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Investor Presentation
December 2016
Safe Harbor
2
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 on any analysis of the Company and/or its assets and the information contained in this Presentation. Nothing in this Presentation constitutes an 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, 2015, 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 U.S. 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, 2015 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.
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
Materials by utilizing an integrated value chain based on specialty minerals
2,347 1,463
508
YTD 2016 ($ million)*
Agriculture Engineered Materials Food
*Before elimination of inter-business units sales
4 4
Adding Value throughout Our Backward Integrated Production Chain
Potash & PolysulphateTM
Phosphate
Bromine
Potash fertilizers
PolysulphateTM Specialty fertilizers
Compound NPKs
Green Phosphoric Acid
SSP, TSP, DAP, MAP
Pure Phosphoric Acid
Food additives
Controlled & slow release fertilizers
Clear brine fluids Elemental bromine
Mercury emission
Flame retardants
Liquid & water soluble
fertilizers
Industrial phosphate Salts and acids
P2S5, fire safety
Bromine industrial solutions
Potash & Magnesium Advanced Additives Phosphates Food Specialties Specialty Fertilizers Industrial Products
Agriculture Engineered Materials Food
ICL
Essential Minerals
Division
Specialty Solutions
Division
5
ICL’s Organization Structure: Enabling Strategic Growth
Potash & Magnesium
Specialty Fertilizers
Phosphates Industrial Products
Advanced Additives
Food Specialties
*Before elimination of inter-business units sales
Potash & Mg. 1,500
Phosphates 1,100
Advanced Additives
950
Industrial Products
870
Food Specialties
600
Specialty Fertilizers
700 Potash & Mg.
900
Phosphates 923 Advanced
Additives 752
Industrial Products
711
Food Specialties
508
Specialty Fertilizers
524
FY2015 Sales ($ million) YTD2016 Sales ($ million)
Agriculture Engineered Materials Food
Focus on diversification into Specialty Solutions and competitiveness of assets
Proactive Management In Light of Market Conditions
Consistently examining plan and investments according to:
Strategy alignment
Rate of return
Market conditions
Cash flow requirements
6
Essential Minerals Specialty Solutions
Geographic advantage of core production sites
Strong cash generation
Competitive advantage from upstream operations
Higher organic growth compared to commodity business
Operational Excellence Commercial Excellence Focus on
Adjusted Targeted Operating Income**
7
Improving Our Commodity-Specialty Balance
Sales*
* Before elimination of inter-business units sales ** Before G&A expenses
47% 45%
53% 55%
2014 2015
59% 61%
41% 39%
2014 2015
46% 40% 44%
54% 60% 56%
2016 Q1 2016 Q2 2016 Q3
Essential Minerals Specialty Solutions
37% 36% 32%
63% 64% 68%
2016 Q1 2016 Q2 2016 Q3
Essential Minerals Specialty Solutions
5,858
1,311 1,439 1,452
1,225
260 252
196
1,336
5,497
Long-term goal
Long-term goal
60%
50%
40%
50%
Short mine-to-port distances, proximity to emerging markets
Mineral Asset Base: ICL Dead Sea
A high quality and practically inexhaustible source of potash, bromine and magnesium
Low cost
Near-infinite reserve life
Logistical advantages: stockpiling ability, geographical position
Increased production capability by ~10% through ongoing operational excellence
China
India
IL
Europe
Brazil
US
8
Mineral Asset Base: ICL Dead Sea
9
A high quality and practically inexhaustible source of potash, bromine and magnesium
Low cost
Near-infinite reserve life
Logistical advantages: stockpiling ability, geographical position
Increased production capability by ~10% through ongoing operational excellence
The Dead Sea provides the highest concentration of Bromine
Mineral Asset Base: Potash, Phosphate and PolysulphateTM Sites
10
Logistical advantages: focus on domestic markets, close to ports
Cost per tonne reduction
Production optimization
Potential for increased production
Potash and PolysulphateTM : ICL Iberia, ICL UK
Backward integration to Specialty Solutions
Cost reduction through efficiency and operational excellence
Potential for increased production
Phosphates: ICL Rotem, YPH JV
Financials
1,379 1,383
210 200 6
Q3 2016 Results
Q3 2016 Sales Q3 2016 Adjusted operating income
Numbers may not add up due to rounding
Results demonstrate ICL’s unique advantages: diversification into Specialty Solutions and competitive position of core assets
Disciplined working capital and CAPEX management resulted in positive cash flow
Robust financial position as indicated by latest rating reports. Efficiency measures and strict capital management will improve future position
Q3 2016 Highlights Q3 2016 Financials
12
$ millions Q3 16 Q2 16 % change Q3 15 % change
Sales 1,383 1,377 0.4% 1,379 0.3%
Adjusted operating income 164 163 0.6% 242 (32.2)%
Net income (340) 120 NA 121 NA
Adjusted net income 120 132 (9.1)% 155 (22.6)%
Operating cash flow 249 238 4.6% 124 100.8%
External potash sales (thousand tonnes)
1,293 1,010 28% 1,091 18.5%
Average potash selling price - FOB
199 221 (10)% 283 (29.7)%
242 164
90 30 25 4 27
200
13
ICL’s Unique Advantage: The Balancing Effect of Specialty Solutions
Sales Operating Income
See Q3 2016 press release for a reconciliation of Adjusted operating income to operating income and Adjusted net income to net income.
