facilities: $1.57b Average Interest rate: 3.5% 653 1, Short Term Loans Loans Securitization Maturities Banks & others 53% Debentures 47% Variable Fixed 34% 66% USD 83% EUR CNY Other 0.0% 6% 8% 3% 39

40 Divestment of Low Synergy Businesses for ~$1.2bn to Improve Balance Sheet and Support Growth In December 2017, ICL announced the sale of its Fire Safety and Oil Additives* sub business lines for ~$1bn The transaction is expected to close in the first half of 2018 Proceeds will be used primarily to reduce debt and support growth initiatives Including the completion of the separately announced IDE sale for $167M, total proceeds amounts to ~$1.2bn Businesses transformed into global leaders, unlocking value for ICL Divested Businesses Financials $ million Sales Operating income Divestments are in-line with ICL s strategy to exit low synergy businesses and focus on core mineral value chains operations ICL transformed the businesses into market leaders by: Investing in organic growth via R&D, market development and geographical expansion Bolt-on acquisitions Building logistic superiority enabling the businesses to be the preferred partner for customers * Referred to P2S5 elsewhere. 40

41 Essential Minerals Segment

42 ICL Essential Minerals - Organizational Structure Business Development President, ICL Essential Minerals Segment Ofer Lifshitz 21 years in ICL HR Finance Potash & Magnesium Noam Goldstein Phosphate Yakov Kahlon Specialty Fertilizers Eli Amon Sales, Marketing & Logistics Alon Gil 31 years in ICL 22 years in ICL 26 years in ICL 23 years in ICL 42

43 ICL Essential Minerals Division Agriculture Potash Phosphate Specialty Fertilizers Commodity Semi-specialty Specialty 43

44 Global Fertilizer Demand More people want more Demand for fertilizers is closely linked to the demand for food and fuel crops Growing population Dietary shifts More grains Increased yields More fertilizers Arable land per capita Biofuels 44

45 Index, relative to 1962 Population, Meat and Fertilizers [Base 1962] Fertilizer demand increases faster than population growth 6.0Correlates better to improved dietary consumption Economic crisis affects fertilizer consumption short term, 5.5but has minor effect on meat consumption Fertilizer consumption Meat Consumption Population Source: IFA, USDA, USA Census 45

46 Total Fertilizer Use by Crop at Global Level Cereals and Oilseeds Account for 62% of Fertilizer Consumption Vegetables 10.0% Fruits 6.6% Oth Crops 11.8% Tot. Other 43% Wheat 6.2% Cereals 37% Rice 12.6% Maize 14.9% Roots/Tubers 3.8% Oilseeds 20% Sugar Crops 7.7% Fibre Crops 2.8% Other Oilseeds 3.5% Oil Palm 7.2% Soybean 9.0% Other Cereals 3.7% Source: IFA- Assessment of Fertilizer Use by Crop at the Global Level 46

47 Billion Tonnes Stock to Use Ratio World Main Crops Long Term Forecast Consumption, Stock and Stock to Use Ratio % 3.0 Stock to use Ratio Consumption 40% % % % % % % Wheat Corn Rice Soybeans Ending stocks Stock to Use Source: OECD-FAO Agricultural Outlook (Jul 2017) 47

48 million mt nutrient Global Fertilizer Consumption 140 Global market share % 9% / / / / / / / / / / / / / / / / / / / / / / / / / / / /22 Source: IFA Medium Term Outlook for World Agriculture and Fertilizer Demand (May 2017) 48

49 Potash Market Share India Brazil China 3.8 Mt 8.8 Mt 6.8 Mt 26% 18% 12% 23% 20% 22% 13% 6% 17% 29% 7% 22% 12% 17% 26% Total Import 2016 Canpotex Uralkali APC BPC ICL Canpotex Uralkali SQM BPC ICL Russia Belarus Canada Jordan ICL 4.5 Mt 9.2 Mt 7.5 Mt 4% 10% 20% 25% 29% 16% 25% 14% 5% 20% 9% 5% 20% 12% 23% 23% 9% 31% Total Import 2017 APC BPC Canpotex ICL Uralkali K+S SQM BPC Uralkali K+S Canpotex ICL Uralkali BPC Canpotex ICL APC Others 49

