Icl Group Ltd. · TASE:ICL
Icl — Israel Chemicals — Investor Presentation (January 2016)
74 slides from Icl's investor presentation, Jan 11, 2016
Slide 1: Investor Presentation January 2016
Investor Presentation January 2016
Slide 2: Safe Harbor
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 perfor
Slide 3: Our Vision: Fulfilling Humanity's Essential Needs
Our Vision: Fulfilling Humanity’s Essential Needs 3 Rise of the middle class and standard of living across the globe Increased demand for and use of natural resources Environmental stewardship and sustainability We fulfill essential needs in 3 core end markets – Agriculture , Food and Engineered Mat
Slide 4: Strategy Highlights – Build Integrated Company Focused On Specialty End Markets
Strategy Highlights – Build Integrated Company Focused On Specialty End Markets 4 Unique business model Global i ntegrated value chain into specialty markets Grow core business x Grow Specialty - R&D, Organic growth, bolt - on M&A x Maintain cost leadership through raw material backward integration
Slide 5: Integrated Value Chains Provide Significant Synergies
Integrated Value Chains Provide Significant Synergies 5 5 Phosphate Fertilizers Fertilizer Grade Phosphoric Acid Compound Fertilizers Raw Materials Fertilizers Industrial Products Performance Products DSM Product Sold Phosphate Rock Source Major Intermediate & Finished Products
Slide 6: Integrated Value Chains Provide Significant Synergies
Integrated Value Chains Provide Significant Synergies 6 6 Phosphate Fertilizers Fertilizer Grade Phosphoric Acid Food Grade Phosphoric Acid Phosphate Salts Compound Fertilizers Specialty Fertilizers Raw Materials Fertilizers Industrial Products Performance Products DSM Product Sold Phosphate Rock El
Slide 7: Integrated Value Chains Provide Significant Synergies
Integrated Value Chains Provide Significant Synergies 7 7 Phosphate Fertilizers Fertilizer Grade Phosphoric Acid Food Grade Phosphoric Acid Salt ( NaCl ) Phosphate Salts Pure Magnesium Magnesium Alloys Compound Fertilizers Salt ( NaCl ) Potash Specialty Fertilizers Chlorine based Biocides Bromine Co
Slide 8: Our Mineral Assets – the Base of Our Integrated Value Chain
Our Mineral Assets – the Base of Our Integrated Value Chain 8 ▪ Logistical advantage - close to port of Barcelona ▪ Vast reserves ▪ C ost reduction initiatives and 0.3 million tonnes brownfield expansion to lower cost per tonne by about € 40 in 2020 vs. 2014 ▪ Significant long term expansion opportu
Slide 9: Improving Our Commodity - Specialty Balance
Improving Our Commodity - Specialty Balance Sales Operating Income Specialty 56% Specialty 35% Commodity 44% Specialty 48% Specialty 62 % Commodity 38% Commodity 65% Commodity 52% 2014 2014 2020 2020
Slide 10: Commodity Business
Commodity Business 10 End Markets Segments Business Units Potash Fertilizers Phosphate F ertilizers Contribution to sales* ~$ 1 , 500 M ~$850M * 2015E, including inter - segment sales
Slide 11: Solid Commodity Platform to Support Specialty Expansion and Cost Position
2014A 2016E 2020E 5.2 5.6 5.3 4.5 7 7 1.9 2.8 2.8 Phosphate Fertilizers Phosphate Rock MOP Solid Commodity Platform to Support Specialty Expansion and Cost Position 11 World scale commodity base ensures competitiveness Source: ICL estimates Million Tonnes ~2,350 Share in ICL’s revenue
Slide 12: Commodity Business Units' Expected Top and Bottom Line Growth
Commodity Business Units’ Expected Top and Bottom Line Growth Potash operating income ($M) 1,816 765 Bulk phosphates Potash Sales ($M) 536 77 Bulk phosphates Potash Operating Income ($M) Potash ~ 0 % 1 - 3 % Phosphates 5 - 7 % 8 - 10 % CAGR 2014 - 2020 Sales O/I
