May 19, 2015
Investor and Analyst Day Nissim Adar, CEO, ICL Fertilizers
Safe Harbor
All statements in this communication, other than those relating to historical facts, are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended 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 our control, which could cause actual results to differ materially from such statements or projections. Important factors that could cause actual results to differ materially from our expectations include, among others: loss or impairment of business licenses or mining permits or concessions; natural disasters; failure to raise the water level in evaporation Pond 5 in the Dead Sea; accidents or disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; labor disputes, slowdowns and strikes involving our employees; currency rate fluctuations; rising interest rates; general market, political or economic conditions in the countries in which we operate; pension and health insurance liabilities; price increases or shortages with respect to our principal raw materials; volatility of supply and demand and the impact of competition; changes to laws or regulations (including environmental protection and safety and tax laws or regulations), or the application or interpretation of such laws or regulations; government examinations or investigations; the difference between actual reserves and our reserve estimates; failure to integrate or realize expected benefits from acquisitions and joint ventures; volatility or crises in the financial markets; cyclicality of our businesses; changes in demand for our fertilizer products due to a decline in agricultural product prices, lack of available credit, weather conditions, government policies or other factors beyond our control; decreases in demand for bromine-based products and other industrial products; litigation, arbitration and regulatory proceedings; and war or acts of terror. More detailed information about factors that may affect our performance may be found in “Risk Factors” in our Annual Report Form 20-F filed with the U.S. Securities and Exchange Commission on March 20, 2015. Forward-looking statements and projections represent our views and are given only as of the date of this communication and we disclaim any obligation to update or revise them, whether as a result of new information, future events or otherwise, except as required by law.
All information included in this document speaks only as of the date on which they are made, and we do not undertake any obligation to update such information afterwards. Some of the market and industry information is based on independent industry publications or other publicly available information, while other information is based on internal studies. Although we believe that these independent sources and our internal data are reliable as of their respective dates, the information contained in them has not been independently verified and we can not assure you as to the accuracy or completeness of this information.
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3
• World population is growing, demand for food is steadily increasing
• Availability of arable lands is declining
All Basic Fundamentals are in Place to Support Long Term Growth of Fertilizers
• Specialty agriculture expansion
• Expansion of the middle class and increased standard of living
• Emerging markets fertilization standards have room to Improve
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Agriculture
ICL Dead Sea
ICL Rotem
ICL Turkey
5,855 Employees Worldwide
ICL Haifa
ICL UK
ICL Iberia
ICL Germany
ICL The Netherlands
Fuentes