Excluding G&A and unallocated expenses
US$M US$M
0
100
200
300
400
500
600
700
800
900
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Essential Minerals Specialty Solutions
0
50
100
150
200
250
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Essential Minerals Specialty Solutions
FY2013 FY2014 FY2015 Q1 2016 Q2 2016 Q3 2016
Improved Competitiveness
14
FY2013 FY2014 FY2015 Q1-Q3 2016
Green phosphoric Acid Cost $/tonne FOB
Potash average realized full cost per tonne sold
Operational Excellence
Procurement HR
* Compared to 2013
Potash average realized full cost per tonne sold
Green phosphoric Acid Cost $/tonne FOB
$400M annual efficiency gain contribution by 2016 year-end*
15
Capital Allocation Approach
Drive long-term value creation
Reduce debt level
Solid shareholder’s
return
FINANCIAL STABILITY
Local rating maintained high level at ‘ilAA’ with stable outlook
International rating downgraded one notch to ‘BBB-’ but remained investment-grade with stable outlook
Strong Israeli rating is a major advantage, providing access to financing in Israel at attractive costs
16
Maintain Robust Financial Position Despite Commodity Market Weakness
3,431
3,440
3,423
3,350
3,370
3,390
3,410
3,430
3,450
0
50
100
150
200
250
Q1 2016 Q2 2016 Q3 2016
Cash flow from operations Free cash flow CapEx Net debt
Net debt US$M US$M
A security rating is not a recommendation to buy, sell or hold securities. It may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating
Available credit facilities*: $838 million
* As of September 30, 2016
Committed to Responsible Value Creation
Thank you
Appendices
ICL at a Glance
19
ICL is a leading global specialty minerals company that operates a
unique integrated business model to fulfil essential needs in
three key end markets: Agriculture, Engineered Materials and
Processed Food
Utilizes sophisticated processing and product formulation
technologies to produce downstream / value-added products
Operates low-cost, geographically advantaged assets
~55% of production and more than 95% of sales outside of Israel
FY2015 dividend yield: 4.3% (2)(3)
Company Snapshot
Key Statistics (3) Our Business Divisions
US$Bn
Market Capitalization 4.9
Net Debt 3.4
Enterprise Value 8.3
Main Shareholders Israel Corp 46.0%
PCS 13.9%
3Q2016 3Q2015
Revenue 1.4 1.4
Adj. EBITDA 0.3 0.3
% Margin 21% 25%
Specialty Solutions division: Includes Specialty Fertilizers, Food Specialties, Industrial Products and Advanced Additives business units. Its focus is on growth, product innovation and commercial excellence. Produces, markets and sells a broad range of downstream phosphate, magnesium, bromine and potassium-based additives for food, fire safety, and a broad range of industrial applications.
