ICL Group Ltd. — Interim / Quarterly Report 2015

Nov 12, 2015

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----- Start of picture text ----- Q3 2015 Results----- End of picture text -----

Mr. Stefan Borgas | President & CEO November 12, 2015

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----- Start of picture text ----- Important Legal Notes----- End of picture text -----

The information delivered or to be delivered to you does not constitute an offer or a recommendation to do any transaction in Israel Chemicals Ltd. (ICL) securities.

Certain statements in this presentation and other oral and written statements made by ICL from time to time, are forward-looking statements, including, but not limited to, those that discuss strategies, goals, financial outlook or other non-historical matters.

These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including, among others, the following: loss or impairment of business licenses or mining permits or concessions; natural disasters; accidents or disruptions at our facilities or seaports; labor disputes; currency rate or financial market fluctuations; rising interest rates; general market, political or economic conditions in the countries in which we operate; price fluctuations for products or raw materials; changes to laws or regulations (including environmental protection and safety and tax laws or regulations) or changes in their application; the difference between actual reserves and our reserve estimates; failure to realize or delays in realizing expected benefits from acquisitions; cyclicality of our businesses, especially in the agricultural markets; litigation, arbitration and regulatory proceedings; and war or acts of terror. We caution you that the above list of important factors is not comprehensive. We refer you to filings that we have made and shall make with the TASE and the U.S. SEC, including under “Risk Factors” in our annual report on Form 20-F. They may discuss new or different factors that may cause actual results to differ materially from this information.

Forward-looking statements and projections 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.

Market data and certain industry data used in this communication were obtained from internal estimates and studies, where appropriate, as well as market research and publicly available information. The information they include has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. Internal estimates and studies, which we believe to be reliable, have not been independently verified. We cannot assure you that such data is accurate or complete.

Readers and viewers are cautioned to consider these risks and uncertainties and to not place undue reliance on such information.

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----- Start of picture text ----- Highlights & Financial Results----- End of picture text -----

• Weak potash sales volumes and prices were partially offset by overall lower costs and higher bromine and phosphates prices

• Efficiency plans are now in full force and positive results are evident throughout the company

• Continued strategic progress – formation of the phosphate JV in China completed, accelerated transformation of ICL UK from potash to Polysulphate

$ 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%
Adjusted operating income	242	262	(7.6)%	251	(3.6)%
Net income	121	179	(32.4)%	75	61.3%
Adjusted net income	154	179	(14.0)%	177	(13.0)%

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----- Start of picture text ----- Business Environment & Major Developments----- End of picture text -----

		ICL	Fertilizers	Fertilizers
		$ million	Q3 2015	Q3	2014
		Sales	745		851
		Adj. O/I	173		168

	ICL Performance Products$ millionQ3 2015Q3 2014Sl419451	ICL Performance Products$ millionQ3 2015Q3 2014Sl419451	ICL Performance Products$ millionQ3 2015Q3 2014Sl419451	ICL Performance Products$ millionQ3 2015Q3 2014Sl419451	ICL Performance Products$ millionQ3 2015Q3 2014Sl419451
		$ millionQ3 2015Q3 2014
		Sl	419	451
		aes
		Adj. O/I	59	66

ICL Industrial Products
$ millionQ3 2015Q3 2014
Sales282328
Adj. O/I3636
Improved bromine andderivative pricingin Asia helpedto compensate weaker volumesFull production ramp uptotargeted levels achieved at theend of Q3

• Lower Advanced Additives sales due to competitive pressure partially compensated by strong fire safety sales in North America

• Food Specialties: macroeconomic headwinds compensated by successful execution of whey protein sales synergies

• Continued potash market headwinds . Expected short term uncertainty triggered reactions by several suppliers

• Continued cost reduction in ICL's potash and phosphate operations helped to offset lower volumes and prices

 Market-related volume weakness especially in FRs expected to continue in Q4 2015 and stabilize in 2016. Prices expected to slightly increase

• ICL Food Specialties continues implementing its strategy to meet consumer demand for healthier food with higher protein content

