Israel Chemicals : ICL REPORTS 54% INCREASE IN Q3 2018 NET INCOME

INVESTOR RELATIONS CONTACT	PRESS CONTACT
Limor Gruber	Maya Avishai
Head of Investor Relations	Head of Global External Communications
[phone]	[phone]
[e-mail]	[e-mail]

ICL REPORTS 54% INCREASE IN Q3 2018 NET INCOME

• - Third quarter sales of $1.37 billion compared to $1.44 billion for Q3 2017. Excluding divestments, sales increased by 7%

• - Third quarter operating income increased by 14% sequentially to $196 million, 9% higher than Q3 2017 and 43% higher when excluding divested businesses

• - EPS was $0.10 vs. $0.07 in Q3 2017 and $0.08 in Q2 2018

• - Focus on cash flow generation resulted in 11% growth in operating cash flow compared to Q3 2017, despite divestments

• - Dividend distribution of 5.1 cents/share, an increase of 20% compared to Q3 2017, reflecting an annualized dividend yield of approximately 3.5%

Tel Aviv, Israel, November 1, 2018 - ICL (NYSE &TASE: ICL), a leading global specialty minerals and specialty chemicals company, today reported its financial results for the third quarter ended September 30, 2018.

Sales for the third quarter were $1,371 million compared to $1,440 million for the comparable period in 2017, or compared to $1,280 million excluding divested businesses. Sequential sales were flat as a result of lower potash sales volume due to delayed supply contracts with customers in China and India. The Company reported operating income of $196 million compared to $180 million for the third quarter of 2017 and net income of $129 million compared to $84 million in the comparable quarter, an increase of 54%. Excluding the contribution of businesses that were divested during 2018, which included exceptional seasonal profit from the Fire Safety business in Q3 2017, adjusted operating income increased by 43%. The Company benefited from higher commodity prices, but also from its ongoing value-focused initiatives in its specialty businesses. Higher commodity and specialty prices more than compensated for the negative impact of lower sales volumes and higher raw materials, energy and transportation costs. Quarterly operating cash flow increased by 11% to $196 million, despite the divestment of high cash generating businesses.

ICL's CEO, Raviv Zoller, stated, "ICL's strong results for the third quarter were driven by improved market conditions and by the Company's continuous focus on cost control and value oriented initiatives. Our overall strong business momentum continued despite a temporary decrease in potash sales volumes due to delays, this year, in signing supply contracts with Chinese and Indian customers."

Zoller continued, "During the third quarter, we also successfully completed important adjustments to our organizational structure to better align with our strategy. They included, among other thing, the consolidation of our phosphate businesses into one segment and the formation of our Innovative Ag Solutions segment. We have set a course to develop new solutions for our customers, leveraging R&D and digital innovation."

Zoller concluded, "We are fostering a company DNA dedicated to employee empowerment, sustainability and corporate responsibility. This was recently reflected in Silver ranking from EcoVadis, a company that monitors the sustainability and CSR activities of companies with global supply chains, and that ranked ICL in the top 7% amongst 33,000 suppliers. We also recently joined the global audit program of Together for Sustainability, an organization that assesses and improves sustainability practices within supply chains in the chemical industry."

FINANCIAL RESULTS

7-9/2018

7-9/2017

$ millions

% of sales

$ millions

% of sales

Sales

• 1,371-1,440

  Sales excluding divested businesses Gross profit

• 1,371-1,280

• 45833470

  Operating income

• 19614180

  --3313

  Adjusted operating income - excluding divested businesses (1)

• 20015140

  Net income - shareholders of the Company

• 129984

  116

  Adjusted net income - shareholders of the Company - excluding divested businesses (1)

• 1341070

  5

  EPS (fully diluted)

• 0.10-0.07

  Adjusted EPS (fully diluted)

• 0.10-0.09

  --

  Adjusted EBITDA - excluding divested businesses (2)

• 29522236

  18

  Cash flows from operating activities

• 196-176

-

Purchases of property, plant and equipment and intangible assets (3)

145-98

-

(1) See "Adjustments to reported operating and net income (Non -GAAP)" in the Appendix.

• (2) See "Adjusted EBITDA for the periods of activity" in the Appendix.

• (3) See "Condensed consolidated statements of cash flows (unaudited)" in the

Appendix

Results analysis:

SalesExpensesOperating income

$ millions

Q3 2017 figures

1,440

(1,260)

180

Total adjustments Q3 2017*

-

35

35

Adjusted Q3 2017 figures

1,440

(1,225)

215

Divested businesses

(160)

85

(75)

Adjusted Q3 2017 figures (excluding divested businesses)

1,280

(1,140)

140

Quantity

(33)

15

(18)

Price

130

Exchange rate

(6)

-9

130

3

Raw materials

Energy

Transportation

Operating and other expenses

----

(31)

(31)

(1)

(1)

(7)

(7)

(16)

(16)

Adjusted Q3 2018 figures

1,371

(1,171)

200

Total adjustments Q3 2018*

-

4

4

Q3 2018 figures

1,371

(1,175)

196

* See "Adjustments to reported operating and net income (Non-GAAP)" in the financial appendix.