Essential Minerals division: Includes the Potash & Magnesium and the Phosphate business units. Its focus is on efficiency, process innovation and operational excellence. Mines phosphate, potash and polysulphate® and produces bromine, magnesium and phosphorus compounds
1 Excluding G&A and unallocated expenses; may not sum to 100% due to rounding 2 Dividend yield calculated as total dividends paid in 2015 divided by current market capitalization (December 31st, 2015) 3 Market data as of November 18, 2016; Net debt calculated as total debt less cash, cash equivalents and short term investments 4 Including inter-company sales
Potash & Magnesium
22%
Phosphates 21%
Advanced Additives
17%
Industrial Products
17%
Food Specialties
11%
Specialty Fertilizers
12%
Essential Minerals
Our Business Mix
Essential Minerals
35%
Specialty Solutions
65%
Specialty Solutions
Business Mix (1) (Based on Q1-3/2016 Adj. EBIT)
Sales Mix (4)
(Based on Q1-3/2016 Revenues)
20
Specialty Solutions Business Units’ Main Growth Strategies
Commercial Excellence
Food Specialties
• Increase protein sales
•Growth through integrated formulations
• Increased innovation, new products
• Increase footprint in Emerging Markets
Advanced Additives
•Geographical expansion
•Expand through differentiation
•Become a lean and reliable supplier
Industrial Products
•Margin expansion through pricing strategy and cost reduction
• Innovation, R&D pipeline
•Advocacy
Specialty Fertilizers
•Geographical expansion
•R&D supported growth
•Enter the NOP market
-
200
400
600
800
1,000
1,200
1,400
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
307*
181
43
302
37
1,373
122 124
1,114
0 46
Loans Securitization
21
Convenient Maturity Deployment and Ample Liquidity
Net debt* ~$3.4B
Available liquidity ~$1.0B
* Including approx. $270 million securitizations
ICL Maturities 30/09/2016 (US$ millions)
Average interest rate: 3.1%
Essential Minerals Division
Market Data
Growth Factors - Fertilizers and Food Products
24
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 per capita
World Grains Production & Consumption
25 Grains and Pulses: Barley, Corn, Millet, Mixed Grain, Oats, Rice, Rye, Sorghum, Wheat
16.72%
19.80%
24.57%
14%
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
2.6
Bill
ion
To
nn
e
Consumption Production Stock to Use
Sources: USDA, (Update Nov. 2016)
$3
$5
$7
$9
$11
$13
$15
$17
CHICAGO BOARD OF TRADE (CBOT) CROP PRICES [$/bushel]
Corn
Rice
Soybean
Wheat
World Grain Price Futures (CBOT)
26 Source: USDA, CBOT. Prices as of November 16th 2016
9.70
9.86
3.97
3.39
5.60
27
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 November 17, 2016
FOB NOLA granular KCl
0
100
200
300
400
500
600
700
200
250
300
350
400
450
500
550
600
650
Potash & Magnesium
29
Potash & Magnesium Business Unit
~70%
Potash & Magnesium 2015 Sales of total ICL sales*
* Not including inter-segment sales
~30%
** Project terminated, mining license under negotiation
ICL Dead Sea
ICL UK ICL Iberia
ICL Magnesium
ICL Ethiopia**
~3,500 Employees Worldwide
Cereals 37%
Oilseeds 20%
Tot. Other43%
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 Crop at the Global Level 2010 (Aug 2013)
Potassium Fertilizer Global Use by Crop
30
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
66.3
54.8 55.5
Potash Consumption Growth Forecast
Data: CRU Potash Outlook August 2016
Million tonnes KCl
31
1999-2015 CAGR
2015-2021 Growth
2015-2021 CAGR
2.0% 11.5 Mt 3.23%
After 2020, annual growth rate returns to about 2%
32
1
3
4
5
2
ICL Dead Sea – Raw Material Extraction
Pumping and
evaporation process
1
2
3
4
5
33
Polysulphate™: A New Bulk Specialty Multi Ingredient Fertilizer Targeting 1 Million Tonnes By 2020
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 friendly, no chemical processing or waste products, suitable for chloride sensitive crops and for organic agriculture
Increased market acceptance: ~120k tonnes sold in 2015, ~210k tonnes estimated for 2016
PolysulphateTM addresses new market niches and replaces more costly existing products
Long term potential up to 3 million tonnes
2014 2020
PolysulphateTM production plan K Tonnes
Operating income expected to double by 2020 vs. 2015
Operating margins expected to increase to over 30% by 2020
Transition to PolysulphateTM - Improving cash contribution
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 West Coast ~1,700 35 47 43
China
India
IL
Europe
Brazil
US
Short mine-to-port distances and proximity to emerging markets
