Market Overview

ICL Reports Q4 2015 Results

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- Sales of $1.43B compared to $1.40B for Q4 '14 reflect higher potash volumes -

- Adjusted operating income of $233M compared to $201M for Q4 '14 due to operational excellence initiatives and higher prices in the bromine value chain -

- Efficiency and cost reduction activities above target and to continue beyond 2016 -

- Strategic focus on strengthening ICL's integrated value chain driven by specialty businesses -

TEL AVIV, Israel, Feb. 9, 2016 /PRNewswire/ -- ICL (NYSE & TASE: ICL), a leading global specialty minerals and specialty chemicals company, today reported its financial results for the fourth quarter and year ended December 31, 2015.

 

PRINCIPAL FINANCIAL RESULTS

THREE AND TWELVE MONTHS ENDED DECEMBER 31



10-12/2015

10-12/2014

1-12/2015

1-12/2014



$ millions

% of

sales

$ millions

% of

sales

$ millions

% of

sales

$ millions

% of

sales

Sales

1,427

-

1,403

-

5,405

-

6,111

-

Gross profit

533

37

513

37

1,803

33

2,196

36

Operating income

146

10

175

12

765

14

758

12

Adjusted operating income*

233

16

201

14

994

-

960

-

Income before tax

115

8

121

9

668

12

632

10

Net income attributable to the Company's shareholders

96

7

86

6

509

9

464

8

Adjusted net income attributable to the Company's shareholders *

180

13

108

8

699

-

695

-

Adjusted EBITDA *

334

23

306

22

1,361

-

1,345

-

Cash flow from current operations

56

-

310

-

573

-

893

-

Adjusted EPS (fully diluted) ($)

0.14



0.09



0.55



0.55



*See adjusted EBITDA calculation, reconciliation between operating income and adjusted operating income and reconciliation between net income attributable to the Company's shareholders and adjusted net income attributable to the Company's shareholders in the Financial Appendix to this release.

Note: All financial figures in this press release are unaudited.

ICL's President & CEO, Stefan Borgas, stated, "ICL's fourth quarter was marked by tangible benefits from our operational excellence programs which we began in early 2014 as part of our 'Next Step Forward' strategy. These efficiency initiatives, which we expect to continue beyond 2016, reduced our production costs and led to record potash production at ICL Dead Sea and drove incremental profitability despite a difficult operating environment. I am also gratified by ICL's other achievements during the quarter and the year, including the completion of our YPH phosphates joint venture in China, the divesture of nearly all of our non-core businesses, the performance of our bromine business, the integration of the whey proteins business into our Food Specialties operations and ICL Iberia's strategic cooperation agreement with the Catalan government. These milestones reflect our adherence to our strategic focus. In 2016, we will continue to create greater balance between our commodity and specialty businesses in order to optimally position ICL for further growth and profitability."  

Nir Gilad, Chairman of ICL, added, "During 2015 we continued to execute our strategy for future growth and development, the first fruits of which we harvested during the year. The directors are satisfied with the major progress achieved in implementing the strategy. Within this strategic framework, ICL has worked diligently to diversify its sources of raw materials, strengthen and deepen its presence in large, growing markets and engage in substantial production activities in our core markets of agriculture, food and engineered materials. In parallel, the company is executing fundamental and impressive efficiency improvements to improve our overall competitiveness. All of these measures are instilling optimism and enthusiasm in the directors regarding ICL's fundamental strength and its future." 

Financial Results

Sales: For the fourth quarter of 2015, sales totaled $1.43 billion, compared to $1.40 billion in the prior-year, an increase of 1.7%. The increase was primarily related to an increase in quantities of potash sold as well as the first‑time consolidation of companies acquired. This increase was partly offset by the sale of non-core businesses, an unfavorable foreign exchange impact  (primarily from the devaluation of the euro against the dollar), a decline in selling prices of potash, as well as a decrease in sales due to the impact of a fire in a fertilizers production facility in Israel.

For the twelve months ended December 31, 2015, sales totaled $5.4 billion compared to $6.1 billion in the prior year, a decrease of about 12%. This decrease was primarily related to lower quantities of potash and bromine sold as a result of the strike at ICL Dead Sea and ICL Neot Hovav, currency exchange rate fluctuations and the sale of non-core businesses, offset primarily by the first time consolidation of companies acquired, an increase in quantities in certain products sold, mainly potash, and an increase in selling prices, mainly of phosphate fertilizers. 

Reported operating income and adjusted operating income: Reported operating income for the fourth quarter of 2015 totaled $146 million, about 17% less than the fourth quarter of 2014. Adjusted operating income for the fourth quarter of 2015 totaled $233 million, approximately 16% higher than Q4 2014. Q4 2015 adjusted operating income excludes primarily the impairment of assets and a provision for historical waste removal.

Growth in adjusted operating income is attributed to higher quantities produced and sold, mainly of potash, as well as lower operating expenses. Both were achieved by implementing our operational excellence initiatives following the strike. The contribution of operational excellence measures more than offset the negative impact of lower fertilizer prices.