Nutrisi Everris
A Global Manufacturer of Products that Fulfills Essential Needs in the Agriculture Market
Potash Fertilizers
Phosphate Fertilizers
Specialty Fertilizers
52% 26%
22%
ICLF 2014 Sales by Lines of Business ($3,400M** )
Of ICL’s Rev ($6,100 M)
56%
Americas* - 22%
Asia* - 27%
EMEA* - 51%
*Of 2014 sales **including inter-segment sales
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Distinctive Characteristics of Our Potash Sites
ICL Dead Sea Israel, Dead Sea
Evaporation Ponds
ICL UK North East England
Conventional mining
I. Advantageous geographical
location II. Polysulphate opportunity
III. Operational excellence
initiatives
ICL Iberia Spain, Catalonia
Conventional mining
I. Vast reserves - long life quality
asset II. Advantageous geographical
location, access to deep water port
III. Mid cost curve with opportunity to improve further from sites
consolidation
IV. Expansion initiatives underway V. Salt offtake agreement
I. Unlimited highly concentrated raw material source
II. Relatively low production cost, in the bottom of the cost curve
III. Strategic Geographic Advantage
IV. Unlimited open-air stockpiling capacity V. Ongoing operational excellence measures
% 2014 Production (5,100 K Tons)
13%
19%
68%
Phosphate Line of Business
ICL Rotem
ICL Germany
ICL Turkey
ICL The Netherlands
• Employees No. : 1,482 FTE’s
• 2014 production: Phosphate Rock : 3,375 K Tons, Fertilizers: 1,591 K Tons, Acid (P2O5): 475 K Tons
• Successful cost reduction plan implementation at ICL Rotem –labor down by 10%, while P2O5 production up by 15%
• Strategic alliance with Yunnan Yuntianhua signed by the end of 2014 will almost double ICL’s global phosphate business and improve our Phosphate competitive position
• World scale phosphate rock mine with fully vertically integrated phosphate business and downstream operations
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Growing our Specialty Fertilizer Business
Horticulture Turf Specialty Agriculture
Faster Growing Markets Strong
Sales Network Best-in-Class R&D /
Technology
Water Soluble Fertilizers
Controlled Release Fertilizers
Liquid Fertilizers
Markets
Slow Release Fertilizers
Straights (MAP / MKP / Pekacid) Growing Media
Plant Protection Products Grass Seeds Adjuvants
Water Conservation Agents
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Grow Our Core Business
Spain Phoenix
Africa /Ethiopia Danakhil project
UK Polysulphate
Africa /Ethiopia Potash for Growth
India Potash for life
China YPH
China YPH
Organic Growth
External Growth
SF Worldwide product development, crops and geographic
expansion
SF Worldwide Growth & innovation through M&A activity
Bulk Blend
Potash Business Line
Phosphate& Fertilizers Business Line
Specialty Fertilizers Business Line
Leverage Growth Opportunities in Potash
Canada, 36%
Russia 16%
Belarus 15%
China, 10%
ICL, 8%
Germany 6%
Other, 4%
Jordan 3%
Chile 3%
ICL’s Market Share, 2014 (Total Sales: 5.1 M Tons)
ICL will capture 9%-16% of Market growth (0.3% - 1.8% Market share growth).
2014 to 2025 Market growth: 18Mt ICL’s Projected growth (vs. 2014) : 1.6-2.8 M
Tonnes/Year to ~8 M tonnes
62 79 80
0
50
2014 2020 2025
Demand (KT)
Annual Growth rate: 2.9%
Source: CRU
Million Tonnes ICL Growth 2015-2025
1.3 ICL Iberia: Phoenix I-IV
0.1- 0.5 ICL Dead Sea
0- (0.8) ICL UK
1.0 ICL Africa
2.8-1.6 Total
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ICL Iberia – Consolidation and Expansion
ICL Iberia operating capacity development - 2015-2027 (K tonnes)
• Phoenix I+ II (2017): capacity expansion of Suria to 1,080K tonnes, closure of Cabanasas mine, expansion of granular capacity to 1,030K tonnes.