1 Israel based on average from Dead Sea to Port of Eilat and Ashdod; Germany based on Werra to Port of Hamburg and Bremerhaven; Canada based on Saskatchewan to Port of Vancouver; Russia based on Starobin to Port of Klaipeda; Spain based on Cabanasas Mine to Port of Barcelona; UK based on Cleveland Potash, Saltburn-by-the-Sea to Teesport Commerce Park
2 Source: ICL estimates, Netpas
• Shorter mine-to-port distances and shorter shipping routes to emerging markets results in lower costs both for land and maritime transportation, as well as faster time to markets
34
Phosphates
36
ICL Rotem
ICL Turkey
~3,500 Employees Worldwide
ICL Germany
ICL The Netherlands
Phosphates Business Unit – the Source of Our Integrated Value Chain
85%
Phosphates 2015 Sales of total ICL sales*
*Not including inter-segment sales
YPH JV
15%
Cajati Brazil
The Phosphate Market and ICL’s Position
37
51.3
56.4
1.90.9 0.4 0.2 0.2
1.9
0.2
48
50
52
54
56
58
Mil
lio
n t
on
ne
P2O
5
Source: CRU, Oct. 2016
Total World P2O5 Consumption Forecast
CAGR 2016-2021= 1.9%
We are active in the DAP, TSP, SSP and Phosphoric Acid
• TSP marketing focuses on Brazil, USA and Europe
SSP marketing focuses mainly on Brazil
• We are the largest supplier of PK fertilizers in Europe
• We are supplying DAP through our YPH JV in China
Total Phosphate (P2O5) Demand Growth Index
38
477
276
126
226
95
50
100
150
200
250
300
350
400
450
5001
990
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
2003
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
2016
20
17
20
18
20
19
20
20
20
21
Ind
ex –
19
90
= 1
00
Brazil India USA China RoW
Phosphate Rock Global Market leaders
SOURCE: McKinsey; team analysis
5
4
3
3
4
5
6
7
9
9
9
10
13
16
30
Total
Mosaic
YTH
Gecopham
Ma’aden
CF Industries
Other companies
Agrium
ICL
216
Simplot
JPMC (Jordan)
Wengfu
CPG (Tunisia)
PhosAgro Apatit
Vale
PotashCorp
85
OCP 1
2
3
4
5
6
7
8
9
10
11
12
13
15
14
Phosphate rock capacity 2011
MT rock annual capacity Ranking
Capacity share
% Company
Players with
significant
rock export
14
7
6
5
4
4
4
3
3
2
2
2
2
2
1
39
*
* Without YPH rock capacity 39
+15%* +58%* +117%* +45%* +63*
780 256 600
1,900
4,000
115
60
700
850
2,500
120
Transforming Into The World’s Leading Specialty Phosphate Player
40
ICL** YPH JV
Thousand tonnes
899 436
1,300
2,750
6,500
Expansions
Phosphate Fertilizers Food Specialties Advanced Additives Specialty Fertilizers
Specialty Commodity
New market supported by Chinese government policy
Grow sales in soluble MAP, MKP and Light Specialties
Build new CRF and WSNPK plants in China
Strengthen ICL PP base in the Asian market
Technical grade phosphoric acid volume growth, in addition to Fosbrasil
Build up niche market applications
Secure long term phosphate reserves
Expand ICL’s commodity portfolio
Establish a position in the Chinese and global commodity phosphates markets (DAP, MAP)
* Increase in capacity compared to 2015
Kunming
Volume increase of about 15%
New multi-ingredient blending plant and lab in China
Leveraging ICL’s expertise to build a new low cost purified acid plant
** Includes N. America and Brazil
Purified Phosphoric Acid
Phosphoric Acid
Commodity Fertilizers
Phosphate Rock
Specialty Fertilizers
Specialty Solutions Division
Specialty Fertilizers
43
Specialty Fertilizers Business Unit
45% 33%
60% 19%
9%
8% 4%
Revenue by product (2015)
Specialty Agriculture
Ornamental Horticulture
Turf and Amenity
Chemicals
Other SF
Specialty Fertilizers 2015 Sales of total ICL sales*
~$700M
~1,000 Employees Worldwide
ICL Haifa
Fuentes
Nutrisi Everris
Americas* - 18%
Asia* - 9%
MEA* - 24%
*Of 2015 sales **including inter-segment sales
YPH JV
Manufacturing site
Pending
Office
Europe* - 49%
Zhapu Pending
Specialty
Light Specialty
Commodities
44
• 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)
Supply chain Production process-technology adding value
Market position R&D - innovate the next generation
Our Advantages in Specialty Fertilizers
• Back integrated • Access to high quality raw material • Efficient supply chain (high synergies)
• Highly professional Agronomic Sales team • Integrated and tailored service • Full product portfolio • Distributor loyalty • Strong Branding
45
• Controlled release fertilizers – low cost production technology
• Environmentally friendly coatings • Fertigation and foliar solubles • Enhanced nutrients and water efficiency
60%
19%
9%
8% 4%
Revenue by product markets SF (2015)
46
ICL Specialty Fertilizers: Sectors & main Brands
Turf & Amenity Sportsfields, Golf and Landscape.