Reported operating income for the twelve months ended December 31, 2015 totaled $765 million compared to $758 million in 2014. Adjusted operating income for the twelve months ended December 31, 2015 totaled $994 million, an increase of approximately 3.5% over $960 million recorded in 2014. 2015 adjusted operating income excludes primarily the impact of the strike at ICL Dead Sea and ICL Neot Hovav. (See table, "Adjustments to Reported Operating and Net Income" in the Appendix.)

Operational excellence: During the quarter the company continued to execute on its cost-cutting efforts and efficiency plan with a $275 million actual savings for the year (vs. 2013). This resulted from improved potash and phosphate margins through labor reduction and improved production, as well as improved performance in the bromine operations through labor reductions and a value oriented marketing strategy. ICL's efficiency efforts led to record production of potash by ICL Fertilizers which compensated for lower potash prices. Reduced costs at ICL Rotem helped to partially offset the impact of a fire at its SSP facility, and record production of phosphoric acid and near record production of phosphate rock also contributed to lower costs per tonne. ICL's efficiency program is well on track to achieve total saving of about $350 million in 2016 (vs. 2013).

Net income and adjusted net income: Net income for the fourth quarter of 2015 totaled $96 million compared to $86 million for the comparable period in 2014, an increase of 12%. Adjusted net income for Q4 2015 was $180 million compared to $108 million for Q4 2014, an increase of 67%, mainly due to operational excellence initiatives and higher prices in the bromine value chain.

Net income for the twelve months ended December 31, 2015, totaled $509 million compared to $464 million for the comparable period in 2014, and adjusted net income for the twelve months of 2015 was $699 million compared to $695 million for 2014.

Net financing expenses in the fourth quarter of 2015 amounted to $29 million, compared with $66 million in the corresponding quarter last year. The decrease derived mostly from a decline in expenses in respect of the fair value of foreign currency hedging transactions, energy and marine shipping, as well as a revaluation of short‑term financial liabilities. This was partially offset by an increase in net interest expenses and provisions for employee benefits.

Tax expenses in the fourth quarter of 2015 amounted to $23 million, compared with $36 million in the corresponding quarter last year. The tax rate on pre-tax income was 20%, compared with a pre-tax income rate of 29% in the corresponding quarter last year. The decrease stems mainly from the adjustment of the deferred taxes in ICL Rotem to the tax rates provided in the Law for the Encouragement of Capital Investments, in the amount of approximately $18 million, which was almost entirely offset by non‑recurring tax expenses stemming from the write-off of a tax asset in respect of carryforward losses in the magnesium operations, in the amount of approximately $19 million. In addition, in the fourth quarter of 2015, as a result of the filing of final tax returns by ICL subsidiaries in the United States and Europe, the Company reduced its tax provision in connection with prior years. Furthermore, the effective tax rate in the quarter was favorably impacted by recognition of deferred taxes at high tax rates in respect of losses recognized from the bromine activities in Israel and the United States. The tax rate in the corresponding quarter last year was impacted by non-recurring tax expenses due to an additional deduction for tax purposes relating to investments made by ICL Spain in previous periods and a tax deduction in respect of dividends between foreign subsidiaries.

Cash flow: Cash flow from operating activities in Q4 2015 was $56 million, compared to $310 million in Q4 in the prior year. The decrease stemmed mainly from an increase in working capital, mainly in the trade receivables category, as a result of increased sales of potash upon the conclusion of the strike, an increase in current interest payments in the quarter, payment in respect of an operating lease on the concession site acquired in China and payments relating to retirement of employees.

Cash flow used in investing activities increased by $68 million compared with the corresponding quarter last year. This stems mainly from payment in respect of the acquisition transaction of the joint venture in China in the amount of $163 million, offset by a decrease in investments in property, plant and equipment in the amount of $53 million.

Segment Review

ICL Fertilizers

Key Developments and Business Environment:

  • YPH joint venture: During the quarter, ICL completed the formation of its joint venture ("YPH JV") with Yunnan Phosphate Chemicals Group, China's leading phosphate manufacturer ("YPC"). The YPH JV contributed about $95 million to ICL Fertilizers' sales for the fourth quarter. The YPH JV includes a world‑scale phosphate rock mine producing about 2.5 million tonnes of phosphate per year and large-scale phosphate activities. The YPH JV's global-level manufacturing platform includes activities across the value chain, from upstream mining and bulk sales of phosphates to the manufacture of downstream specialty products. It is expected to increase ICL's phosphate platform by 50%, secure its long-term phosphate resources and expand its phosphate end-to-end business model with a focus on China and other Asian markets.
  • In January, 2016, ICL completed the purchase of 15% of the equity of Yunnan Yuntianhua ("YTH"), the parent company of YPC. YTH, which is publicly traded on the Shanghai Stock Exchange, issued 199 million new shares to ICL through a private offering, at the price of RMB 8.24/share. The $250 million investment deepens ICL's strategic alliance with the parent company of its phosphates joint venture partner in China.
  • Transition to Polysulphate production at ICL UK: As a result of the depletion of potash reserves at ICL UK, the Company will transition from the production of potash to Polysulphate, a high-potential mineral discovered in large quantities under the potash seam at ICL UK. As part of this move, ICL UK began to implement an efficiency program that includes a workforce reduction of about 330 people to be completed by the end of the first quarter of 2016.
  • ICL Iberia agreement with Catalan government: During the quarter, ICL Iberia signed a cooperation agreement with the Government of Catalonia that is expected to ensure the long-term continuation of ICL Iberia's potash mining activities in the Bages region of Catalonia, Spain. The agreement provides further support by the government related to regulatory, infrastructure and transportation matters, and reflects the government's position that the potash industry serves a strategic public interest.
  • Approval process to mine Barir field: Israel's National Planning and Building Council recommended that phosphate mining be permitted at the Barir Field in the Negev region. Additional decisions and actions must be taken before ICL can commence mining, but the council's decision is an important step in the approval process.
  • Chinese market: Potash imports into China in 2015 reached 9.4 million tonnes, an increase of approximately 18% compared with the corresponding period last year. Following the quarter, ICL signed new framework agreements with its customers in China to sell 3.4 million tonnes of potash over the next three years. The selling prices will be established in line with prevailing market prices in China. The three-year framework agreements represents a 3% increase in quantities over its previous three‑year agreements with customers in China, and the Company will supply 1.1 million tonnes of potash in 2016, 1.14 tonnes in 2017, and 1.16 tonnes in 2018.
  • Global business environment for potash: ICL estimates that global potash shipments in 2015 declined compared to 2014 primarily due to lower demand in North America, India and Brazil due to lower crop prices, currency devaluation, weak monsoon rains and credit availability. Potash imports into India decreased by 7% from 2014 to 4.0 million tonnes, while imports into Brazil decreased by 8.3% to 8.3 million tonnes, compared with the record level in 2014. The global slowdown in potash demand triggered a downward trend in potash prices, which continued into the fourth quarter. Recently, a number of leading producers announced that they will cut back their production levels.
  • Global business environment for phosphate fertilizers: Worldwide demand for phosphate fertilizers decreased during the fourth quarter mainly due to lower demand in India, the world's largest importer of phosphates, as a result of the devaluation of the rupee against the dollar, high inventory levels and lower than average Monsoon rains. In addition, exports from China increased significantly due to the imposition of VAT in China which created an adverse impact on local demand and increased exports. Lower demand was also recorded in Brazil, with imports falling by 24%. As a result, phosphate fertilizers prices dropped significantly during the quarter.
  • Specialty fertilizers: The results of operations in specialty fertilizers were unfavorably impacted by continued competitive pressure, sales currency depreciation and macroeconomic conditions.

Results of Operations

Segment's sales, reported and adjusted operating income for the quarter and year by areas of operation (before setoffs of inter-segment sales):

 



10-12/2015

10-12/2014

1-12/2015

1-12/2014



$ millions

% of

Sales*

$ millions

% of

sales*

$ millions

% of

sales*

$ millions

% of

sales*

Sales

















Potash

448

-

430

-

1,450

-

1,816

-

Fertilizers and phosphate

441

-

385

-

1,703

-

1,678

-



















Operating income

















Potash

158

35

128

30

375

26

536

30

Fertilizers and phosphate

39

9

45

12

154

9

133

8



















Adjusted operating income**

















Potash

161

36

128

30

575

-

544

-

Fertilizers and phosphate

42

10

37

10

165

-

141

-

 

*Percentage of the total sales by areas of operation.
**See reconciliation between operating income and adjusted operating income in the Financial Appendix to this release.
Note: Sales in the ICL Fertilizers segment include sales of potash from Israel, Spain (ICL Iberia) and England (ICL UK), as well as sales of phosphate and specialty fertilizers mainly from Israel, Europe and China.

Potash:

The increase in potash sales in the fourth quarter of 2015 compared to the corresponding quarter in 2014 stems from an increase in quantities sold, partially offset by a decrease in selling prices and the devaluation of the euro and pound exchange rates against the dollar.

The adjusted operating income excludes compensation received from the Manufacturers Association of Israel for the strike, in the amount of approximately $8 million, a provision for early retirement at ICL UK, which resulted from the implementation of an efficiency program, in the amount of approximately $6 million and an update of the provision for the arbitration on downstream products' royalties in respect of prior years, in the amount of approximately $5 million.

Increased adjusted operating income in Q4 2015 stems primarily from an increase in quantities sold and a decrease in operating expenses, including energy and shipping prices, as well as a result of a reduction in the number of employees and of maintenance expenses as part of ICL's operational excellence initiatives. This increase was partially offset by a decrease in selling prices.

 

Potash – Production, Sales and Closing Inventories:



Thousands of Tonnes

10-12/2015

10-12/2014

1-12/2015

1-12/2014

Production

1,460

1,318

4,195

5,143

Sales to external customers

1,416

1,150

4,259

5,034

Sales to internal customers

79

68

298

321

Total sales (including internal sales)

1,495

1,218

4,557

5,355

Closing inventory

552

914

552

914

 

The increase in the quantity of potash sold in the fourth quarter of 2015 stems mainly from an increase in quantities sold to China. Production increased due to improved production at ICL Dead Sea following conclusion of the strike as well as increased production in Europe.