• Potash production at ICL Dead Sea will be fully ramped up to 3.9 million tonnes by year-end

 Strong Clear Brine Fluid sales

• ICL Specialty Fertilizers: continued competitive pressure and macroeconomic headwinds

 Increased demand for FR122P

• All non-core activities divested

• First deployment of bromine based energy storage battery

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----- Start of picture text ----- Polysulphate [TM] : The Future of ICL-UK----- End of picture text -----

Moving from high-cost potash to low-cost Polysulphate[TM] operations

• “Economic” potash reserves at ICL-UK are running out

• ICL plans to transition to a pure Polysulphate operation by year-end 2018

Polysulphate[TM] production plan

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----- Start of picture text ----- K Tonnes----- End of picture text -----

• Expected production of 1 million tonnes by 2020. Further increase afterwards

• Low CAPEX (~£40 million) using existing infrastructure

• Additional ~£40 million for granulation facility under consideration

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----- Start of picture text ----- 2014 2020----- End of picture text -----

• Transition will result in lower costs and higher operating margins for ICL-UK

• Three-year accelerated depreciation of potash facilities

Improving cash contribution at ICL UK

• Operating income expected to double by 2020 vs. 2015

• Operating margins expected to increase to over 30% by 2020

• Immediate restructuring expected to contribute $30 million annually, starting from 2H2016

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Readily available new natural fertilizer in the market containing four nutrients: Sulphur, Potassium, Magnesium and Calcium – a substitute for some fertilizers

~36% ~50% Mg+Ca S ~14% K

• 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

• Polysulphate addresses new market niches and replaces more costly existing products

• 2020 production and sales target – 1 million tonnes. Long term potential up to 3 million tonnes

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----- Start of picture text ----- ICL's Potash Sub-Segment Production ModeratelyIncreasing while Adding Specialty Products----- End of picture text -----

Potential gradual increase of production capability excluding ICL UK

Million tonnes 12

Potash Polysulphate SOP

Polysulphate

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----- Start of picture text ----- 0.528160.1242 5.9 7.35.150----- End of picture text -----

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2014A

2020E

Incremental potash production –short term & brownfield potash	Incremental potash production –short term & brownfield potash	Incremental potash production –short term & brownfield potash
Project	Production**(Mt) **	Comments
ICL Iberia	0.3	1ststage brownfield expansion
ICL Dead Sea	0.4
ICL UK	(0.7)	Beginning 2019
PolysulphateTM	1.0	By 2020

~ 2025E

Incremental potash production –long term	Incremental potash production –long term	Incremental potash production –long term
Project	Production(Mt)	Comments
ICL Iberia	1.0	2ndstage brownfield expansion
ICL Ethiopia - potash	1.0-1.5	Subject to detailedengineering planning andboard approval
ICL Ethiopia - SOP	0.5

Sales growth will be supported by development of new markets in India and East Africa

Source: Industry publications, ICL estimates

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----- Start of picture text ----- ICL to Become a Leading Player in China’sPhosphate Sector----- End of picture text -----

Formation of phosphate JV with Yunnan Yuntianhua completed:

• JV includes upstream mining, bulk fertilizers and downstream specialty businesses

• R&D platform: 11 projects in Food, Engineered Materials, Agro and process improvement. Additional projects by year-end

• A key milestone in our strategy:

  • I. increasing phosphate platform by more than 50%, securing long-term resources

  • II. expanding phosphate end-to-end business model with a focus on Asia

  • III. transforming into the world’s leading specialty phosphate player IV. improving cost competitiveness of our phosphate network

The JV in Numbers

Investment ~$180M in the JV

RMB2,900 ($450M) in year 1 to Revenues RMB3,900 ($600M) in year 5

Operating Income Break even to low single digits in year 1 to Margins low teens in year 5 Additional CAPEX About $340 million spread over 5 years