Specialty Agriculture Specialty Inputs for food crops
Ornamental Horticulture (OH) Container Nursery & Greenhouse
Others – Trading / Chemicals
Various industries (examples: caustic soda, Liquid ammonia)
47
ICL Specialty Fertilizers: The Path for Faster than the Market Growth
~700
Solubles /Fertigation
Foliar
Controlled Release Fertilizers
5%
9%
9%
R&D supported growth
Geographic expansion
Cost Position in MAP/MKP
NOP Plant
Water Soluble NPKs in China
Global trends to drive 6-7% annual growth
Regulatory pressure Zero growth in nutrient use from 2020
EU Nitrate Directive
Environmental trends
New grower practices
Market segments
Market Growth
Specialty Agriculture 5-6%
Ornamental Horticulture
1-2%
Professional Turf 0%
Market growth (CAGR) Product line Strategic initiatives
Industrial Products
49
ICL Industrial Products Business Unit
~1,600 worldwide
Of ICL sales in 2015
~20%
Bromine and Phosphorus based flame retardants
Elemental Bromine, Mercury emission control, clear brine fluids, HBr
Solutions for the water treatment and the gas fracking industries
Flame Retardants
Microbial Solutions
Industrial Solutions
Industrial Products - From Assets to Markets
50
Chemistries Key Markets
Back Integration to Customer Solutions
Flame Retardants
Microbial Solutions
Energy & Intermediates
Bromine
Chlorine
Phosphorus
Global Trends Supporting Our Business
51
Population Regulation & Environmental Standard of living
FURNITURE & TEXTILE TRANSPORTATION
WATER TREATMENT
CONSTRUCTION
INTERMEDIATES FOR FOOD,
PHARMA, AGRO OIL & GAS
POWER PLANTS
ELECTRONICS
Global Cost Leader in Bromine
52
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
UndergroundWells
(China)
Sea Water(China, Japan)
Shallow Sea(Ukraine)
Salt Lake(India)
UndergroundWells (U.S.)
Dead SeaOperations
(Israel, Jordan)
• The Dead Sea provides the highest concentration of Bromine
• Cost is related to concentration
• Abundant supply
Source: ICL estimates, MarketsandMarkets
A Global Leader in a Concentrated Market
53
ICL holds the largest capacity Global Bromine Capacity, by producer
280 280
120 120
95 90
92 87
91 81
64 69
2015 2020
Albemarle (Dead Sea)
ICL (Dead Sea)
Other
Albemarle (US)
Chemtura (US)
China
Bromine demand by industry - 2015
Market utilization rates: ~75%
Flame retardants
41%
Brominated organic
intermediates 21%
Clear brine fluids 18%
Industrial 8%
Biocides 6%
Fumigants 2%
Mercury control
3%
742 727
Source: ICL estimates, MarketsandMarkets
Q1-3/2015 Q1-3/2016
2000
2500
3000
3500
54
Industrial Products’ 4 Pillars Strategy: Q1-3/2016 vs 2014
Grow the core business
Organic growth Margin expansion Portfolio management $28M price contribution despite raw material deflation Clearon divestment
US$/T
Elemental bromine - China
Operational excellence Reduction of total costs Cash management ~$20M in savings Over 30% CapEx reduction Reduce working capital as a percentage of sales
Cost reduction
• Flame Retardants Standards • SAFR™ • Merquel® in China/EU • Protect & improve product image • No products banned, new standards in
process in China
Advocacy Grow the core business
New solutions focused on un-met needs
Increased pipeline NPV Outside technical and
business collaborations Significant contribution to
operating income from new products: FR-122P, 1410
New products sales
Advanced Additives
Advanced Additives – Vast Global Footprint and Backward Integration
Kamloops
Rancho Krummrich
Sao Jose
dos Campos
Kunming
Knapsack Lawrence
Carondelet
Aix en
Provence
Oviedo
Sdom/
Beer-Sheva
Monterrey Beer-Sheva
Ladenburg
Calais
Hammond
Cajati 56
Fire Safety
P-Salts, Acids
P2S5
Spec Min / P&C
Industrial Specialties
Acids
Fire Safety
P2S5
Specialty Minerals P4
2015 Sales by Business line 2015 Sales of total ICL sales*
83%
17%
*Not including inter-segment sales
Advanced Additives – A Stable Portfolio With Broad Applications
57
P2O5 Chain
58
Technical Phosphates & Related Specialties; Industrial, Food and Specialty Phosphoric Acids