Slide 13: Specialty Business
Specialty Business 13 End Markets Segments Business Units Flame Retardants Industrial Solutions Advanced Additives Food Specialties Specialty Fertilizers Contribution to sales* ~$700M ~$ 400 M ~$700M ~$700M ~$650M * 2015E, including inter - segment sales
Slide 14: Transforming Into The World's Leading Specialty Phosphate Player
Purified Phosphoric Acid Specialty Fertilizers Phosphoric Acid Commodity Fertilizers Phosphate Rock 230 780 600 1,900 4,000 60 115 700 850 2 , 500 120 Transforming Into The World’s Leading Specialty Phosphate Player 14 +64%* +15% +117% +45% + 63 % ICL YPH JV Thousand tonnes 410 899 1,300 2,750 6 , 5
Slide 15: Polysulphate: Bulk Specialty Multi-Ingredient Fertilizer
15 Polysulphate™: Bulk Specialty Multi - Ingredient Fertilizer Readily available new natural fertilizer containing four nutrients ~50% ~ 14 % K S ~ 36 % Mg+Ca □ Over 200 million tonnes resources in the ICL UK potash mine □ Low production cost allows attractive economics for farmers □ Environmentally
Slide 16: ICL Specialty Fertilizers: The Path for Faster than the Market Growth
16 1 Other straights includes MAP/MKP, Calcium Nitrate, SOP ICL Specialty Fertilizers: The Path for Faster than the Market Growth ~ 700 Solubles / Fertigation Foliar Controlled Release Fer til izers 5 % 9 % 9 % R&D supported growth Geographic expansion Cost Position in MAP/MKP NOP Plant Water Solubl
Slide 17: Industrial Products' Growth Projects - a Significant Contribution To Future Sales
17 Industrial Products’ Growth Projects - a Significant Contribution To Future Sales FURNITURE & TEXTILE TRANSPORTATION WATER TREATMENT CONSTRUCTION INTERMEDIATES FOR FOOD, PHARMA, AGRO OIL & GAS POWER PLANTS ELECTRONICS ~ 1 , 100 Develop new applications while adopting a price over volume strategy
Slide 18: Food Specialty – A Fully Integrated Provider of Texture and Stability Solutions
18 Food Specialty – A Fully Integrated Provider of Texture and Stability Solutions 1 ) Phosphate, whey protein, soy protein, pea protein, soluble fiber, modified starches 2 ) Other Proteins, fibers and hydrocolloids, emulsifiers V ision To become a recognized global provider of texture and stability
Slide 19: Advanced Additives' Growth Mainly Driven by M&A and R&D
Grow revenues and operating margin by about 30 % in 2020 vs . 2014 Advanced Additives’ Growth Mainly Driven by M&A and R&D Organic growth in paints and coatings for the metal, wood and concrete markets, with expected growth of 10 - 15 % p.a. Fire Safety growth principally from class B foam in N.
Slide 20: Specialty Business Units' Expected Top and Bottom Line Growth
55 8 120 101 49 770 470 867 653 525 Food specialties Advanced additives Industrial solutions Flame retardants PolysulphateTM Specialty Fertilizers (Incl. SOP, NOP) Specialty Business Units’ Expected Top and Bottom Line Growth 20 Sales ($M) Food specialties 8 - 10% 9 - 11% Advanced additives 3 - 5 %
Slide 21: Operational Excellence & Efficiency
Operational Excellence & Efficiency
Slide 22: Efficiency Initiatives Contribution – Segment Breakdown
Efficiency Initiatives Contribution – Segment Breakdown 22 USD millions/year 2016 efficiency gains run - rate of $ 350 M Segment run - rate contribution* 2016E 2015E 2014A ICL PP ICL IP Phosphates and fertilizers Potash $ 240 million $ 120 million $ 350 million Anticipated labor costs savings in 201
Slide 23: Significant Contribution From Operational Excellence Program At Our Major Sites
