ICL Group Ltd. — Earnings Release 2017

Feb 14, 2018

Q4 & FY 2017 Results

Asher Grinbaum | Acting CEO February 14th , 2017

Important Legal Notes

Disclaimer and Safe Harbor for Forward-Looking Statements

The information contained herein in this presentation or delivered or to be delivered to you during our presentation does not constitute an offer, expressed or implied, or a recommendation to do any transaction in Israel Chemicals Ltd. ("ICL" or "Company") securities or in any securities of its affiliates or subsidiaries.

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.

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, 2016, and in subsequent filings with the Tel Aviv Securities Exchange (TASE) and/or the U.S. Securities and Exchange Commission (SEC). Therefore actual results, performance or achievements of the Company could differ materially from those described in or implied by such forward-looking statements. 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 IFRS 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 IFRS. Please refer to our Q4 2017 press release for the quarter ended December 31, 2017 for a reconciliation of the non-GAAP financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with IFRS.

Q4 and Full Year 2017 Results Summary

• Strong Q4 and full year performance:
  • ✓ Growth of 20% in adjusted operating income (~160% in Q4 2017 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	Q4 17	Q4 16	% change	FY2017	FY2016	% change
Sales	1,361	1,338	1.7%	5,418	5,363	1.0%
Operating income (loss)	189	72	162.5%	629	(3)	NA
Adjusted operating income*	168	140	20.0%	652	582	12.0%
Adjusted EBITDA	276	264	4.5%	1,059	1,051	0.8%
Net income (loss)	155	32	384.4%	364	(122)	398.4%
Adjusted net income	142	114	24.6%	389	451	(13.7) %
Free cash flow**	137	127	7.9%	405	346	17.1%
Net Debt	3,037	3,264	(7.0)%	3,037	3,264	(7.0)%
Average potash selling price - FOB	222	202	9.9%	219	211	3.8%

* Operating income attributed to segments before G&A and other expenses

**See appendix for reconciliation of Free cash flow

3

Business Performance & Major Developments

Specialty Solutions
\$ million	Q4 2017	Q4 2016	FY2017	FY2016
Sales*	651	601	2,650	2,553
Segment O/I**	114	121	554	534

2017 profit growth driven by Advanced Additives and Industrial Products business lines

• In Industrial Products, supportive bromine market conditions continued in the fourth quarter. However, operating margins were negatively impacted by lower sales of clear brine fluids
• Fourth quarter Advanced Additives' results supported by higher sales along the P2O5 value chain, driven by value oriented pricing strategy and expansion of customer base, as well as by off-season wildfires in California
• Fourth quarter Food Specialties results reflect the continuous trends in 2017 – lower sales to Russia and lower dairy protein sales to a major customer

\$ million Q4 2017 Q4 2016 FY2017 FY2016
Sales*	780	800	3,008	3,036
Segment O/I**	124	103	359	398

2017 performance driven by potash market recovery, offset by challenges in commodity phosphate

• Growth in Potash operating income supported by strong demand and tight supply, with record annual sales to Brazil
• Record fourth quarter results for the Specialty Fertilizers business line led by growth in specialty agriculture
• Higher Q4 Sulphur costs and production slowdown at YPH JV due to maintenance and at ICL Rotem, offset contribution from phosphate price recovery

Significant Achievements in 2017 Setting the Base for a Promising Future

2017 ACHIEVEMENTS LOOKING INTO 2018

• ~\$1.2b Divestments of IDE (water desalination), Fire Safety and Oil Additives businesses
• Consistently positive FCF through optimization of CapEx and working capital and reduction in G&A expenses
• Significant improvement in YPH performance
• Growth in Specialty agriculture despite commodity headwinds
• Acceleration of transfer into Polysulphate at ICL UK, growing Polysulphate sales by ~50%
• Beneficial long-term natural gas supply agreement

• Significant overhang was removed through the successful sale of PCS's holdings in ICL