 

Potash – Average Selling Prices





10-12/2015

10-12/2014

1-12/2015

1-12/2014

Average potash selling price - FOB

268

314

280

293

 

Fertilizers and Phosphates:

The increase in sales in the fourth quarter of 2015 is attributable to the first-time consolidation of the YPH JV, partly offset by a decrease in quantities sold, mainly as a result of the fire at one of the fertilizer production plants in Israel, and fluctuations in currency exchange rates.

Adjusted operating income excludes a provision for system-wide electricity costs in Israel for previous periods in the amount of approximately $2 million, costs related to the closing of the YPH JV transaction in the amount of about $2 million and a $1 million gain from an equity divestment. The increase in adjusted operating income from phosphate fertilizers in Q4 derives mainly from lower production costs and proceeds from insurance in connection with the fire at ICL Rotem offset by a decrease in quantities sold as a result of the fire at the fertilizer production plant and costs related to the consolidation of the YPH JV.

 

Fertilizers and Phosphates – Production and Sales



Thousands of Tonnes

10-12/2015

10-12/2014

1-12/2015

1-12/2014

Phosphate rock









Production of rock

1,519

871

4,417

3,357

Sales *

787

255

1,624

920

Phosphate rock used for internal purposes

699

715

2,767

2,398

Fertilizers









Production

466

391

1,639

1,590

Sales *

323

354

1,584

1,695

* To external customers.

The quantity of fertilizers sold in Q4 2015 was lower than in the corresponding period last year primarily due to a decrease in quantities sold in Brazil. Manufacture of phosphate fertilizers increased in the fourth quarter of 2015 compared with the corresponding period in 2014 as a result of the consolidation of the YPH JV, offset by the impact of the fire at the ICL Rotem SSP facility during Q2 2015. The reconstruction of the facility is expected to be completed during the first quarter of 2016. The production and sales of phosphate rock were higher due to the consolidation of the YPH JV and increased production at Israeli mines.

ICL Industrial Products

Key Developments and Business Environment:

  • Improved profitability of bromine value chain: During the quarter, ICL significantly improved the profitability of its bromine value chain as a result of cost savings, a value-oriented marketing strategy, new products and strong sales of clear brine fluids.
  • Efficiency plan: ICL plans to expand globally the efficiency plan that it implemented in Israel which included a 15% reduction in labor.
  • Higher elemental bromine and bromine derivatives prices: Elemental bromine prices in China continued to increase during the 4th quarter and are now about 50% higher than Q4 2014 as a result of reduced imports and stricter hazardous materials handling regulations by the Chinese authorities following the Tianjin explosion. Prices of bromine derivatives are 10-20% higher, depending on their bromine content. Bromine prices are expected to moderate slightly towards the summer, which is the seasonal peak of production in China, but the company expects prices will remain elevated compared to mid-2015. Price increases are expected to further contribute to operating income in 2016.
  • Polymeric flame retardants: ICL recorded significant sales growth for its new polymeric flame retardant, FR122P, which is used in insulation materials by the construction sector, due to the rapid shift from HBCD in Europe. Japan has already phased out HBCD and there is growing interest for this product in Asia Pacific and North America. Prices are increasing gradually and supply agreements are being negotiated.
  • Clear brine fluids: Sales of clear brine fluids were very strong in the fourth quarter, although demand is expected to decrease in 2016 due to lower oil and gas prices.
  • Merquel product line: Demand for ICL's Merquel product increased due to continued implementation of mercury emission control regulations in the US.
  • Flame retardants and other brominated compounds: Demand was weaker for brominated flame retardants in the printed circuit board market during Q4 2015 compared to the comparable period last year primarily due to China's economic slowdown, which also negatively impacted demand in the television market. Demand also decreased for other bromine‑based products as a result of weaker demand in the agrochemicals markets and strong competition in the polyester fibers industry. In addition, sales of phosphorous‑based flame retardants were unfavorably impacted by weakening of the euro against the dollar and as a result of increased competition from Chinese manufacturers. Demand for flame retardants for the automotive, connectors and butyl rubber industries remained stable.

Results of Operations:



10-12/2015

10-12/2014

1-12/2015

1-12/2014



$

millions

% of

sales

$

millions

% of

sales

$

millions

% of

sales

$

millions

% of

sales

Sales*

303

21**

313

 22**

1,115

 21**

1,337

 22**

Operating income (loss)

(21)

-

(19)

-

(24)

-

(62)

-

Adjusted operating income****

 

46

 15***

 

30

 

10***

 

145

 13***

 

128

 

10***

* Including revenue from inter-segment sales.
** Percentage of the Company's total sales.
*** Percentage of the segment's total sales.
**** See reconciliation between operating income and adjusted operating income in the Financial Appendix to this release.


The decrease in sales in the fourth quarter stems from the impact of currency exchange rates and a decrease in quantities sold, mainly of phosphorous-based flame retardants and elemental bromine, partly offset by an increase in selling prices, mainly of bromine-based flame retardants.

Adjusted operating income excludes impairment in the value of assets in Israel and the United States, in the amount of approximately $56 million, and a provision for treatment of historical waste in the amount of $20 million, net of compensation from the Manufacturer's Association of Israel for the strike, in the amount of approximately $9 million. Adjusted operating income was favorably impacted mainly by a decrease in labor costs, lower energy and raw‑material prices, as well as higher selling prices.