Key Applications: Metal treatment, water treatment, cleaners, oral care, cola drinks, asphalt modification, others
Example Customers & Distributors: o P&G, Henkel, Colgate, Coca-Cola,
Pepsi, Chemetall o Univar, Brenntag
Specialty Minerals / Paints & Coatings
59
Specialty Minerals P & C
Specialty phosphates and blends, selected organic chemistry
Key Applications: Corrosion Inhibition, Flash Rust Inhibitors, Tannic Stain Inhibitors
Example Customers & Distributors: o Sherwin Williams, Behr Paint o Specialty Distributors based on
mutual exclusivity
Magnesium, Potassium, Calcium,
Carnalite and Sodium salts
Key Applications: Deicing, Nutrition, Pharma, Specialty Steel, Fuel Additives, Rubber, others
Example Customers & Distributors: o Pfizer, Bayer, BASF, Cargill Salt and
GSK o Brenntag Specialties, Barrington
and Scotwood (bagged MgCl2 for US deicing market)
P2S5
60
ICL is the only global manufacturer
High barriers to entry Key customers: Chevron,
Lubrizol, Afton and Infineum
Additional sales into insecticide market
Phosphorus pentasulfide (P2S5) is an essential ingredient for modern lubricants
Fire Safety– Expand Through Differentiation
61
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 chemical industry
Complete and broad portfolio Own testing facilities Fluorine free product innovations
Class B Fire
Fire Safety Products
Food Specialties
Single phosphates
Phosphate blends
Multi-blends
Proteins
Spices
Food Specialties - Providing Solutions to the Global Food Industry
63
Meat
Dairy proteins/other
Bakery
Dairy
Beverages
2015 main market breakdown ~900 Employees
Worldwide 2015 main business line breakdown
64
Categories and Components
Meat Substitutes
65 Source: GS&PA Research, FAO
“Extra“ without meat The vegetarian bestseller
Rovitaris MultiCompounds
Dairy and Beverages
66 Source: GS&PA Research, FAO
Image source: Brand Channel.com
fresh milk
meal
replacer
yoghurt
dairy drink
functional
drink
HIGH PROTEIN APPLICATION IN DAIRY & BEVERAGE
67 Source: GS&PA Research, FAO
10g protein – Designer Whey Protein Blend of WPC, SPI, MPC
10g protein – Pea Protein Isolate
10g protein – SPI
20g protein – Muscle Brownie Protein Blend (WPC, SPI, Wheat Isolate )
20g protein – whey & milk protein
Protein Bars
Protein Drinks
68 Source: GS&PA Research, FAO
Each 8-oz serving from Bolthouse Farms contains 16 grams of protein and at least 9 vitamins and minerals (Protein PLUS Vanilla has 20 vitamins and minerals).
Concept for high protein breakfast replacer
Dairy
69 Source: GS&PA Research, FAO
Contains sodium phosphates & sodium polyphosphate
4g protein – WPC, MPC
Contains WPC & sodium polyphosphate
Contains WPC & sodium phosphates
Increased Global Demand for Proteins
70
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
Dai
ly P
rote
in /
Cap
ita
(g)
Population (mil)
3.0
7.7 0.45
0.2
'60 '70 '80 '90 '00 '10 '20P
Ara
ble
Lan
d (
ha/
cap
ita)
Wo
rld
Po
pu
lati
on
(b
ilio
ns)
The world population grows, and the arable
land per capita decreases
Decade
Source: GS&PA Research, FAO
Expanding product offering via R&D and CAPEX, focusing on protein formulations, to complement our phosphate products
Total Sales New products sales
Q1-3' 2015 Q1-3' 2016
71
ICL Food Specialties: New Blended Solutions Driving Growth
Expertize That Inspires
Total and new products sales continuous increase
82% Increase
11% Increase
1) Phosphate, whey protein, soy protein, pea protein, soluble fiber, modified starches 2) Other Proteins, fibers and hydrocolloids, emulsifiers
Growing share of protein in eating behavior of consumers in emerging markets
Trend for healthier food (taste & consistent nutritional value) in mature markets
Growing demand for unprocessed and non—allergenic food
Strong growth in Dairy Proteins and blended solutions, portfolio shifts more towards value ingredients
Business growth is driven by
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