• Phoenix III (2019): new crystallization plant aimed to expand Suria’s Center capacity by extra 200K tonnes of KCl and 500K tonnes of NaCl
• Phoenix IV (gradual, until 2024): a Brownfield project targeted to extend Suria’s Center production capacity by additional 1M tonnes of KCl
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
~1,000
~2,300
• Agreement with Akzonobel to produce and market 1.5M tonnes of vacuum salt and 50K tonnes of white potash annually
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Polysulphate™: The Future of ICL UK
Readily available new natural fertilizer in the market containing four nutrients: Sulphur, Potassium, Magnesium and Calcium
130
600
0
100
200
300
400
500
600
700
2014 2015 2016 2017 2018
Polysulphate production plan K Tonnes
50%
14% K
S
36% Mg+Ca
From Mine to Market, existing infrastructure, low production cost, high profit margins
Promising long term potential for up to 3 million tonnes
Reserves of more than 1 billion tonnes in the ICL UK potash mine
Already in the market, 60 k tonnes were sold in 2014. 2015 target: 150 k
tonnes
With an investment of £ 40 million, infrastructure will support production of 600 K tonnes. Additional investment of £ 40 million for granulation facility
Environmentally friendly, used in its natural form. No chemical processing or waste products
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Danakhil Potash Project - Ethiopia
Ethiopia
• Our gate to Africa
Acquisition of Allana will enable ICL to accelerate the development of Allana’s concession to mine potash in Ethiopia
Allana estimates that its Danakhil project could yield up to one million tonnes of potash production per year for 25 years
Over the past year ICL has accelerated its market development efforts in Africa by sponsoring the “potash for growth” program
ICL to acquire full ownership of Allana potash (remaining 84%) for C$ 0.5 per share , C$ 137 million in total
Ethiopia
Location: Afar region, 800 km north of Addis Ababa, 600 km west of nearest port of Djibouti (export destination port); arid desert
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ICL to Establish Bulk Blending Facilities Across Ethiopia to Support Demand Growth
Bulk Blending - fertilizer plant designed to blend several nutrients. The final formula is determined according to the crop needs and availability of nutrient in the soil
Several locations has been investigated
First Bulk Blend was already established in Tulu Bolo by the Ethiopian Government
Djibouti Port
Allana Potash
Oromia
Amhara
SNNP
Tigray Mekele
Nekemte
Tulu Bolo
Worabe
Bahar Dar
• Alternatives examined by ICL • Sites where the Ethiopian Government established or intend to
establish BB facilities without any private business partner
Fertilizers are considered as a strategic commodity in Ethiopia
The plants are design to serve an area of about 200Km radius, use 150 k tonnes of potash annually through various number of formulas
The Ethiopian Gov. is defining the preferred cooperation model between the public and private sectors
780.00
Specialty FertilizersKT p.a.
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Strategic Alliance with Yunnan Yuntianhua– a Step Change to ICL’s Global Phosphate Business
Kunming
• 50% in a fully vertically integrated phosphate business including a world scale phosphate rock mine and integrated downstream operations
• A 15% stake in Yunnan Yuntianhua Co. Ltd., China’s leading producer of phosphate rock and fertilizers
3.50
0
1
2
3
4
5
6
7
Phosphate Rock, MT p.a.
2.5
3.5
6.0
30 years of Reserves
8 Years of Reserves
0250500750
1,0001,2501,5001,7502,0002,2502,5002,7503,000
Fertilizers KT p.a.
850
1,800
2,700
600.00
0250500750
1,0001,2501,5001,7502,0002,2502,5002,7503,000
Phosphoric AcidKT p.a.
700
600
1,300
780
115
0250500750
1,0001,2501,5001,7502,0002,2502,5002,7503,000
Specialty PhosphoricAcid
KT p.a.
290 60
350 895
ICL Standalone YPH Add. production
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Strategic Rationale
Expanding End Market Reach to Fulfil Essential
Needs in the Fast Growing Chinese and
Asian Markets
Expand ICL’s Global Specialty Phosphates
Business through Competitive Backward
Integration
Implement Proven Business Model –
Converting Commodity into Specialty
Utilizing Expertise between Both
Companies
3.5
700
600
Financial Highlights
JV sales to increase from ~$550M to ~$700M
Commodity / Specialty sales volumes ratio to develop from 90%/10% to 50%/50%
Revenues
Expand EBITDA margins from low teens to high teens within 5 years
Margin expansion
At least $30M per year, achieved within 5 years, with a potential to double this amount
