Last updated on April 16, 2014 at 1:21 EDT

ICL Reports Financial Results for the First Quarter of 2011

May 16, 2011

TEL-AVIV, Israel, May 16, 2011 /PRNewswire-FirstCall/ — ICL (TASE:ICL),
a multinational fertilizer and specialty chemicals company, today reported
its financial results for the first quarter ended March 31, 2011.

Financial Results

The first quarter of 2011 was the Company’s second best Q1 on record
(second only to Q1 2008, an exceptional “spike” year for the fertilizer
industry) despite the the Dead Sea Work’s 44-day strike during the quarter
(see below), which impacted the quantity of potash sold. This reflected the
industry’s improving price environment together with record sales for ICL IP.

Revenues: ICL’s revenues for the first quarter of 2011 totaled $1,528
, up 11% compared with $1,383 million in the first quarter of 2010.
The growth reflected an increase in selling prices, countered partially by
reduced quantities of potash sold due to the 44-day strike at Dead Sea Works
during the period (see below). Revenues from Europe and North America
increased, reflecting increased regional demand for fertilizers, bromine and
brominated compounds.

Gross Profit: Gross profit for the first quarter totaled $638 million, up
14% from $559 million in the parallel period of 2010, reflecting primarily
the increased selling prices, countered partially by a rise in raw material
costs and reduced quantities of potash sold. Gross margin for the period rose
to 41.8% compared with 40.4% in the first quarter of 2010.

Operating income: Operating income for the first quarter of 2011
increased by 19% to $361 million from $304 million in the first quarter of
2010, reflecting the improved gross margin.

Net income: Net income to shareholders for the first quarter of 2011
increased by 16% to $280 million from $240 million in the first quarter of

Debt: As of March 31, 2011, the Company’s net debt totaled $1,049
, a $391 million increase compared with December 31, 2010. The
increased debt was assumed to finance payment of a special tax of $165
, a dividend of $170 million and acquisitions totaling $262 million.
On March 14, 2011, the Company signed an agreement with a group of 17 banks
from Europe, the US and Israel, setting the terms under which they will
provide ICL with a $675 million revolving credit facility for a period of
five years. The basic rate for funds drawn up to $225 million will be 0.8%
over LIBOR, while for larger draw-downs the interest rate will increase by

Strike at Dead Sea Works: During the first quarter, the Dead Sea Works
Workers’ Committee carried out a 44-day strike, representing nearly half of
the quarter. As a result, Dead Sea Works’ first quarter potash production was
reduced by approximately 450,000 tons, though production and stockpiling of
carnallite was maintained at its normal rate. The Company projects that it
will be able to use the carnallite inventory over the next few years, and
that it will be able to ship a large portion of the sales that were delayed
because of the strike by the end of the year.

Highlights of Core Business Segments

– ICL Fertilizers: Despite the 44-day strike at Dead Sea Works which
began in January, 2011 (see above), the segment’s sales for the first quarter
increased by 9% to $837 million, representing 51.8% of total revenues (before
offsets of inter-segment sales). During the quarter, the segment sold 1.05
million tons of potash, a 12% decrease compared to 1.33 million tons in Q1
2010, but at increased prices compared to the previous year. In addition, it
sold 486 thousand tons of phosphate fertilizers, a 7% increase over Q1 2010,
at higher prices that contributed to a five-fold increase in associated
operating income to approximately $59 million.

ICL Fertilizers’ operating income for the first quarter of 2011 totaled
$244 million, a 5% rise compared with $232 million in the first quarter of
2010. The increase reflected the higher selling prices of potash and
phosphate fertilizers, offset partially by reduced quantities sold of potash.
Operating margin increased slightly to 30.4% from 30.3% in the first quarter
of 2010.

Special events: During and immediately after the first quarter, ICL
carried out a number of activities aimed at increasing its ongoing business,
reducing the segment’s production expenses outside of Israel, expanding its
product portfolio and transforming it into one of the world’s leading
Specialty Fertilizers players. These transactions included:

– Potash contracts signed with Chinese customers: In February 2011, ICL
signed new contracts under which it will supply 500 thousand tons of potash
to Chinese customers during the second half of 2011 at prices similar to
those signed recently with other market players.

– Announcement of significant polyhalite reserves in the UK: On April 12,
, the Company announced that its Cleveland Potash subsidiary in the U.K.
possesses reserves of more than a billion tons of polyhalite, and that the UK
government will give it a grant of 15 million pounds to initiate polyhalite
mining and production activities. CPL’s existing infrastructure and
equipment, together with the polyhalite’s location beneath CPL’s existing
potash mines, will make it easier and more efficient to extract the mineral,
making it possible to produce hundreds of thousands of tons during the
earliest stages at relatively low prices. Polyhalite can be used in its
natural state as an organic fertilizer and as an input into the production of
specialty fertilizers.