ICL Performance Products 

Key Developments and Business Environment:

  • Food Specialties: Sales were favorably impacted during Q4 2015 as a result of the integration of the new whey protein business, partly offset by lower sales in Eastern Europe which experienced instability and currency pressure. Sales were particularly weak in the CIS region. However, sales in North America were stronger mainly due to improved sales to key bakery customers.
  • Advanced Additives: Demand for ICL's Advanced Additives was mixed across the portfolio in Q4 2015. Sales of phosphoric acid were favorably impacted by the contribution of Fosbrasil, the remaining 50% of which was acquired at the end of 2014. The YPH JV contributed revenue to both the Industrial Specialties and Acids business lines. Industrial Specialties volume in the EU remains under pressure due to excess capacity in the market. North America has experienced sluggish demand, partly offset by improved demand in the paints and coatings markets.
  • P2S5: The segment's P2S5 business increased in Q4 2015 from the comparable period in 2014 primarily as a result of maintenance shutdowns in the prior year. At the end of the fourth quarter, December sales weakened due to several customers who took inventory control measures in response to weak demand for Zinc-Dithio-Phosphate, an organic phosphate produced by ICL's customers using ICL's P2S5. this weakness has continued into the first quarter of 2016.
  • Currency fluctuations: Weakening of the euro against the dollar negatively impacted the segment's sales, mostly offset by a decline in costs in dollar terms in Europe. The impact is expected to normalize in the first quarter of 2016.
  • Divestitures: Divestitures of non-core businesses in 2015 contributed a capital gain of $190 million to operating income, including an impairment of assets in Germany.

Results of Operations:



10-12/2015

10-12/2014

1-12/2015

1-12/2014



$

millions

% of

sales

$

millions

% of

sales

$

millions

% of

sales

$

millions

% of

sales

Sales*

325

 23**

363

 26**

1,472

 27**

1,614

 26**

Operating income

3

 1***

41

 11***

319

 22***

197

 12***

Adjusted operating income****

10

 3***

26

 7***

139

 9***

192

 12***

* Including revenue from inter-segment sales.
** Percentage of the Company's total sales.
*** Percentage of the segment's total sales.
**** See reconciliation between operating income and adjusted operating income in the Financial Appendix to this release.


The decrease in sales is attributed to the sale of non‑core businesses and devaluation of the euro and the Brazilian real against the dollar, offset by an increase in quantities sold, including the first‑time consolidation of companies acquired and an increase in selling prices.

Adjusted operating income excludes transaction costs related to non-core divestitures, in the amount of $7 million.

The decline in operating income in the fourth quarter stems mainly from an increase in operating expenses which, among other things, derives from salary expenses due to expansion of the marketing set‑up in ICL Food Specialties as a result of implementation of the Company's strategy, an increase in personnel in some of the assembly lines due to an increase in quantities sold and as a result of a shortage of raw materials and purchases from third parties, due to the shutdown of the ammonia tank caused by the fire in the fertilizers production facility in Israel. This was offset primarily by increased quantities sold, including from the first time consolidation of acquisitions, lower raw material and energy prices and an increase in selling prices.   

Debt movement:

As of December 31, 2015, ICL's net financial liabilities amounted to $3.2 billion, an increase of $571 million compared to the balance at the end of 2014. The increase stems from, among other things, investment in the YPH JV and the first‑time consolidation of its financial liabilities.

The total amount of the securitization framework and credit facility deriving therefrom amounts to $405 million. As of December 31, 2015, ICL had used $285 million of the securitization facility.

ICL also has long-term credit facilities of approximately $1.7 billion and €100 million, of which $519 million remains unused as of December 31, 2015.

About ICL

ICL is a global manufacturer of products based on specialty minerals that fulfill humanity's essential needs primarily in three markets: agriculture, food and engineered materials.

ICL produces approximately a third of the world's bromine, and is the sixth largest potash producer, as well as the leading provider of pure phosphoric acid. It is a major manufacturer of specialty fertilizers, specialty phosphates and flame retardants. ICL's mining and manufacturing activities are located in Israel, Europe, the Americas and China, and are supported by global distribution and supply networks.

The agricultural products that ICL produces help to feed the world's growing population. The potash and phosphates that it mines and manufactures are used as ingredients in fertilizers and serve as an essential component in the pharmaceutical and food additives industries. The food additives that ICL produces enable people to have greater access to more varied and higher quality food. ICL's water treatment products supply clean water to millions of people as well industry around the world. Other substances, based on bromine and phosphates help to create energy that is more efficient and environmentally friendly, prevent the spread of forest fires and allow the safe and widespread use of a variety of products and materials.

ICL benefits from a number of unique advantages, including its vertically integrated activities and complementary and synergistic downstream operations for the production of unique end products; its balanced and varied product portfolio in growing markets; broad presence throughout the world and proximity to large markets, including in emerging regions.

ICL operates within a strategic framework of sustainability that includes a commitment to the environment, support of communities in which ICL's manufacturing operations are located and where its employees live, and a commitment to all its employees, customers, suppliers and other stakeholders.