Synergies
~$340M spread over 4 years starting from the closing
CAPEX
$452 million for the JV and the listed company
Deal value
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Yunnan Yuntianhua - China’s Leading Producer of Phosphate Rock and Fertilizers
Top 10 producers by phosphoric acid capacity 2013-2014
Phosphate Fertilizer,
Phosphate Rock 43%
Trade (Phosphate Fertilizer)
16%
Trade & Logistics (Grain)
23%
Trade (Others) 11%
Engineered Materials
2%
Nitrogen Fertilizer 5%
Revenue RMB55.9bn
$9.2bn
China’s leading producer of phosphate rock and fertilizers with approximately $9 billion in annual revenues
The phosphate value chain accounts for ~60%
of total revenue
China’s leading producer of phosphate rock and fertilizers with approximately $9 billion in annual revenues
Phosphate Fertilizer,
Phosphate Rock 71%
Trade (Phosphate Fertilizer)
4%
Trade (Grain) 11%
Trade (Others) 3%
Nitrogen Fertilizer 11%
Gross Profit RMB7.2bn
$1.2bn
The phosphate value chain accounts for ~75% of total gross
profit
Location of Production Facilities
Kunming
Beihai port
▪ Multiple sites (<100Km apart) in Yunnan Province near Kunming
▪ Distance to closest port (Beihai) is ~1,000km ▪ Own logistics (train) network
2014
2013
• Added a short talking point
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Operational excellence: Improve Our Competitiveness in the Global Markets
Cost structure improvement / cost per
tonne reduction
Increased production / process optimization /
yield increase
Mindset & Behaviors
Management Infrastructure
Our Operational Excellence program is
designated to formulate and integrate
organization wide Best Practices for all of our
operations on a global scale, instituting
excellence while enabling our managers and
employees to work better and smarter.
2014 2015 2016
Potash
2014 2015 2016
ACE and other efficiency initiatives
Operational excellence
Phosphate & Specialty Fertilizers
* Actual, Compared to 2013
41
107
210
30
54
78
M
M
Technical Systems
Contribution to EBIT – by project:
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Improving Our Cost Position in Potash
ICL Iberia ICL UK
Co
st
2/3 of ICL’s effective capacity
Potash volume
*Source: CRU, McKinsey & Company, ICL estimates. Excluding Royalties
ICL Dead Sea ICL Africa
Future project
Potash Cash Cost Curve – FOB $ / Tonne * - Abstract Model
Improving Our Cost Position in Phosphate
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Site
co
sts
Yunnan
Source: CRU, November 2014.
3 Open Pit Mines Restored Mine
Site Capacity
The strategic alliance in China will secure ICL's access to competitive phosphate rock for several decades
Cost reduction in ICL’s existing production base Establishing new low cost
phosphate base
Phosphate rock cost curve (abstract model):
Successful Implementation of Operational Excellence and Efficiencies
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Average headcount decreased by 9% in Q1 15 vs Q1 14
Green phosphoric acid Production increased by over 40% vs Q1 14
White phosphoric acid production cost decreased by 6% vs Q1 14 despite an increase in sulfur prices of 41%
Additional upside from downstream specialty products
Demonstrated Efficiency at ICL Rotem
Improving operations at ICL UK
Potash production has increased by over 40% vs Q1 14
Polysulphate production increased by 150% Cost /tonne over 20% lower vs 2014 average Operating margins in the last 6 months
about 20% higher than 2013 average, despite lower potash prices
0.0%
5.0%
10.0%
15.0%
20.0%
25
75
125
175
225
Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15
ICL Rotem performance
Green Phosphoric Acid production '000t
Operating income %
Linear (Sulhpur price trend line*)
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
75
125
175
225
Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15
ICL UK performance
Potash production '000t Operating income %
Linear (Potash price trend line**)
* Middle east spot FOB ** Std potash Vancouver FOB
Sulphur price trend line*
Potash price trend line**
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Key Takeaways
1,620
536
Revenues Operating profit
1522
133
Revenues Operating profit
2014 results - Potash
2014 results - Phosphates & Fertilizers
$ million
$ million
Solid position in our markets supported by distinctive logistical advantages
Potash capacity expansion to capture the demand growth expected in our strategic markets
Operational excellence initiatives to reduce cost per tonne and improve competitive position
Strategic alliance in China – a major step to solidify our phosphate and specialty fertilizers businesses
Thank You