Significant Contribution From Operational Excellence Program At Our Major Sites 23 ICL Dead Sea : 400 kt additional production at ICL Dead Sea Labor reduction ~ 10 % of workforce Cost per tonne reduction through operational excellence ICL UK : Labor reduction Labor reduction of ~ 10 % P 2 O 5 produc
Slide 24: Significant Cost Reduction at ICL Fertilizers
Significant Cost Reduction at ICL Fertilizers 24 Cost reduction initiatives are bearing fruits 100 % 92 % 87 % 81 % GTSP Cost indexed ( $/ tonne FOB) 100 % 88 % 81 % 72 % White phosphoric Acid Cost indexed ( $/ tonne FOB) 83 % 91 % 99 % 100 % Phosphate Rock Cost indexed ( $/ tonne FOB) * Calculati
Slide 25: Financials
Financials
Slide 26: Solid Dividend Yield
Solid Dividend Yield 26 Dividend Yield (%) 1.89 2.24 3.28 11.21 3.32 5.42 7.38 6.72 6.05 3.83 4.30 0.00 0.20 0.40 0.60 0.80 1.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 Dividends per Share (US$) Dividend Yield (%) Linear (Dividend Yield (%)) Dividend/Share (US$)
Slide 27: Declining Share of Israeli Operations
Declining Share of Israeli Operations 69 % 73 % 76 % 69 % 60 % 43 % 39 % 42 % 44 % 34 % 74 % 70 % 65 % 70 % 35 % 71 % 68 % 64 % 60 % 54 % Israel % - CAPEX Israel % - Operating Income 27 CAPEX is expected at a level below $ 800 million
Slide 28: Balanced Business Model Supports Profitability Despite Potash Headwinds
960 988 1 , 196 910 930 2013 A 2014 A 2015 E 2016 E ICL operating income ICL operating income - potash price effect Balanced Business Model Supports Profitability Despite Potash Headwinds 28 ICL’s operating income adjusted to potash price developments Specialty business, lower costs and cost reducti
Slide 29: ICL Attractive Investment Case
ICL Attractive I nvestment C ase 29 Solid commodity base and growing specialty business to provide ROIC of about 15 % Efficiency improvement to deliver $ 350 M EBITDA contribution Total specialty business growth by 2020 : 4 - 6 % p.a. Going global: Improved resource balance Grow specialties in emerg
Slide 30: Committed to Responsible Value Creation Thank you
Committed to Responsible Value Creation Thank you
Slide 31: Appendices
Appendices
Slide 32: ICL at a Glance
ICL at a Glance 32 ICL is a leading global specialty minerals company that operates a unique integrated business model to fulfil essential needs in three key end markets : Agriculture, Engineered Materials and Processed Food Utilizes sophisticated processing and product formulation technologies
Slide 33: Q3 2015 Results
1 , 560 1 , 379 17 65 84 75 74 30 Q 3 2015 Results Q 3 2015 Sales Q 3 2015 Operating income Numbers may not add up due to rounding $ millions Q3 15 Q3 14 % change Q2 15 % change Revenues 1 , 379 1 , 560 ( 11.6 )% 1 , 196 15.3 % Operating income 197 262 ( 24.8 )% 107 84.1 % Adj. operating income 242
Slide 34: Agriculture
Agriculture
Slide 35: Growth Factors - Fertilizers and Food Products
Growth Factors - Fertilizers and Food Products 35 Meat Consumption Population Fertilizer consumption 1.0 2.0 3.0 4.0 5.0 6.0 Index, relative to 1962 Yield Growth Required to Meet World’s Food Needs Population, Meat and Fertilizers [Base 1962 ] Source : IFA, USDA, USA Census Diminishing arable land p
Slide 36: World Grains Production & Consumption
World Grains Production & Consumption 36 Grains and Pulses: Barley, Corn, Millet, Mixed Grain, Oats, Rice, Rye, Sorghum, Wheat 16.72 % 19.80 % 22.91 % 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 Billion Tonne Consumption Production Stock to Use Sou
Slide 37: World Grain Price Futures (CBOT)
World Grain Price Futures (CBOT) 37 Source: USDA, CBOT . Prices as of January 7 th 2015 $ 11.82 $ 4.62 $ 3.51 $ 8.62 $3 $5 $7 $9 $11 $13 $15 $17 CHICAGO BOARD OF TRADE (CBOT) CROP PRICES [$/bushel] Corn Rice Soybean Wheat
