TEL AVIV, Israel, August 24 /PRNewswire-FirstCall/ -- Israel Chemicals Ltd. ("ICL") (TASE:ICL), a multinational fertilizer and specialty chemicals company, today reported results for the second quarter ended June 30, 2009.

Financial Results

Revenues: Revenues for the second quarter of 2009 were $1,083 million, up 20.5% as compared sequentially with $898.5 million for the first quarter of 2009. Relative to last year, volumes sold during the quarter were significantly lower, though selling prices of potash and ICL Performance Products were higher. Since the end of the second quarter, the rate of ICL Fertilizers' third quarter sales has been higher than it was for the previous three quarters.

Gross profit: Gross profit for the second quarter of 2009 was $382 million, and gross margin for the period was 35.3%. The decline compared to the parallel quarter last year reflected the continued effect of the global economic slowdown, which led to a drop in demand and prices for grains, fertilizers and other agricultural commodities. Although prices have recovered somewhat, they remain volatile, and uncertain markets make demand difficult to forecast. The quarter's gross profit benefited from the contribution of intensified cost savings and efficiency programs initiated at the end of 2008, as well as 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 second quarter of 2009 was $191 million. The decline compared to the parallel quarter last year reflected the reduced gross profit, countered partially by the combined effect of 1) the sharp reduction in shipping rates and energy expenses; and 2) the reduction of overhead and other expenses, due both to the weakening of the shekel and to ICL's intensified cost savings and efficiency efforts undertaken since the end of 2008 (including the reduction of inventory levels, the prioritization of investment programs, and other initiatives). In parallel, the Company has recommitted itself to investments on the areas of safety, environmental responsibility and strategic capacity expansion, and, given the current market's low demand, continues to stockpile potash at the Dead Sea for future sales.

Operating margin for the quarter was 17.6%. As a direct result of the global financial crisis and its effect on the Company's markets, the Company has increased its cost savings and efficiency programs, and this had a positive effect on the Company's operating expenses during the reporting period.

Net income: Net income to the Company's shareholders for the second quarter of 2009 was $152 million.

Cash flow: Cash flow from operating activities for the first half of 2009 totaled $639 million. Cash flow from operating activities for the second quarter of 2009 totaled $400.

Debt: As of June 30, 2009, the Company's net debt totaled $756 million, the lowest level of debt in its history, and a reduction of $188 million compared to the end of 2008. Further, on April 27, 2009, the Company completed a successful placement of three series of debentures to institutional investors, raising NIS 695 million ($167 million). During the month of August, these debentures were registered for trading on the Tel Aviv Stock Exchange. 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

    - Current developments: Beginning in March 2009, shipments of potash
      resumed to the Brazilian market. Following the end of the quarter, ICL
      signed a supply agreement with India and resumed its shipments of
      potash to the region.
    - Market outlook: Despite the current crisis, and despite the fact that
      short-term market demand continues to be comparatively weak, the
      fundamentals driving long-term demand for fertilizers have not changed
      materially. The growth in demand for grains, which derives from natural
      population growth and from dietary changes, together with historically
      low levels of grain stocks and production levels, are expected, over
      the medium term and long term, to increase demand for grains. The
      short-term decline in demand for fertilizers and reductions in the
      application of fertilizer is likely to lead to further depletion of
      world grain inventories, a development that is expected to lead to
      price rises for grains and fertilizers in the future.


    Highlights of Core Business Segments for the First Six Months of 2009

    - ICL Fertilizers: sales for the first half of 2009 were $836 million,
      representing 43.4% of the Company's total revenues (before offsets of
      inter-segment sales). The decrease compared to the first half of 2008
      reflects the sharp decline in quantities sold of most of the segment's
      products and lower prices for phosphate fertilizers, mitigated
      partially by the period's higher average selling prices for potash as
      compared to the first half of 2008.Operating income for the first half
      was $250 million in the first half of 2008, and operating margin for
      the period was 29.9%.

Global potash sales during the first half of 2009 derived primarily from India and Brazil.

    - In Brazil, imports of potash began to strengthen in March 2009, and
      their level is expected to further increase during the second half of
      the year; in fact, Fertecon magazine has forecast (in its July edition)
      that Brazil's potash demand for 2009 would be similar to its total in
      2008.

    - ICL Fertilizers signed a nine-month supply agreement with its primary
      Indian customers for the sale of 1,085,000 tons of potash (including
      optional quantities) at $460 per ton.