Revenue: Sales were $1,371 million in Q3 2018 compared to $1,440 million for the comparable quarter in 2017 as a result of the sale of the Fire Safety and Oil Additives businesses at the end of the first quarter of 2018 together with the sale of Rovita at the beginning of the third quarter of 2018. The negative quantity impact resulted mainly from a 14% decrease in potash sales volumes due to a delay in the signing of supply contracts with China and India, as well as lower quantities sold of green phosphoric acid. This was offset by strong sales of clear brine fluids, bromine and phosphorous based flame retardants and a significant improvement in selling prices across all of ICL's businesses.

Operating income: The Company reported operating income of $196 million in Q3 2018 compared to $180 million for the third quarter of 2017. Excluding divested businesses, adjusted operating income increased to $200 million compared to $140 million in Q3 2017. The increase was driven by a $52/tonne rise in the potash average realized price per tonne compared to the corresponding quarter last year, as well as higher prices of phosphate fertilizers, phosphate-based acids and food additives and across ICL Industrial Products' businesses (as part of value-oriented sales initiatives). Exchange rates contribution derived mainly from the devaluation of the Israeli shekel and the euro against the dollar decreasing production costs, partly offset by the devaluation of the euro against the dollar decreasing revenues. Price and exchange rates contribution was partly offset by lower sales quantities, higher sulphur prices, which increased raw materials costs throughout the phosphate value chain, higher raw materials prices used for bromine and phosphorous based flame retardants and highertransportation costs resulting from an increase in marine transportation prices. The negative impact of operating and other expenses derived mainly from an increase in royalties and sales commissions, as a result of higher prices, as well as an insurance income that was recorded in the corresponding quarter last year.

Financing expenses, net: The net reported financing expenses in Q3 2018 amounted to $23 million, compared to $36 million in the corresponding quarter last year, a decrease of $13 million, which was driven mainly by a decrease in the amount of $8 million resulting from exchange rate differences and hedging transactions. In addition, there was a $5 million decrease in interest expenses due to the significant reduction of net financial liabilities.

Tax expenses: Tax expenses for Q3 2018 amounted to $45 million, reflecting an effective tax rate of 26%. The lower tax rate compared with the corresponding quarter last year is mainly due to a decrease in the tax rate in the US, lower weight of profits before taxes generated in the US following the divestiture of businesses at the end of the first quarter of 2018 and a decrease in tax provisions in Israel.

Cash flow & debt level: In Q3 2018, operating cash flow increased by $20 million compared to the corresponding quarter in 2017 to $196 million. The strong results of Q3 2018 compared with the corresponding quarter last year more than compensated for an increase in the net working capital. The increase was achieved despite the notable contribution from the highly cash generating divested fire safety and oil additives businesses in Q3 2017. Cash flow used for the purchase of property, plant, equipment and intangible assets amounted to $145 million compared to $98 million in Q3 2017, mainly due to investments in the P9 pumping station at the Dead Sea.

The Company's net financial liabilities at the end of the third quarter amounted to $2,205 million, a decrease of $832 million compared to December 31, 2017. The significant decrease is mainly from proceeds received from the sale of ICL's Fire Safety and Oil Additives businesses.

ICL'S ORGANIZATIONAL STRUCTURE

As part of management's efforts to enhance ICL's leading market position and promote its growth, the Company organizational structure was aligned with its strategy as of Q3 2018. ICL's operations are now divided into four segments: Industrial Products (bromine value chain and complementary businesses), Potash, Phosphate Solutions (P2O5 Chain) and Innovative Ag Solutions. This structure will serve to optimize the businesses of each of the Company's minerals value chains and provide managers of ICL's segments with the tools to streamline operation, promote efficiency and eliminate redundancies. The alignment will further enable the Company to focus on creating leadership in areas where it is currently not an industry leader, leveraging the Company's R&D, industrial know-how and digital innovation.

REVIEW OF OPERATING SEGMENTS

Industrial Products

The Bromine value chain segment recorded another strong quarter driven by higher prices and sales volumes across most of its business lines. The segment benefited from strong demand from oil and gas drilling projects in the Gulf of Mexico and in Israel which drove higher sales of clear brine fluids. Bromine and phosphate-based flame retardants sales also benefitted from environmentally-related regulatory pressure in China and raw material shortages among competitors.

Industrial Products accounted for 24% of sales and 36% of profit attributed to the business segments in the third quarter compared to 20% of sales and 28% of profit attributed to the business segments in Q3 2017.

Significant Highlights and Business Environment



During the third quarter of 2018 the price of elemental bromine price in China increased compared to the second quarter of 2018 as local bromine production was affected by strict environmental related regulatory pressure and the upcoming winter.



Despite stable market demand, ICL's sales of bromine-based flame retardants increased compared to Q3 2017 mainly due to higher prices and volumes of TBBA in China and FR-245 as a result of a production shortage in the market.



Clear brine fluids sales were higher compared to the corresponding quarter mainly due to continuation of higher drilling activity in the Gulf of Mexico and a major Israeli gas drilling project, which was concluded at the end of Q3 2018.



Sales of phosphorous-based flame retardants in ICL's markets (US and Europe) increased compared to the corresponding quarter as a result of continuous strict environmental related regulatory pressure in China which impacted competitors' supply, supporting ICL's sales volume and prices.



The segment recorded higher profitability for magnesia products as a result of higher selling prices and continued focus on applications with higher margins.