ICL is a public company whose shares are dual listed on the New York Stock Exchange and the Tel Aviv Stock Exchange (NYSE and TASE: ICL). Approximately 46% of ICL's equity is held by Israel Corp., 13.8% by Potash Corporation of Saskatchewan and the remainder by the public. 

The company employs approximately 14,000 people worldwide, and its sales in2015 totaled US$5.4 billion. For more information, visit the company's website at www.icl-group.com.

Forward Looking Statement

This press release contains statements that constitute "forward-looking statements", many of which can be identified by the use of forward-looking words such as "anticipate", "believe", "could", "expect", "should", "plan", "intend", "estimate" and "potential" among others. Forward-looking statements include, but are not limited to assessments and judgments regarding macro-economic conditions, including demands and prices and the Group's markets, operations, production levels and financial results, as well as, our savings expectations pursuant to ICL's efficiency program; our expectations to increase ICL's phosphate platform by 50%, secure long-term phosphate resources and expand ICL's phosphate end-to-end business model with a focus on China and other Asian markets; our expectations regarding the long-term continuation of ICL Iberia's potash mining activities in the Bages region of Catalonia, Spain; the expected timetable to complete the reconstruction of the ICL Rotem SSP facility and our plans to expand globally the efficiency plan that it implemented in Israel. Forward-looking assessments and judgments are based on our management's current beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to: 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; market fluctuations, among others in the YPH JV's manufacturing locations and target markets, changes in the demand and price environment for the YPH JV's products; shipping and energy costs; 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 resources and our resource 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; closing of transactions, mergers and acquisitions; third party service providers' financial condition; war or acts of terror; and other risk factors described in "Item 3. Key Information—D. Risk Factors" in the Company's annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on March 20, 2015. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update or revise them or any other information contained in this press release, whether as a result of new information, future developments or otherwise.

(Financial tables follow)

Financial appendix (unaudited):

 

ADJUSTED EBITDA FOR THREE AND TWELVE MONTHS ENDED DECEMBER 31



$ million

10-12/2015

10-12/2014

1-12/2015

1-12/2014

Net income attributable to the Company's shareholders

96

86

509

464

Depreciation and amortization

99

92

353

356

Financing expenses, net

29

66

108

157

Taxes on income

23

36

162

166

Non-recurring items*

87

26

229

202

Total adjusted EBITDA

334

306

1,361

1,345

*See "Adjustments to Reported Operating and Net Income" below.

 

ADJUSTMENTS TO REPORTED OPERATING AND NET INCOME:



$ million

10-12/2015

10-12/2014

1-12/2015

1-12/2014

Operating income reported GAAP figures

146

175

765

758

Impact of employee strike

(17)

(9)

248

17

Capital gain from divestitures and transaction expenses in connection with acquisition and divestitures of businesses

9

-

(208)

-

Impairment of assets

56

71

90

71

Provision for early retirement and dismissal of employees

6

-

48

-

Income from consolidation of previous equity method investee

-

(36)

(7)

(36)

Provision in respect of prior periods resulting from an arbitration decision

5

-

10

149

Retroactive electricity charges

8

-

20

-

Provision for legal claims

-

-

8

-

Provision for historical waste removal

20

-

20

-

Other

-

-

-

1

Total adjustments of operating income

87

26

229

202

Total adjusted operating income

233

201

994

960

Total tax impact on the above adjustments and non-recurring  deferred tax adjustments(1) 

3

4

39

(29)

Total net income attributable to the company's shareholders

96

86

509

464

Total adjusted net income attributable to the company's shareholders

180

108

699

695

(1)   Non- recurring deferred tax adjustments at DSM in 2015 and at ICL Spain in 2014

We disclose in this press release financial measures entitled adjusted EBITDA, adjusted operating income and adjusted net income attributable to the Company's shareholders. We use adjusted EBITDA, adjusted operating income and adjusted net income attributable to the Company's shareholders to facilitate operating performance comparisons from period to period. Adjusted EBITDA is defined as the net income to Company shareholders plus depreciation and amortization plus financing expenses, net, and taxes on income and plus certain items as presented in the reconciliation table which were adjusted for the operating income and net income attributable to the Company's shareholders. We believe adjusted EBITDA facilitates company‑to‑company operating performances comparisons by backing out potential differences caused by variations such as capital structures (affecting financing expenses, net), taxation (affecting taxes on income) and the age and book depreciation of facilities, equipment and intangible assets (affecting relative depreciation and amortization), which may vary for different companies for reasons unrelated to operating performance. Adjusted EBITDA is a non‑IFRS measure for reporting our total Company performance. Our management believes, however, that disclosure of adjusted EBITDA provides useful information to investors, financial analysts and the public in their evaluation of our operating performance. Adjusted EBITDA should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, operating income or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of our profitability or liquidity. Adjusted EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, adjusted EBITDA, as presented in this press release by the Company, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

 

ICL CONSOLIDATED STATEMENT OF INCOME

(In millions except per share data)



For the three-month period ended

For the

year ended



December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014



$ millions

$ millions

$ millions

$ millions

Sales

1,427

1,403

5,405

6,111

Cost of sales

894

890

3,602

3,915











Gross profit

533

513

1,803

2,196











Selling, transport and  marketing expenses

181

194

653

839

General and administrative expenses

113

80

350

306

Research and development expenses, net

17

20

74

87

Other expenses(income), net

76

44

(39)