Since the end of the second quarter, the rate of ICL Fertilizers' third quarter sales has been higher than it was for the previous three quarters.

    - ICL Industrial Products: sales for the first half of 2009 were $458
      million, representing 23.8% of total revenues (before offsets of
      inter-segment sales). The decline compared to the parallel period last
      year derived from a reduction in quantities sold of most of the
      segment's products, countered partially by higher selling prices on
      average compared to the first half of 2008. Operating income for the
      first half was $13 million.

    - ICL Performance Products: sales for the first half of 2009 were $633
      million, representing 32.8% of total revenues (before offsets of
      inter-segment sales). The decrease compared to the first half of 2008
      reflects the reduction of quantities sold of most of the segment's
      products, together with the strengthening of the Euro as compared to
      the dollar, which decreases European sales as expressed in dollar
      terms. This was countered partially by higher prices for some of the
      segment's products. Operating income for the first half was $103
      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 the Company's first quarter results.

    - The Company's Board of Directors today declared that a
      dividend totaling $100 million will be paid on September 16, 2009 in
      respect of its second 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.

                                       ICL

                           PRINCIPAL FINANCIAL RESULTS

                 THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2009


                     3 months ended June 30,       6 months ended June 30,

                       2009           2008           2009           2008
                     $     % of     $     % of     $     % of     $     % of
                  millions sales millions sales millions sales millions sales
    Sales          1,082.6 100.0  2,079.8 100.0  1,981.1 100.0  3,607.9 100.0
    Gross profit     382.1  35.3  1,147.2  55.2    751.2  37.9  1,877.7  52.0
    Operating
    income           190.7  17.6    862.8  41.5    396.3  20.0  1,327.8  36.8
    Pre-tax income   193.3  17.9    835.5  40.2    422.0  21.3  1,249.9  34.6
    Net income to
    the Company's
    shareholders     152.3  14.1    703.2  33.8    311.1  15.7  1,049.8  29.1
    Operating cash
    flow             399.6          461.2          638.8          661.5
    EBITDA*          235.5  21.8    904.3  43.5    495.0  25.0  1,412.2  39.1
    Investment in
    fixed assets
    less grants       80.2           87.3          168.9          154.4


    * EBITDA is calculated as follows:

                       3 months ended June 30,  6 months ended June 30,
                           2009        2008         2009        2008
    Net income            152.3       703.2        311.1     1.049.8
    Amortization &
    depreciation           51.0        45.8         98.6        89.9
    Financing
    expenses, net          (2.2)       29.0        (24.7)       84.9
    Taxes on income        34.4       126.4        110.0       187.6
    EBITDA                235.5       904.4        495.0     1,412.2



                                          ICL

                 PRINCIPAL RESULTS FROM CORE MANAGERIAL SEGMENTS

                 THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2009


                     3 months ended June 30,       6 months ended June 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      465.1  44.5  1,349.9  63.4    836.2  43.4  2,302.7  62.4
    ICL
    Industrial
    Products         247.8  23.7    361.4  17.0    457.9  23.8    651.0  17.7
    ICL
    Performance
    Products         331.3  31.8    418.2  19.6    632.7  32.8    734.6  19.9
    Other and
    offsets           38.4          (49.7)          54.3          (80.4)
    Total          1,082.6        2,079.8        1,981.1        3,607.9

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

                      3 months ended June 30,        6 months ended June 30,
                       2009             2008            2009             2008
    Operating       $    % of        $    % of       $    % of      $    % of
    income by    mill segment     mill segment    mill segment   mill segment
    segment     -ions   sales    -ions   sales   -ions   sales  -ions   sales
    ICL
    Fertilizers 111.5    24.0    731.4    54.2   250.3    29.9  1,138.8  49.5
    ICL
    Industrial    7.8     3.1     45.4    12.6    12.9     2.8     74.1  11.4
    Products
    ICL
    Performance
    Products     50.6    15.3     81.5    19.5   102.8    16.2    117.3  16.0
    Other and
    offsets      20.8              4.5            30.3             (2.4)
    Total       190.7            862.8           396.3          1,327.8



    Press contact:

    Fleisher Communications and Public Relations
    Amiram Fleisher
    +972-3-6241241
    amiram@fleisher-pr.com

SOURCE ICL - Israel Chemicals Ltd