Slide 38: Fertilizer Prices
38 Fertilizer Prices Potash Prices FOB Vancouver standard KCl US$/t spot US$/t spot Average DAP fob Tampa Average GTSP, fob North Africa Phosphate Prices * Source: Fertilizer Week, prices as of December 12 , 2015 FOB NOLA granular KCl 200 250 300 350 400 450 500 550 600 650 0 100 200 300 400 500 600
Slide 39: Fertilizers are Affordable
39 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Index of Fertilizer Price Ratio to GPI Base 2002 MOP/GPI DAP/GPI Fertilizers are Affordable *GPI = Grain Price Index formula: [(wheat price* 7 ) + (maize price* 8 ) + (rice price* 4.5 ) + (soybean price* 2.5 )] / 22 ] Source: CBOT, Fertilizer Week & ICL
Slide 40: Potassium Fertilizer Global Use by Crop
Cereals 37 % Oilseeds 20 % Tot. Other 43 % Wheat 6.2 % Rice 12.6 % Maize 14.9 % Other Cereals 3.7 % Soybean 9.0 % Oil Palm 7.2 % Other Oilseeds 3.5 % Fibre Crops 2.8 % Sugar Crops 7.7 % Roots/Tubers 3.8 % Fruits 6.6 % Vegetables 10.0 % Oth Crops 11.8 % Source: IFA – Assessment of Fertilizer Use by C
Slide 41: Potash Demand Growth Estimates
China China China China China India India India India India Brazil Brazil Brazil Brazil Brazil USA USA USA USA USA SE Asia SE Asia SE Asia SE Asia SE Asia RoW RoW RoW RoW RoW China India Brazil RoW 72 53 62 Potash Demand Growth Estimates Data: CRU, Updated: March 2015 - CAGR -
Slide 42: Supply Development – Capability Factor
62 72 Supply Development – Capability Factor Data: CRU, DSW Brownfields Greenfields 2014 Base Capability Brownfields Mt 2014 2020 2025 Demand 62 72 80 Supply 73 91 105 Gap 11 19 25 Utilization rate 85 % 79 % 76 % Greenfields new entrants Greenfields existing players 91 Million tonnes KCl
Slide 43: Fertilizer P2O5 Demand Growth Index
Fertilizer P 2 O 5 Demand Growth I ndex 43 5.0 7.7 4.0 12.1 18.3 50 100 150 200 250 300 350 400 450 Index – 1990 = 100 Brazil India USA China RoW Million Tonnes P 2 O 5
Slide 44: ICL Fertilizers: A Global Manufacturer of Products that Fulfills Essential Needs
44 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 ICL Fertilizers: A Global M anufacturer of Products that Fulfills E ssential N eeds in the Agriculture Market Potash Fertilizers Phosphate
Slide 45: Strategic Geographic Advantage
Strategic Geographic Advantage Clear Service Advantage to Developed and Emerging Markets Distance Destination (Days) Country of Departure Mine - to - Port (km) (1) China India Brazil Israel ~200 23 11 22 UK ~30 34 22 20 Spain ~85 27 15 17 Germany ~350 34 23 20 Russia / Belarus ~600 39 27 25 Canada W
Slide 46: ICL Dead Sea – Raw Material Extraction
46 1 3 4 5 2 ICL Dead Sea – Raw Material Extraction Pumping and evaporation process 1 2 3 4 5
Slide 47: The Phosphate Market and ICL's Position
47 The Phosphate Market and ICL’s Position 43.0 46.4 - 0.2 0.2 0.4 1.7 1.2 2014 consumption USA China Brazil India RoW 2019 consumption Million tonnes P 2 O 5 Source: CRU We are active in the TSP, SSP and Phosphoric Acid • TSP marketing focuses on Brazil, USA and Europe SSP marketing focuses mainly
Slide 48: Specialty Fertilizers vs. Commodities
Specialties Light Specialties Commodities • Added value • Higher prices • Smaller volumes • Selective distribution Specialty Fertilizers vs. Commodities ▪ CRF (Controlled Release Fertilizers) ▪ WSNPK (Water Soluble Fertilizers) ▪ NOP (Potassium Nitrate) ▪ CN (Calcium Nitrate) ▪ Soluble ( MAP/MKP) ▪
Slide 49: Our Advantages