50 TSP Trade 2017 Major Exporters Israel 14% Morocco 30% China 32% Tunisia 9% Bulgaria 4% Mexico 4% Others 7% Total Global Trade = 1.7 Mt P exporting countries control 93% of total global Trade Brazil Imported 24% of global traded TSP. Bangladesh, 16% USA 6% Major Importers Brazil 24% Indonesia 12% W. Europe 12% Others 30% Source: CRU Phosphate (Jan. 2018) 50

51 Phosphate - Operational Advantages The operational advantages of Phosphate, starting with the P2O5 value chain Food additives Phosphate Green Phosphoric Acid SSP, TSP Pure Phosphoric Acid Controlled & slow release fertilizers Liquid & water soluble fertilizers Industrial phosphate Salts and acids Phosphate Specialty Fertilizers Specialty solutions 51

52 Key Takeaways Significant potash presence in emerging markets Low production cost at the Dead Sea Significant growth potential in semi-specialty and specialty fertilizers P2O5 value chain in Israel and in China Experienced management team 52

53 Organizational Structure ICL Essential Minerals Segment Specialty Solutions Segment Potash & Magnesium Phosphate Specialty Fertilizers Industrial Products Advanced Additives Food Specialties Specialty Fertilizers 53

54 Specialty Fertilizers and Bio Solutions Became An Important Part of the Ag Input market Others, 32% ~$150bn Specialty Fertilizers market / ~$9bn Bio Solutions 1.5% Specialty Fertilizers 3.5% Micro Nutrients 1% Advanced bio solutions for plant nutrient and protection Nontraditional application of nutrients (i.e. Soluble, Liquids and Coated) N,P,K and Secondary nutrients 1 Traditional Fertilizers, 63% Nutrients consumed in small quantities 2 1 Calcium, Magnesium and Sulfate 2 iron, cobalt, chromium, copper, iodine, manganese, selenium, zinc and molybdenum 54

55 Our Core Markets and Products Today 69% OF 2017 SALES 19% OF 2017 SALES 12% OF 2017 SALES Specialty Agriculture Fruit, vegetables & arable crops Ornamental Horticulture Nursery stock, perennials, pot & bedding plants Turf & Landscape Golf courses, sports fields & landscape Turf & Landscape Golf courses, sports fields & landscape Controlled Release Fertilizers (CRF) Water Soluble Fertilizers (WSF) Growing Media Liquid Fertilizers Slow Release Fertilizers Grass Seeds Liquid Fertilizers Straights (MAP / MKP / Pekacid) Adjuvants Water Conservation Agents Plant Protection Products 55

56 Our Core Markets and Products / Turf Most stadiums of La Liga use ICL products (fertilizers& seeds) Camp Nou 56

57 Our Core Markets and Products / Turf Wimbledon 57

58 Our Core Markets and Products / Turf Cardiff 58

59 ICL Specialty Fertilizers is a Leader in the Market Xcalibur (USA)

60 Global Players by Product Categories Coated Fertilizers SRF CRF Solub le NPK Solubles / Straights MAP/ MKP SOP/CN NOP Bulk Liquid s Liquids ICL-SF ^ ^ ^ ^ ^ ^ Compo ^ ^ ^ ^ Haifa Chemicals ^ ^ ^ ^ YARA ^ ^ ^ SQM ^ ^ ^ ^ Foliar Liquid s Kingenta ^ ^ ^ ^ ICL- Comp Haifa SQM YARA SF o Kingen ta 60

61 Specialty Agriculture Main Growth Drivers Reduce cost of production Expand Product Portfolio New cost efficient coating generation New production plants with focus on emerging markets Grow with R&D and new Strategic Partners Establish production in attractive markets 61