• Reduce debt ratios while still investing in growth

• Executing long-term infrastructure CapEx projects
• Focus on specialty agriculture growth
• Continue both organic and inorganic growth of Specialty businesses
  • ✓ Grow the post-divestment Advanced Additives
  • ✓ Return to growth trajectory in Food Specialties
  • ✓ Maintain high profit margins at Industrial Products
• Complete transition to Polysulphate at ICL UK.
• Continuous improvement in the competitiveness of our mineral assets in Spain, China and Israel

Our Strategic Direction

Financial Results

Kobi Altman CFO

Main Financial Figures and Analysis

* See appendix for reconciliation of free cash flow

\$ millions	Q4 17	Q4 16	% change	2017FY	2016FY	% change
Sales	1,361	1,338	1.7%	5,418	5,363	1.0%
Operating income (loss)	189	72	162.5%	629	(3)	NA
Adjusted operating income	168	140	20.0%	652	582	12.0%
Net income (loss)	155	32	384.4%	364	(122)	398.4%
Adjusted net income	142	114	24.6%	389	451	(13.7)%
Free cash flow	137	127	7.9%	405	346	17.1%

Q4 2017 Sales (\$M) Q4 2017 Adjusted operating income (\$M)

Segment Contribution to Operating Income

Effective Tax Rate

\$ million	2017	2016
Adjusted income before tax	528	506
Income tax rate (including resource tax)	26%	24%
	136	121
Carryforward losses not recorded for tax purposes	25	26
	161	146
	30%	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	156	100
Actual Effective tax rate	30%	20%
Reported Effective tax rate	31%	N/A

See Q4 2017 press release for a reconciliation of Adjusted operating income to operating income

Specialty Solutions Bridge Analysis

Sales (\$M) Segment operating income (\$M)

Excluding G&A and unallocated expenses

Essential Minerals Bridge Analysis

Sales (\$M) Segment operating income (\$M)

Excluding G&A and unallocated expenses

Prudent Capital Management Leading to Strong Cash Flow Generation

We Exercise Strict CapEx* Management While Still Investing in Future Growth…

Q4 and FY2017 Key Takeaways

Thank You

Appendix

Specialty Solutions Segment

Specialty Solutions' Sales and Operating Income FY2017

Sales (\$M) Adjusted operating income (\$M)

Excluding G&A and unallocated expenses

See Q4 2017 financial reports for a reconciliation of Adjusted operating income to operating income and Adjusted net income to net income.

Specialty Solutions' Business Line SalesQ4 2017

Industrial Products Advanced Additives

Food Specialties

19

Essential Minerals Segment

Essential Minerals' Sales and Operating Income FY2017 Sales (\$M) Adjusted operating income (\$M) 3,036 3,008 18 9 1 ^{398 359 18 7 6 9} 30 31

Excluding G&A and unallocated expenses

See Q4 2017 press release for a reconciliation of Adjusted operating income to operating income and Adjusted net income to net income.

Essential Minerals' Business Line Sales Q4 2017

Potash Business Stand-Alone Bridge Analysis Q4 2017 Sales (\$M) Business unit operating income (\$M) See Q4 2017 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 401 6 1

Free Cash Flow Reconciliation

	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1 2015	Q2 2015	Q3 2015	Q4 2015	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017	Q2 2017	Q3 2017	Q4 2017
Cash flow from operations	167	120	295	310	66	325	124	58	222	238	249	257	195	199	176	277
Purchase of property, plant and equipment and intangible assets	(239)	(209)	(207)	(180)	(150)	(155)	(164)	(150)	(187)	(154)	(153)	(138)	(106)	(113)	(98)	(140)
Dividend from investees	9	3	2	3	12	-	4	3	3	1	-	8	3	-	-	-
Proceeds from sale of fixed assets	-	-	-	-	-	-	-	-	-	-	-	-	12	-	-	-
Free Cash Flow	-63	-86	90	133	-72	170	-36	-89	38	85	96	127	104	86	78	137 24