Our Advantages Supply chain Production process - technology adding value Market position R&D Innovate the next generation • Controlled release fertilizers • Fertigation and foliar solubles • Enhanced nutrients and water efficiency • Back integrated • Access to high quality raw material • Efficient s
Slide 50: Geographical Expansion
Geographical Expansion 50 Production moves closer to Emerging Markets High logistic synergies Improve Yield & Quality Innovative technology Market education Worldwide Agronomist team Focus on Plants needs Knowledge and experience in the market Strategic alliance with YTH
Slide 51: ICL Iberia – Consolidation and Expansion
51 ICL Iberia – Consolidation and Expansion • Phoenix I+ II ( 2020 ): capacity expansion of Suria to 1 , 080 K tonnes , closure of Cabanasas mine, expansion of granular capacity to 1 , 030 K tonnes . • Phoenix III ( 2020 ): new crystallization plant aimed to expand Suria’s Center capacity by extra 2
Slide 52: ICL's Long Term Commitment to Catalonia
ICL's long term Commitment to Catalonia 52 □ Master Plan signed between the Government of Catalonia and ICL defines the development for the next decades □ Development of mining and operations □ Adaptation of logistics via rail and port and roads □ C ommitment to the environment: restauration and was
Slide 53: Fulfilling Potash Demand Growth Potential in India
53 Fulfilling Potash Demand Growth Potential in India An ICL & IPL JV, Bringing India to the state of the art potash fertilization - K +K The program enters its 3 rd year, covers 52 districts in 9 states around India 21 experienced agronomists help providing evidence of the profitable use of potash
Slide 54: Africa – Driving Demand in an Unexploited Potash Market
54 Africa – Driving Demand in an Unexploited Potash Market Potential potash consumption of more than 400 k tonnes between Ethiopia, Tanzania & Kenya. Current consumption – 40 - 50 k tonnes □ Africa has 12 % of the world’s arable land but only 20 % is cultivated □ Only 7 % is irrigated ( 40 % in Asia
Slide 55: Transforming Into The World's Leading Specialty Phosphate Player
Transforming Into The World’s Leading Specialty Phosphate Player 55 ~$ 180 M in the JV Investment ~RMB 2 , 900 (~$ 450 M) in year 1 to ~RMB 3 , 900 (~$ 600 M) in year 5 Revenues Break even to low single digits in year 1 to low teens in year 5 Operating Income Margins About $ 340 million spread over
Slide 56: Engineered Materials
Engineered Materials
Slide 57: ICL Industrial Products: Vast Global Footprint
ICL Industrial Products: Vast Global Footprint 57 2500 Employees worldwide Of ICL sales in 2014 20 % EMEA Americas Asia Plant Sales R&D Sales by region $ 0.8 B sales 1 - 9 / 2015
Slide 58: ICL Industrial Products - From Assets to Markets
ICL Industrial Products - From Assets to Markets 58 Bromine Phosphorus Mineral Salts Magnesium Chlorine Flame Retardants Energy and Intermediates Microbial Solutions Mineral Applications Chemistries Key Markets Back Integration to Customer Solutions
Slide 59: Global Trends Supporting Our Business
Global Trends Supporting Our Business 59 Population Regulation & Environmental Standard of living FURNITURE & TEXTILE TRANSPORTATION WATER TREATMENT CONSTRUCTION INTERMEDIATES FOR FOOD, PHARMA, AGRO OIL & GAS POWER PLANTS ELECTRONICS
Slide 60: Global Cost Leader in Bromine
Global Cost Leader in Bromine 60 0.02 – 0.03 0.03 – 0.05 0.5 – 0.9 3.5 – 4.5 2.5 – 5.5 11.0 – 12.0 g/liter Underground Wells (China) Sea Water (China, Japan) Shallow Sea (Ukraine) Salt Lake (India) Underground Wells (U.S.) Dead Sea Operations (Israel, Jordan) • The Dead Sea provides the highest conc
Slide 61: A Global Leader in a Concentrated Market