62 Key Takeaways ICL Specialty Fertilizers An attractive investment opportunity Fast Growing Industry Driven by Global Trends Efficient Supply Chain and Strong Professional Sales Force Leader in Key Markets Established Brands Well Positioned for Growth with Wide Portfolio End User Inspired Innovation 62

63 Specialty Solutions Segment

64 Specialty Solutions Organizational Structure Specialty Solutions Segment Eli Glazer, President, ICL Specialty Solutions 34 years in ICL Industrial Products Advanced Additives Food Specialties Anat Tal, EVP Industrial Products, 25 in ICL James Moffatt, EVP Advanced Additives and Food Specialties 12 years in ICL 64

65 Specialty Business Provide Balance Specialty Solutions Sales*** ($M) 2,234* 2,202* ,332* 2,357* ,251 1,034 1,120 1,193 FY 2014 FY 2015 FY 2016 FY 2017 Industrial products Advanced additives Food specialties Segment Operating Income ($M)** & *** Adjusted to organizational structure as of Q * Total prior to elimination of inter-business lines sales **Excluding G&A, unallocated expenses and eliminations *** Proforma adjusted for divestment of fire safety and P2S5 businesses FY 2014 FY 2015 FY 2016 FY

66 % 25% 20% 15% 10% 5% 0% Industrial Products: Impressive Performance Driven by Value Based Strategy and Cost Reduction $1.2Bn 2017 SALES* $303M 2017 OPERATING INCOME** EMPLOYEES WORLDWIDE ~1,600 20% CAGR IN OPERATING INCOME 16% 22% % 25% GROWTH STRATEGY New product development including new applications Next generation flame retardants Advocacy - FR Standards, SAFR, Merquel in China/EU, Chemistry ban defense Value based pricing Cost reduction KEY ADVANTAGES Backward integrated to the lowestcost source of bromine Global leader in bromine capacity Largest producer of brominated flame retardants, biocides and clear brine fluids Largest Iso-tank fleet Operating income Operating income margin Note: Sales and operating income according to Organizational Structure as of Q All numbers are rounded. * Before setoffs and inter-segment eliminations. ** Before G&A expenses. 66

67 ICL-IP Product Supply Chains Produced MgCl Salts KCl Purchased Specialty Minerals plants: Israel France * Bromine compounds plants: Israel Netherlands China Customers Phosphorus compounds plants: Germany USA * RM sourced from 3 rd parties 67

68 Global Trends and Major End Markets Standard of living Population Regulation & Environmental ELECTRONICS INTERMEDIATES FOR FOOD, PHARMA, AGRO and Other CONSTRUCTION OIL & GAS WATER TREATMENT TRANSPORTATION FURNITURE & TEXTILE POWER PLANTS 68

69 ICL-IP Market Leadership in Flame Retardants in Bromine capacity in Bromine compounds plant in Bromine Iso-tank fleet in Brominated biocides in Phosphorus FRs in Clear Brine Fluids in Self-extinguishing Hydraulic fluids in Solid MgCl in Magnesia for Nutraceutical market 69

70 Major Trends and ICL Solutions Trends ICL s Solutions Clean Air Mercury Emissions Control MERQUEL Regulation New target 1-7 Yet to follow 1.3 Existing Comparison of Hg Emission limits (µgr/m3) 70

71 Major Trends and ICL Solutions Trends ICL s Solutions Renewable energy Energy storage Electrolytes for Bromine Flow battery 71

