ICL Reports Continued Sequential Improvement for Third Quarter of 2009

Signs of Market Recovery: Q3 Revenues - $1.3B, Up 24% From Q2 & 50% From Q1; Q3 Adjusted Operating Income - $357M*, Up 87% From Q2 -

TEL-AVIV, Israel, November 24 /PRNewswire-FirstCall/ -- ICL (TASE:ICL), a multinational fertilizer and specialty chemicals company, today reported results for the third quarter and nine months ended September 30, 2009.

Financial Results for the Third Quarter

Revenues: Revenues for the third quarter of 2009 were $1,347 million, up 24% as compared sequentially with $1,083 million for the second quarter of 2009. Revenues for the third quarter of 2008 were $2,178 million, reflecting the exceptional demand and prices that characterized that "spike" year for the fertilizers industry. The steady sequential increase in sales may be an indication that ICL's markets have begun to recover and that demand has begun a return to normal levels.

*Note: the Company's gross profit, operating profit and net profit for Q3 and 2009 reflect several one-time events. Results including the influence of one-time events are presented in financial tables beginning on page 6 below. To provide investors with better insight into the Group's operating performance, the following discussion relates to adjusted results that exclude these one-time provisions.

Gross profit: Gross profit for the third quarter of 2009 was $575 million, up 50% as compared sequentially with $382 million for the second quarter of 2009. Gross margin for the third quarter of 2009 was 42.7%, compared with 35.3% for the second quarter of 2009. Gross profit for the third quarter of 2008 was $1.2 billion, reflecting the extraordinary sales and 57.0% gross margin achieved during that "spike" year. The sequential increase in gross profit derived from the higher level of sales, together with a significant reduction in some input costs as compared with 2008 (especially sulfur and energy), countered partially by a reduction in the production of some of the Company's products. Profitability was also enhanced by the period's weakening of the shekel as compared to the dollar, which reduced shekel-based expenses as expressed in dollar terms.

Operating income: Operating income for the third quarter of 2009 was $357 million, up 87% as compared sequentially with $191 million for the second quarter of 2009. Operating margin for the third quarter of 2009 was 26.5%, compared with 17.6% for the second quarter of 2009. Operating income for the third quarter of 2008 was $963.6 million, with an Operating margin of 44.2%, both all-time records for the Company reflecting the year's steep climb of fertilizer prices, which peaked during the third quarter.

The sequential increase in operating income during 2009 reflects the increased sales and gross profit, together with the combined effect of reduced shipping rates and overhead costs, which benefited both from the weakening of the shekel and the Company's ongoing cost savings and efficiency efforts.

Net income: Net income to the Company's shareholders for the third quarter of 2009 was $279 million, up 83% compared sequentially with $152 million in the second quarter of 2009. Net income for the third quarter of 2008 was $846 million, a record for the Company reflecting the year's extraordinary fertilizer prices and profit levels.

Cash flow: Cash flow from operating activities for the first nine months of 2009 totaled $881 million. Cash flow from operating activities for the third quarter of 2009 totaled $242 million.

Debt: As of September 30, 2009, the Company's net debt totaled $700 million, a reduction of $253 million compared to the end of 2008. Further, on September 9, 2009, the Company completed a successful placement of three series of debentures to institutional investors, raising NIS 898 million ($235 million). The Company's ability to reduce its net debt and place its debentures despite the period's challenging economic environment underscores its financial strength and stability.

Market Trends

- Grain inventory levels: Although inventories of grain, corn

and soy increased towards the end of 2008, global inventory

levels remain historically low. Current supplies represent

approximately 20% of annual demand.

- Grain & fertilizer market dynamics: Demand and prices for

both grain and fertilizers remain low compared to their levels in

mid-2008. However, they rose somewhat from their lowest points

during the first quarter of 2009 and have remained stable during the

second and third quarters.

- Fertilizer supply: With demand low and difficult to project,

many producers of potash and phosphate fertilizers curtailed production

during the nine months of 2009. During the third quarter, demand

increased in India and Brazil, and, to a lesser extent, in North

America and Western Europe. This may lead to a resumption of

production. With virtually unlimited storage capacity at the Dead Sea,

ICL has been able to continue manufacturing throughout this period of

reduced demand, taking advantage of the opportunity to stockpile

inventory.

- Fuel prices: The global financial crisis led to a reduction

in the price of energy which began in the third quarter of 2008.

As a result, the Company's average prices paid for oil and fuel oil

during 2009 have been approximately 50% lower than their average

levels before the crisis.

Highlights of Core Business Segments

- ICL Fertilizers: sales for the third quarter of 2009 were $677 million, a 46% increase compared with the second quarter of 2009, representing 50.6% of total revenues (before offsets of inter-segment sales). The increase reflects the resumption of shipments to primary customers in India and an accelerated rate of shipments to Brazil. Operating income for the third quarter was $261 million, a 134% increase compared to the second quarter of 2009. Operating margin for the period was 38.6%. For the third quarter of 2008, revenues were $1,440 million and operating income was $799 million.