A Global Leader in a Concentrated Market 61 ICL holds the largest capacity Global Bromine Capacity, by producer 280 280 120 120 95 91 92 88 93 83 64 69 2014 2019 Albemarle (Dead Sea) ICL (Dead Sea) Other Albemarle (US) Chemtura (US) China Bromine demand by industry - 2014 Market utilization rates: 7
Slide 62: ICL Performance Products: Overview
ICL Performance Products: Overview 62 Of ICL Sales in 1 - 9 / 2015 28 % 54 % 41 % 5 % Non Core 3 , 300 Employees Worldwide Advanced Additives Food Specialties Sales by Business unit $ 1.1 B sales in 1 - 9 / 2015 Americas 40 % Asia/Pacific 15 % EMEA 45 %
Slide 63: ICL Performance Products – Business Lines
63 ICL Performance Products – Business Lines 2015 Fire Safety Acids Industrial specialties P 4 P 2 S 5 Whey/Other Dairy Beverages Bakery Meat
Slide 64: Advanced Additives – A Stable Portfolio With Broad Applications
Advanced Additives – A Stable Portfolio With Broad Applications 64
Slide 65: Advanced Additives – Expand Through Differentiation
Advanced Additives – E xpand Through Differentiation 65 Class A Fire ▪ ICL provides products and services that help prevent, control, and suppress fires ▪ World - wide reputation ▪ A strong market position ▪ 2014 acquisition of Auxquimia: specialists in the Class B Foam for oil, refinery and chemica
Slide 66: Food
Food
Slide 67: Food Specialties – What We Do
67 Food Specialties – What We Do Linking Markets with Consumer Trends Sugar Fat Sodium Proteins Fibers Minerals Antioxidants Healthy Reduction versus Healthy Enhancements
Slide 68: Food Specialties - Increased Global Demand for Proteins
Food Specialties - Increased Global Demand for Proteins 68 Upside potential for protein consumption per capita Brazil China Ethiopia Germany India Indonesia Nigeria USA 40 60 80 100 120 0 500 1,000 1,500 2,000 Daily Protein /Capita (g) Population (mil) 3.0 7.7 0.45 0.2 '60 '70 '80 '90 '00 '10 '20P A
Slide 69: Food Specialties – Add Technology Platforms: Whey Proteins in Europe
Food Specialties – Add Technology Platforms : Whey Proteins in Europe 69 ▪ Acquisition of Prolactal / Rovita in Q 1 / 2015 is a big step in implementing the strategy ▪ 2014 annual revenue of $ 110 M; market growth of approximately 10 % annually ▪ Proprietary technology can be expanded into other reg
Slide 70: Efficiency and Operational Excellence - Examples
Efficiency and Operational Excellence - Examples
Slide 71: Procurement Savings: Three Potential Levers
Procurement Savings: Three Potential Levers What did we do? • One global ICL approach – regions & management level • Coordination alignment between global and regional • Excellent global team work • Exploration of supply options over the entire value chain • One global contract or no contract Result
Slide 72: CAPEX Value Engineering
As project progresses, budget is committed, ability to change project decisions/add value decreases: 10 0 % Low High Project life cycle 0 % CAPEX Value Engineering ▪ A systematic and structured approach for improving projects, products, and processes ▪ Used to analyze and improve manufacturing produ
Slide 73: Shared Services Contribution
Shared Services Contribution x Reduce and optimize labor costs x Increase and optimize productivity x Meet and exceed service quality levels x Drive centralization as part of "One ICL" Vision Full time employees 50 91 158 184 188 2015 2016 2017 2018 2019 Accumulated employee reduction Accumulated an
Slide 74: Thank you
Thank you SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Israel Chemicals Ltd. By: /s/ Kobi Altman Name: Kobi Altman Title: Executive Vice President an
Israel Chemicals — Investor Presentation (January 2016) on 6ix