Non GAAP Financial Measures

We disclo se in this Quarterly Repo rt non-IFRS financial measures titled adjusted operating income, adjusted net income att ributable t o the Company's shareholder s, adjusted EBITDA and free cash flow. Our management uses adju sted operating income, adju sted net income att ributable t o the Company's shareholder s and adju sted EBITDA t o facilitate operating per fo rmance compariso ns from period to period and present free cash flow t o facilitate a review o f our cash flows in period s. We calculate our adju sted operating income b y adju sting our operating income to add certain items, as set fo rt h in t he reconciliation table "Adju stment s to repo rted operating and net income" abo ve. Certain o f t hese items may recur. We calculate our adju sted net income att ributable to t he Company's shareholder s b y adju sting our net income attributable to t he Company's shareholders to add certain items, as set fo rt h in t he reconciliation table "Adju stment s to reported operating and net income" above, excluding t he total tax impact o f such adju stment s and adju stment s att ributable to t he non-cont rolling interest s. We calculate our adju sted EBITDA by adding back to t he net income att ributable to t he Company's shareholder s t he depreciation and amo rtization, financing expenses, net, taxes o n income and t he items presented in t he reco nciliation table "Adju sted EBITDA fo r t he periods o f activit y" below which were adju sted fo r in calculating t he adju sted operating income and adju sted net income att ributable to t he Company's shareholders. We calculate our free cash flow as our cash flows from operating activities net o f our purchase o f propert y, plant, equipment and intangible asset s, and adding Proceeds from sale o f propert y, plant and equipment and Dividend s from equit y-accounted investees during such period as presented in t he reconciliation table under "Calculation o f free cash flow".

You should not view adju sted operating income, adju sted net income att ributable to t he Company's shareholder s o r adju sted EBITDA as a substit ute fo r operating income o r net income att ributable t o the Company's shareholder s determined in acco rdance wit h IFRS, o r free cash flow as a substit ute fo r cash flows from operating activities and cash flows u sed in investing activities, and you should note t hat our de finitions o f adju sted operating income, adju sted net income att ributable to t he Company's shareholder s, adju sted EBITDA and free cash flow may differ from t ho se used b y ot her companies. However, we believe adju sted operating income, adju sted net income att ributable to t he Company' s shareholder s, adjusted EBITDA and free cash flow provide u se ful in fo rmation t o bot h management and invest o rs by excluding certain expenses t hat management believes are not indicative o f our ongoing operatio ns. In particular fo r free cash flow, we adju st our Capex to include any Proceeds from sale o f propert y, plant and equipment becau se we believe such amount s o ffset the impact o f our purchase o f propert y, plant, equipment and intangible asset s. We furt her adju st free cash flow t o add Dividend s from equit y-accounted investees because receipt o f such dividends a ffect s our residual cash flow. Free cash flow does not reflect adju stment fo r additional items t hat may impact our residual cash flow fo r discretionar y expendit ures, such as adju stment s fo r charges relating t o acquisitions, ser vicing debt obligations, changes in our depo sit account balances t hat relate t o our investing activities and ot her non-discretionar y expendit ures. Our management uses t hese non-IFRS measures t o evaluate t he Company's bu siness st rategies and management 's per fo rmance. We believe t hat t hese non-IFRS measures provide u se ful info rmation t o invest o rs becau se t he y improve t he comparabilit y o f t he financial result s between periods and provide fo r greater t ransparency o f key measures used t o evaluate our per fo rmance.

We present a discu ssio n in t he period-t o-period compariso ns o f t he primar y driver s o f changes in t he company's result s o f operations. This discu ssio n is based in part o n management 's best estimates o f t he impact o f t he main t rends in it s businesses. We have based t he following discussio n o n our financial statement s. You should read t he following discussion t oget her wit h our financial statement s.