- ICL Industrial Products: sales for the third quarter of 2009 were $281 million, an increase of 13% compared to the second quarter of 2009, representing 21.0% of total revenues (before offsets of inter-segment sales). The increase reflects a rise in demand for the segment's flame retardants and other products during the third quarter as compared to their levels in the fourth quarter of 2008 and the first half of 2009. Operating income for the third quarter was $26.7 million, an increase of 242% compared to the second quarter of 2009. This reflected the period's higher sales, lower input costs, cost-savings efforts and the weakening of the dollar, countered partially by the curtailment of production made in response to low demand. For the third quarter of 2008, revenues were $342 million and operating income was $44 million.

- ICL Performance Products: sales for the third quarter of 2009 were $381 million, an increase of 15% compared to the second quarter of 2009, representing 28.5% of total revenues (before offsets of inter-segment sales). The increase reflects a rise in demand for some of the segment's products and improved prices as compared to their levels in the fourth quarter of 2008 and the first half of 2009. Nonetheless, demand remains low as customers continue to draw down existing inventories, leading the segment to continuously re-evaluate its product pricing. Operating income for the quarter was $63 million, an increase of 24% compared with the second quarter of 2009, reflecting the higher sales and lower input costs (especially phosphoric acid). For the third quarter of 2008, revenues were $467 million and operating income was $122 million.

    Dividends:

    - On May 4, 2009, the Company paid a dividend totaling $175
      million in respect of its fourth quarter 2008 results.

    - On June 17, 2009, the Company paid a dividend totaling $100
      million in respect of its first quarter results.

    - On September 16, 2009, the Company paid a dividend totaling
      $100 million in respect of its second quarter results.

    - The Company's Board of Directors today declared that a
      dividend totaling $175 million would be paid on December 22,
      2009 in respect of its third quarter results.

About ICL

ICL is one of the world's leading fertilizer and specialty chemicals companies. For a world challenged by population growth and scarce resources, ICL makes products that increase global food and water supplies and improve industrial materials and processes.

ICL produces approximately a third of the world's bromine and approximately 9% of its potash. ICL is a leading supplier of fertilizers in Europe and a major player in specialty fertilizer market segments. One of the world's most integrated manufacturers and suppliers of phosphate products, ICL has become the world's leading provider of pure phosphoric acid and a major specialty phosphate player.

ICL is comprised of three core segments: ICL Fertilizers, ICL Industrial Products and ICL Performance Products. Its major production activities are located in Israel, Europe, the US, South America and China, and are supported by major global marketing and logistics networks. ICL benefits from exclusive concessions to extract minerals from Israel's Dead Sea, a vast source of high-quality and low-cost potash, bromine, magnesium chloride and sodium chloride. ICL also mines phosphate rock from Israel's Negev Desert and potash and salt from its mines in Spain and the UK.

ICL's shares are traded on the Tel Aviv Stock Exchange (TASE:ICL).

Forward Looking Statement

This press release contains forward-looking assessments and judgments regarding macro-economic conditions and the Group's markets, and there is no certainty as to whether, when and/or at what rate these projections will materialize. Management's projections are likely to change in light of market fluctuations, especially in ICL's manufacturing locations and target markets. In addition, ICL is likely to be affected by changes in the demand and price environment for its products as well as the cost of shipping and energy, whether caused by actions of governments, manufacturers or consumers. ICL can also be affected by changes in the capital markets, including fluctuations in currency exchange rates, credit availability, interest rates, etc.

                           PRINCIPAL FINANCIAL RESULTS
                 THREE MONTHS AND NINE ENDED SEPTEMBER 30, 2009

                    3 months ended September 30, 9 months ended September 30,
                         2009           2008           2009           2008
                      $     % of     $     % of     $     % of     $     % of
                  millions sales millions sales millions sales millions sales

    Net Sales      1,346.5 100.0  2,177.9 100.0  3,327.6 100.0  5,785.9 100.0
    Reported gross
    profit           574.8  42.7  1,200.4  55.1  1,325.9  39.8  3,078.1  53.2
    Adjusted gross
    profit**         574.8  42.7  1,240.4  57.0  1,325.9  39.8  3,118.1  53.9
    Reported
    operating
    income           287.7  21.4    881.7  40.5    684.0  20.6  2,209.6  38.2
    Adjusted
    operating
    income**         357.4  26.5    963.6  44.2    758.3  22.8  2,291.4  39.6
    Pre-tax income   264.3  19.6    876.2  40.2    686.3  20.6  2,126.1  36.7
    Reported net     256.6  19.1    778.6  35.8    567.7  17.1  1,828.4  31.6
    income to the
    Company's
    shareholders
    Adjusted net     278.9  20.7    846.1  38.8    593.5  17.8  1,895.9  32.8
    income to the
    Company's
    shareholders**
    EBITDA*          380.3  28.3  1,025.0  47.1    880.3  26.5  2,437.2  42.1
    Operating cash
    flow             242.2          717.4          881.0        1,378.9
    Investment in
    property,
    plant and
    equipment less
    grants
    received          79.8           84.0          248.7          238.3