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Production capability	JV	Total ICL*	Change
Phosphate Rock	2.5mt	6.5mt	63%
Commodity Fertilizers	850kt	2.7mt	45%
Specialty Fertilizers	115kt	895kt	15%
Phosphoric Acid	700kt	1.3mt	117%
Purified Phosphoric Acid	60kt	290kt	26%
- Incl. Expansion Plans	160kt	410kt	64%

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• Including 100% of the JV’s production capability

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----- Start of picture text ----- Improving Bromine and Bromine CompoundsMargins While Maintaining Historical Market Share----- End of picture text -----

• Elemental bromine market prices in China have increased

• Bromine compound prices increased by about 15% especially in Asia

• Price increase will expand to other markets as well, subject to contract timing

• Cost reduction initiatives taken this year are expected to generate about $23 million in annual savings in 2016

• R&D pipeline encapsulates potential for growth of bromine demand

Bromine price in China (RMB/MT)

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Mr. Kobi Altman Executive VP & CFO

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----- Start of picture text ----- Q3 2015 Results----- End of picture text -----

$ 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%
Adjusted operating income	242	262	(7.6)%	251	(3.6)%
Net income	121	179	(32.4)%	75	61.3%
Adjusted net income	154	179	(14.0)%	177	(13.0)%
Cash flow from operations	122	295	(58.6)%	325	(62.5)%
External Potash sales (thousand tonnes)	1,126	1,234	(8.8)%	650	73.2%

Q3 2015 Sales Q3 2015 Adjusted operating income

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----- Start of picture text ----- 17 65 84757430 1,560 1,379----- End of picture text -----

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----- Start of picture text ----- 25 25 7 16 11262 242----- End of picture text -----

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Numbers may not add up due to rounding

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----- Start of picture text ----- Potash Bridge Analysis----- End of picture text -----

Sales ($M) Adjusted Operating income ($M)*

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----- Start of picture text ----- 7183821 1777450387131 135----- End of picture text -----

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• Excluding the following one-time items : claim provision of $3 million, electricity system management provision for prior periods of $5 million, 2014 Royalties arbitration provision of $5 million and strike related expense of $8 million.

Numbers may not add up due to rounding

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----- Start of picture text ----- Reduced Average Cost Per Tonne - Potash----- End of picture text -----

Potash – realized full cost per tonne sold*

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Lower cost is achieved through:

• [] Increased production at our Dead Sea and UK facilities

• Labor cost reduction and increased operating efficiency

• Depreciation of euro, shekel and pound vs. USD

• Reduced shipping costs

• Reduced energy costs

• Calculation based on adjusted full costs, including COGS, royalties, depreciation, freight and transportation, G&A, S&M.

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----- Start of picture text ----- Specialty and Phosphate Fertilizers----- End of picture text -----

Sales ($M) Adjusted Operating income ($M)*

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----- Start of picture text ----- 163822 516 5442438037 39----- End of picture text -----

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*** Excluding the following one-time items** : fire impact of $9 million, income from insurance claim due to the Rotem fire of $7 million and electricity system management provision for prior periods of $6 million.

Numbers may not add up due to rounding

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----- Start of picture text ----- Reduced Cost for Phosphate Rock,Phosphoric Acid, and Phosphate Fertilizers----- End of picture text -----

Cost reduction initiatives are bearing fruits

Green phosphoric Acid Cost $/tonne FOB

GTSP Cost $/tonne FOB

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White phosphoric Acid Cost $/tonne FOB

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Phosphate Rock Cost $/tonne FOB

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----- Start of picture text ----- Industrial Products----- End of picture text -----

Sales ($M) Adjusted Operating income ($M)*

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----- Start of picture text ----- 92519119 11232828236 36----- End of picture text -----

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*** Excluding the following one-time items** : legal claim provision of $2 million and strike related expenses of $6 million.

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Numbers may not add due to rounding

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----- Start of picture text ----- Performance Products----- End of picture text -----

Sales ($M) Operating income ($M)

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----- Start of picture text ----- 63841622510 11451 2419 536659----- End of picture text -----

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Numbers may not add due to rounding

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Thank You