206











Operating income

146

175

765

758





















Finance expenses, net

29

66

108

157





















Share in earnings (losses) of equity-accounted investees

(2)

12

11

31











Income before income taxes

115

121

668

632











Income taxes

23

36

162

166











Net income

92

85

506

466





















Attributable to the non-controlling interests

(4)

(1)

(3)

2











Net income attributable to the shareholders of the Company

96

86

509

464





















Earnings per share attributable to

US $

US $

US $

US $

  the shareholders of the company:



















Basic earnings per share

0.08

0.07

0.40

0.37











Diluted earnings per share

0.08

0.07

0.40

0.37











 

ICL CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

$ million

December 31, 2015

December 31, 2014

Current assets





Cash and short term investments

248

247

Trade receivables

1,082

1,039

Derivatives and other receivables

207

155

Current tax assets

45

139

Inventories

1,364

1,335

Assets held for sale

39

225

Total current assets

2,985

3,140







Non-current assets





Investments in equity-accounted investees

159

185

Property, plant and equipment

4,212

3,927

Other assets

536

293

Intangible assets

1,185

803

Total non-current assets

6,092

5,208

Total assets

9,077

8,348







Current liabilities





Short-term credit and current portion of long-term debt

673

603

Trade payables

716

585

Derivatives and other charges

569

730

Current tax liabilities

62

36

Liabilities held for sale

26

51

Total current liabilities

2,046

2,005







Non-current liabilities





Debentures and other long-term debt

2,805

2,303

Deferred tax liabilities

351

260

Employee benefits

547

659

Other non-current liabilities

140

121

Total non-current liabilities

3,843

3,343

Total liabilities

5,889

5,348







Total shareholders' equity

3,028

2,974

Non-controlling interests

160

26

Total equity

3,188

3,000

Total liabilities and equity

9,077

8,348

 



ICL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



For the three-month

period ended

For the

year ended



December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014



$ millions

$ millions

$ millions

$ millions

Cash flows from operating activities









Net income

92

85

506

466

Depreciation and amortization

142

163

430

427

Other adjustments to reconcile net income to cash provided by operating activities

22

(26)

(162)

(23)

Income tax expenses

23

36

162

166



279

258

936

1,036











Change in inventories

(90)

(89)

25

(33)

Change in trade and other receivables

(191)

149

(86)

(25)

Change in trade and other payables

50

54

(106)

55

Change in provisions and employee benefits

64

(25)

(90)

66



112

347

679

1,099











Income taxes paid, net

(24)

(25)

(20)

(159)

Interest paid, net 

(32)

(12)

(86)

(47)

Net cash provided by operating activities

56

310

573

893











Cash flows from investing activities









Additions to fixed and intangible assets

(150)

(180)

(619)

(835)

Business acquisitions, net of cash acquired

(163)

(55)

(351)

(143)

Other investment activities

3

(13)

59

5

Proceeds from divestiture of subsidiaries* and equity accounted investees, net

(6)

-

364

-

Investments in equity-accounted investees

-

-

-

(23)

Net cash used in investing activities

(316)

(248)

(547)

(996)











Cash flows from financing activities









Dividend paid

(85)

(126)

(348)

(846)

Receipt of debt, net

295

19

363

916

Net cash provided by (used in) financing  activities

210

(107)

15

70











Net change in cash and cash equivalents

(50)

(45)

41

(33)

Cash and cash equivalents as at beginning of the period

212

189

138

188

Net effect of currency translation on cash and cash equivalents

(1)

(5)

(18)

(16)

Cash and cash equivalents included as part of assets held for sale

-

(8)

-

(8)

Cash and cash equivalents as at end of the period

161

131

161

131

 

Sales by Main Business Lines









10-12/2015

10-12/2014

1-12/2015

1-12/2014



$ millions

% of

sales

$ millions

% of

sales

$ millions

% of

sales

$ millions

% of

sales

Potash

448

31

430

31

1,450

27

1,816

30

Phosphate

311

22

240

17

1,079

20

979

16

Specialty Fertilizers

148

10

162

12

693

13

770

13

Industrial Solutions

193

14

195

14

671

12

786

13

Flame Retardants

96

7

108

8

366

7

470

8

Advanced Additives

164

11

140

10

780

14

653

11

Food Specialties

156

11

126

9

614

11

525

9

All other and setoffs

(89)

(6)

2

0

(248)

(5)

112

2

Total

1,427

100

1,403

100

5,405

100

6,111

100

 

Sales by Main Countries









10-12/2015

10-12/2014

1-12/2015

1-12/2014



$ millions

% of

sales

$ millions

% of

sales

$ millions

% of

sales

$ millions

% of

sales

China

291

20

78

6

550

10

525

9

USA

273

19

304

22

1,176

22

1,299

21

Germany

115

8

116

8

487

9

531

9

Brazil

101

7

153

11

506

9

516

8

Spain

68

5

78

6

285

5

342

6

Israel

67

5

58

4

240

4

284

5

United Kingdom

58

4

68

5

303

6

335

5

France

58

4

74

5

295

5

364

6

India

58

4

89

6

206

4

272

4

All other

338

24

385

27

1,357

25

1,643

27

Total

1,427

100

1,403

100

5,405

100

6,111

100

 