– Acquisitions to build ICL’s Special Fertilizers business: As part of
the Company’s strategy for expanding its activities in Specialty Fertilizers,
a market segment that it believes offers exceptional potential for growth,
ICL has recently acquired the Scotts Global Pro business and Spain’s A.
Fuentes Mendez
(see below), The acquisitions have built ICL Specialty
Fertilizers into a global rapidly-growing Specialty Fertilizers player with
annual sales of $650 million (based on 2010 performance).

– Scotts Global Pro Business: On February 28, 2011, ICL acquired the
Global Professional business of The Scotts Miracle-Fro Company for $270
. Global Pro’s 2010 sales totaled $240 million. It has production
facilities in Holland, the U.S. and the U.K., and three peat mines in the
U.K. In addition, it has industry-leading R&D teams, a strong patent
portfolio and unique products.

A. Fuentes Mendez, S.A.: On April 11, 2011, the Company acquired A.
Fuentes Mendez
, S.A., Spain’s largest Specialty Fertilizers company. The
acquisition included Fuentes’ four subsidiaries, production lines in Totana
and Cartegena, and also Fuentes’ warehouses, logistical centers and
distribution facilities in Cartagena, Sagunt and Albacete. Fuentes’ 2010
sales totaled approximately $163 million.

– Rationalization and expansion of potash production in Spain: As part of
its “green revolution,” on April 13, 2011, ICL announced that it would invest
160 million Euros to rationalize its Spanish potash mining operations,
significantly expanding the mining and production capacity of one of its
mines while closing its other locations.

Market developments:

– Further decreases in grain stock-to-use ratio: In a report published in
April, the U.S. Department of Agriculture (USDA) forecast a decrease in the
world grain stock-to-use ratio to 19.5% by the end of the 2010/2011
agricultural season, a level that is significantly lower than its historical

– Effect of disruptions in Tunisia: The political disruptions and power
changes in Tunisia resulted in the temporary closing of the country’s
phosphate mines and production plants, a fact that has increased the global
scarcity of fertilizer. Although the Tunisians have renewed operations in
these factories, the supply of phosphate rock remains constrained, a factor
that is limiting the fertilizer production rate.

– ICL Industrial Products: the segment’s sales for first quarter of 2011
reached an all time record of $373 million, up 28% compared with the first
quarter of 2010, representing 23.1% of total revenues (before offsets of
inter-segment sales). The increase reflects the success of the segment’s
strategies, including the expansion of its manufacturing capacity, which have
enabled it to benefit from higher demand for some of its products and higher
selling prices for its flame retardants and other products.

The segment’s operating income for the first quarter of 2011 totaled a
record $71 million, a 112% increase compared with $34 million for the first
quarter of 2010. This reflected the market’s ongoing rise in demand for most
of the segment’s products coupled with the reduced production of bromine in
China, which has led to an increase in the prices elementary bromine and
brominated compounds compared with their levels in 2010. Operating margin for
the period rose to 19.1% from 11.5% in the first quarter of 2010, reflecting
the rising prices and an increase in quantities sold and produced, countered
partially by higher raw material and energy prices.

Market developments:

– Demand for flame retardants and most of the segment’s other products
continues to grow throughout the world, and especially in the Far East, due
to a resurgence in demand for consumer electronics, automobiles and building
supplies. The increased demand, together with the decreased quantity of
bromine produced by China, has led to increased selling prices for elementary
bromine compared with the fourth quarter of 2010, resulting in a rise in the
selling prices for most of the segment’s products.

– In April 2010, the explosion in the deep-water oil well in the Gulf of
, a key region for the Company’s sales of drilling fluids, led the US
government to enforce a temporary moratorium in the area’s deep water
drilling activities. Although the slowdown has been cancelled, the US
government continues to issue oil drilling licenses at a very slow pace, a
development which has impacted the segment’s drilling fluid sales.
Nonetheless, the segment’s overall sales of drilling fluids rose during the
first quarter, due both to the year-over-year rise in the price of drilling
fluids and to the segment’s rising levels of sales to other regions of the
world. This reflects the world’s growing demand for oil and the rising price
of bromine in China.

– ICL Performance Products: the segment’s sales for the first quarter of
2011 totaled $350 million, up 10% compared with the first quarter of 2010,
and representing 21.7% of total revenues (before offsets of inter-segment
sales). The increase reflected rising selling quantities and prices for some
of the segment’s products. The segment’s operating income for the quarter
increased by 7% to $47 million, reflecting the higher sales countered
partially by a rise in raw material costs.

Market developments:

The segment’s sales during the quarter were impacted positively by rising
demand in Europe compared with their levels in 2010.


– On May 12, 2011, the Company paid a dividend totaling $170 million in
respect of its fourth quarter 2010 results. This brought the total dividend
paid in respect of 2010 results to $1,185 million.

– The Company’s Board of Directors today declared that a dividend
totaling $195 million will be paid on June 28, 2011 in respect of its first
quarter 2011 results.