72 Major Trends and ICL Solutions Trends ICL s Solutions Electric car/ Autonomous car New generation polymeric FRs 72

73 Major Trends and ICL Solutions Trends ICL s Solutions Home automation New generation polymeric FRs 73

74 Major Trends and ICL Solutions Trends ICL s Solutions Water shortage and treatment New Biocides 74

75 Live 75

76 Advanced Additives Benefits from Vast Global Footprint and Backward Integration $568M 2017 SALES* $85M 2017 OPERATING INCOME** EMPLOYEES WORLDWIDE ~900 SALES DISTRIBUTIONS 2017 Industrial phosphates 38% P4 4% Phosphate Acids 59% GLOBAL SALES FOOTPRINT* EMEA 28% Asia/Pac 9% Sth America 13% Nth America 50% GROWTH STRATEGY KEY ADVANTAGES Geographic Expansion Product Differentiation Cost optimization / Lean & Reliable Support growth through opportunistic M&A Full phosphate chain from rock to salts Largest global footprint in specialty phosphates Note: Sales and operating income according to Organizational Structure as of Q Proforma results adjusted for divestments of fire safety and P2S5 businesses All numbers are rounded. * Before setoffs and inter-segment eliminations. ** Before G&A expenses. 76

77 We Have Built a World-Class Advanced Additives Portfolio Phosphate Salts and Acids Paints and Coatings Description Technical Phosphates & Related Specialties; food and technical grade Phosphoric Acids Specialty phosphates and blends, selected organic chemistry Key Applications Metal treatment, water treatment, cleaners, oral care, cola drinks, asphalt modification, others Corrosion Inhibition, Flash Rust Inhibitors, Tannic Stain Inhibitors Example Customers & Distributors P&G, Henkel, Colgate, Coca-Cola, Pepsi, Chemetall Univar, Brenntag Sherwin Williams, Behr Paint Specialty Distributors based on mutual exclusivity 77

78 Phosphate Value Chain - Markets and Competition EUROPE NORTH AMERICA LATIN AMERICA ICL ICL ICL ICL Prayon Budenheim FOSFA Other ICL Prayon Budenheim PotashCorp Innophos Other ICL Prayon Innophos Chinese Other Source: market size (acid/salts) via internal analysis, published data & other market reports 78

79 Food Specialties Growth Driven by Global and Portfolio Expansion, Supported by Market Trends $596M 2017 SALES* $51M 2017 OPERATING INCOME** EMPLOYEES WORLDWIDE* 2017 BUSINESS LINE BREAKDOWN Food Phosphates, Blends, Multi-blends 69% Spices 6% Dairy Proteins 25% GLOBAL SALES FOOTPRINT* Asia/Pac 32% EMEA 28% Nth America 28% Sth America 13% ~850 GROWTH STRATEGY MARKET TRENDS * Before setoffs and inter-segment eliminations. ** Before G&A expenses. All numbers are rounded. High-growth new applications in Meat and Dairy Expand portfolio through tailored solutions Increase footprint in growing emerging markets Support growth through opportunistic M&A Growing middle class in emerging markets Demand for longer shelf- life On the go Health and Nutrition (gluten free, reduced salt, etc) 79

80 Vast Product Portfolio Serving a Variety of End Markets Meat, Poultry and Seafood: Description $200M in 2016 sales Providing solutions for modifying texture and stability of food products, including meat substitutes Dairy and Dairy Protein: $280M in 2016 sales Produces milk and whey proteins for food ingredients Provides integrated solutions based on dairy proteins and phosphate additives Bakery and Other: $180M in 2016 sales ICL leavening acids impact the appearance, texture and volume of bakery products Key Applications Continued development of applications for low-sodium salts (SALONA ) from the Dead Sea Development of new products based on milk proteins Novel product applications by exploiting synergies between food phosphates, proteins, starches and fibers Recent Acquisitions In 2014, completed acquisition of the Hagesud Group, a German producer of premium spice blends and food additives for meat processing In 2015, completed acquisition of Prolactal GmbH, a leading European producer of dairy proteins Key Customers 80

81 Food Specialties: Markets and Competition Food Phosphates, Blends & Multi-Blends 2017 sales: ~$410M Dairy and Protein 2017 sales: ~$150M Spices 2017 sales: ~$35M 81

82 Main Takeaways for Specialty Solutions Division Backward integration to Bromine and Phosphate Innovation capabilities The only Global player with worldwide presence Clear, proven, value based strategy Growing sales and margins despite competitive market environment 82

83 Thank You