Sales by geographical regions based on the location of the customer:



10-12/2015

10-12/2014

1-12/2015

1-12/2014



$

millions

% of

sales

$

millions

% of

sales

$

millions

% of

sales

$

millions

% of

sales

Europe

459

32

508

36

2,068

38

2,389

39

Asia

446

31

298

21

1,118

21

1,299

21

North America

287

20

318

23

1,253

23

1,374

22

South America

125

9

167

12

585

11

569

9

Rest of the world

110

8

112

8

381

7

480

8

Total

1,427

100

1,403

100

5,405

100

6,111

100

 

The increase in sales in Asia stems mainly from the increase in the quantities of potash sold in China and the impact of the first‑time consolidation of the YPH JV in China. This increase was partially offset by the sale of non‑core businesses in the ICL Performance Products segment and a decrease in the quantities sold of elemental bromine and bromine‑based flame retardants. The decrease in Europe stems mainly from a decline in the quantities sold, mainly as a result of the sale of non‑core businesses, a decline in the quantities sold of elemental bromine, bromine‑based and phosphorous‑based flame retardants and a weakening of the exchange rate of the euro against the dollar. Sales in South America declined mainly as a result of a decline in the quantities of potash sold in Brazil. Lower quantities of potash sold impacted the sales in North America. This was partially offset by an increase in sales of clear brine fluids used for oil and gas drillings.



Operating segments data:





Fertilizers

Industrial

Performance

Other







Potash

Phosphate

Eliminations

Total

products

products

activities

Eliminations

Consolidated



$ millions

For the three-month period ended December 31, 2015







































Sales to external parties

404

400

-

804

297

303

23

-

1,427

Inter-segment sales

44

41

(22)

63

6

22

9

(100)

-

Total sales

448

441

(22)

867

303

325

32

(100)

1,427





















Operating income (loss) attributed to segment

158

39

(1)

196

(21)

3

(27)



151





















Expenses not allocated to segments and intercompany eliminations

















(5)

Operating income

















146









































Financing expenses, net

















(29)

Share in income of investee companies accounted for using the equity method of accounting

















(2)

Income before taxes on income

















115

 





Fertilizers

Industrial

Performance

Other







Potash

Phosphate

Eliminations

Total

products

products

activities

Eliminations

Consolidated



$ millions

For the three-month period ended December 31, 2014







































Sales to external parties

388

340

-

728

306

343

26

-

1,403

Inter-segment sales

42

45

(19)

68

7

20

8

(103)

-

Total sales

430

385

(19)

796

313

363

34

(103)

1,403





















Operating income (loss) attributed to segment

128

45

(2)

171

(19)

41

(4)



189





















Expenses not allocated to segments and intercompany eliminations

















(14)

Operating income

















175









































Financing expenses, net

















(66)

Share in income of investee companies accounted for using the equity method of accounting

















12

Income before taxes on income

















121

 



Fertilizers

Industrial

Performance

Other







Potash

Phosphate

Eliminations

Total

products

products

activities

Eliminations

Consolidated



$ millions

Year 2015







































Sales to external parties

1,292

1,534

-

2,826

1,098

1,388

93

-

5,405

Inter-segment sales

158

169

(86)

241

17

84

26

(368)

-

Total sales

1,450

1,703

(86)

3,067

1,115

1,472

119

(368)

5,405





















Operating income (loss) attributed to segment

375

154

-

529

(24)

 319*

(48)



776





















Expenses not allocated to segments and intercompany eliminations

















(11)

Operating income

















765









































Financing expenses, net

















(108)

Share in losses of investee companies accounted for using the equity method of accounting

















11

Income before taxes on income

















668

 

* Includes capital gain in the amount of $214 million, from sale of non‑core businesses.



 



Fertilizers

Industrial

Performance

Other







Potash

Phosphate

Eliminations

Total

products

products

activities

Eliminations

Consolidated



$ millions

Year 2014







































Sales to external parties

1,620

1,522

-

3,142

1,317

1,533

119

-

6,111

Inter-segment sales

196

156

(93)

259

20

81

29

(389)

-

Total sales

1,816

1,678

(93)

3,401

1,337

1,614

148

(389)

6,111





















Operating income (loss) attributed to segment

536

133

1

670

(62)

197

(9)



796





















Expenses not allocated to segments and intercompany eliminations

















(38)

Operating income

















758









































Financing expenses, net

















(157)

Share in income of investee companies accounted for using the equity method of accounting

















31

Income before taxes on income

















632

 

PRESS CONTACT                                                    
Amiram Fleisher                                                        
Fleisher Communications                                         
+972-3-6241241                                                          



amiram@fleisher-pr.com                                            

 

INVESTOR RELATIONS CONTACT

Limor Gruber    

Head of Investor Relations, ICL

+972-3-684-4471              
 Limor.Gruber@icl-group.com




 

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/icl-reports-q4-2015-results-300217290.html

SOURCE ICL

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