About ICL

ICL is one of the world’s leading fertilizer and specialty chemicals
companies. For a world challenged by population growth and scarce resources,
ICL makes products that increase global food and water supplies and improve
industrial materials and processes.

ICL produces approximately a third of the world’s bromine and is the 6th
largest potash producer in the world. ICL is a leading supplier of
fertilizers in Europe and a major player in specialty fertilizer market
segments. One of the world’s most integrated manufacturers and suppliers of
phosphate products, ICL has become the world’s leading provider of pure
phosphoric acid and a major specialty phosphate player.

ICL is comprised of three core segments: ICL Fertilizers, ICL Industrial
Products and ICL Performance Products. Its major production activities are
located in Israel, Europe, the US, South America and China, and are supported
by major global marketing and logistics networks. ICL benefits from exclusive
concessions to extract minerals from Israel’s Dead Sea, a vast source of
high-quality and low-cost potash, bromine, magnesium chloride and sodium
chloride. ICL also mines phosphate rock from Israel’s Negev Desert and potash
and salt from its mines in Spain and the UK.

ICL’s shares are traded on the Tel Aviv Stock Exchange (TASE: ICL).

Forward Looking Statement

This press release contains forward-looking assessments and judgments
regarding macro-economic conditions and the Group’s markets, and there is no
certainty as to whether, when and/or at what rate these projections will
materialize. Management’s projections are likely to change in light of market
fluctuations, especially in ICL’s manufacturing locations and target markets.
In addition, ICL is likely to be affected by changes in the demand and price
environment for its products as well as the cost of shipping and energy,
whether caused by actions of governments, manufacturers or consumers. ICL can
also be affected by changes in the capital markets, including fluctuations in
currency exchange rates, credit availability, interest rates, etc.


                           PRINCIPAL FINANCIAL RESULTS

                        THREE MONTHS ENDED MARCH 31, 2011

                             3 months ended             12 months ended
                                March 31,                December 31,

                           2011            2010                2010
                         $      % of      $     % of      $         % of
                     millions  sales  millions sales   millions    sales

    Net sales         1,528.3  100.0  1,382.5  100.0    5,691.5    100.0
    Gross profit        638.1   41.8    559.1   40.4    2,432.1     42.7
    Operating income    360.5   23.6    303.5   22.0    1,346.1     23.7
    Income before
    taxes               341.8   22.4    302.1   21.9    1,295.4     22.8
    Net income to
    the Company's
    shareholders        279.7   18.3    240.5   17.4    1,024.7     18.0
    EBITDA*             418.8   27.4    353.1   25.5    1,572.1     27.4
    Operating cash
    flow                142.0           219.7           1,537.0
    Investment in
    property, plant
    and equipment
    less grants
    received             82.9           84.7             333.4

    * EBITDA is calculated as follows:

                            3 months ended      12 months ended
                               March 31,           December 31,
                            2011       2010            2010
    Net income to
    Company's              279.7      240.5         1,024.7
    Amortization &
    depreciation            54.9       52.1           217.4
    expenses, net           23.0       (0.1)           53.2
    Taxes on income         61.2       60.6           266.8
    Unusual or
    one-time expenses          -          -            10.0
    EBITDA                 418.8      353.1         1,572.1

    ** For further details regarding adjusted metrics, please refer to the
       Company's financial reports.



                        THREE MONTHS ENDED MARCH 31, 2011

                             3 months ended             12 months ended
                                March 31,                December 31,

      Sales CIF by          2011            2010                2010
       segment            $      % of      $     % of      $         % of
                      millions  sales  millions sales   millions    sales

    Fertilizers          836.7   51.8    766.0   52.7    3,107.3     51.7
    ICL Industrial
    Products             372.9   23.1    292.2   20.1    1,313.2     21.9
    Products             350.1   21.7    319.3   22.0    1,340.0     22.3
    Other and
    offsets              (31.4)            5.0             (69.0)
    Total              1,528.3         1,382.5           5,691.5

    Note: Segment sales data and their percentage of total sales
           are before offsets of inter-segment sales.

                          3 months ended              12 months ended
                             March 31,                  December 31,
                       2011             2010                  2010
    Operating       $        % of     $       % of      $          % of
    income by    millions segment millions segment  millions    segment
    segment                 sales            sales                sales
    Fertilizers     243.5    29.1    232.4    30.3    965.1        31.1
    Products         71.3    19.1     33.7    11.5    206.6        15.7
    Products         47.4    13.5     44.2    13.8    185.1        13.8
    Other and
    offsets          (1.8)            (6.8)           (10.7)
    Total           360.5    24.2    303.5    22.0  1,346.1        23.7

    Press Contact

    Fleisher Communications and Public Relations
    Amiram Fleisher

SOURCE ICL – Israel Chemicals Ltd

Source: newswire