    * EBITDA is calculated as follows:

                                 3 months ended              9 months ended
                                  September 30,               September 30,
                                2009          2008          2009         2008

    Net income                 256.6         778.6         567.7      1,828.4
    Amortization &              51.5          53.6         150.1        143.5
    depreciation
    Financing                   24.1          12.8          (0.7)        97.7
    expenses, net
    Taxes on income              6.2          98.2         116.2        285.8
    Unusual or                  42.4          81.8          47.0         81.8
    one-time expenses
    EBITDA                     380.8       1,025.0         880.3      2,437.2

** During the reporting period, the Company's gross profit, operating profit and net profit were affected by one-time charges and provisions including:

    1) A one-time provision taken by ICL Fertilizers & ICL
       Industrial Products with respect to the segments' Early Retirement
       programs.

    2) A one-time provision taken by ICL Performance Products for
       the reduction of the value of fixed assets.

    3) A tax credit reflecting the effect of a change in the
       Israeli government's Investment Incentive policies on the Company's
       financial reports.

To facilitate meaningful comparisons between the Company's operating results for all periods, the Company has presented adjusted gross profit, operating profit and net profit which exclude these one-time factors.

    Following is a detailed accounting of these one-time charges and
provisions:

                                                                9 months
                                              3 months ended      ended
    In $millions                               September 30,    September
                                                    2009        30, 2009
    Provision for Early Retirement
    benefits                                        42.4          47.0
    One-time provision for reduction of
    value of fixed assets taken by ICL
    Performance Products                            27.3          27.3
    Effect of one-time expenses on
    Operating Income                                69.7          74.3
    Tax consequences of one-time
    expenses                                       (21.1)        (22.2)
    Tax credits due to change in tax
    law                                            (26.3)        (26.3)
    Effect of one-time expenses and tax
    credits on
    Net Income                                      22.3          25.8

                                       ICL
                 PRINCIPAL RESULTS FROM CORE MANAGERIAL SEGMENTS
                 THREE MONTHS AND NINE ENDED SEPTEMBER 30, 2009

                    3 months ended September      9 months ended September
                               30,                           30,
                       2009           2008           2009           2008
    Sales CIF by     $     % of     $     % of     $     % of     $     % of
    segment       millions gross millions gross millions gross millions gross
                           sales          sales          sales          sales
    ICL
    Fertilizers      677.1  50.6  1,440.1  64.0  1,513.4  46.4  3,742.9  63.0
    ICL
    Industrial
    Products         280.6  21.0    342.4  15.2    738.5  22.6    993.4  16.7
    ICL
    Performance
    Products         380.9  28.5    466.9  20.8  1,013.6  31.0  1,201.5  20.3
    Other and
    offsets            7.9          (71.5)          62.1         (151.9)
    Total          1,346.5        2,177.9        3,327.6        5,785.9

    Note: Segment sales data and their percentage of total sales
          are before offsets of inter-segment sales.


                  3 months ended September 30,  9 months ended September 30,
                      2009             2008        2009             2008
    Reported       $    % of      $      % of   $      % of      $      % of
    operating   mill   segment  mill   segment mill segment millions segment
    income by   ions   sales    ions   sales   ions   sales            sales
    segment
    ICL
    Fertilizers 253.5    37.4   759.3   52.7   503.8    33.3  1,898.2    50.7
    ICL
    Industrial
    Products     (8.0)   (2.9)   20.4    6.0     4.9     0.7     94.5     9.5
    ICL
    Performance
    Products     35.2     9.2   103.6   22.2   138.1    13.6    220.9    18.4
    Other and
    offsets       6.9            (1.6)          37.2             (4.0)
    Total       287.7    21.5   881.7   40.5   684.0    20.6  2,209.6    38.1


                  3 months ended September 30,   9 months ended September 30,
                      2009             2008          2009             2008
    Adjusted       $   % of    $    % of      $      % of      $      % of
    (see above) mill segment mill  segment millions segment millions segment
    operating   ions  sales  ions    sales            sales            sales
    income by
    segment
    ICL
    Fertilizers 261.2  38.6  799.3    55.5    513.4    33.9  1,938.2    51.8
    ICL
    Industrial
    Products     26.7   9.5   44.3    12.9     41.9     5.7    118.4    11.9
    ICL
    Performance
    Products     62.6  16.4  121.5    26.0    165.8    16.4    238.8    19.9
    Other and
    offsets       6.9         (1.5)            37.2             (4.0)
    Total       357.4  26.5  963.6    44.2    758.3    22.8  2,291.4    39.6

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    Amiram Fleisher
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