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Published: 2022-07-27 06:03:52 ET
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6-K 1 zk2228179.htm 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of July 2022
 
 
Commission File Number: 001-13742
 
ICL GROUP LTD.
(Exact name of registrant as specified in its charter)
 
ICL Group Ltd.
Millennium Tower
23 Aranha Street
P.O. Box 20245
Tel Aviv, 61202 Israel
(972-3) 684-4400
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
 
Form 20-F ☒ Form 40-F ☐
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
 
Yes ☐ No ☒
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
 
Yes ☐ No ☒
 
 
 
 ICL GROUP LTD.
 
 INCORPORATION BY REFERENCE
 
This report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form S-8 (Registration Number: 333-205518) of ICL Group Ltd. and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished. In addition, this report on Form 6-K shall be deemed to be incorporated by reference into the Israeli Shelf Prospectus of ICL Group Ltd. filed with the Israel Securities Authority and dated February 28, 2022 (Filing Number: 2022-02-019821) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.


ICL GROUP LTD.
 
 
1.
Q2 2022 results
 
 
Operating and Financial Review and Prospects
June 30, 2022

 
ICL Reports Record Second Quarter 2022 Results and Raises Guidance
Company executed on growth strategy, which continued to result in strong performance of specialties
businesses, as it also benefitted from significant market upside
 
Tel Aviv, Israel, July 27, 2022 – ICL (NYSE: ICL) (TASE: ICL), a leading global specialty minerals company, today reported its financial results for the second quarter ended June 30, 2022.  Consolidated sales of $2,880 million were up 78% year-over-year versus $1,617 million. Operating income of $1,139 million was up 369% versus $243 million and up 383% versus adjusted operating income of $236 million.  Net income of $563 million was up 302%, while adjusted net income of $751 million was up 456%.  Adjusted EBITDA of $1,258 million was up 249% versus $360 million.  EBITDA margin of 43.7% was up versus 22.3%.
 
ICL’s continued focus on long-term specialties solutions benefitted the Company once again, with additional significant upside from commodity prices.  During the quarter, the Company’s strong performance was supported by increased demand and higher prices in most markets and achieved despite increased raw material costs and continued global supply chain challenges.
 
“In the second quarter, ICL delivered all-time record sales, operating income and EBITDA, and another consecutive quarter of profit and margin growth, with record results from all our specialty businesses and our commodity businesses.  We also achieved multiple production records, as we continued to focus on efficiency and productivity,” said Raviv Zoller, president and CEO of ICL. “Our performance in the quarter reaffirms our specialties strategy, and our strong balance sheet will allow us to accelerate business expansion opportunities, including growth through investments in R&D, capacity and new products, among others.”
 
Due to very strong results in the first half, ICL is raising its expectations for full year adjusted EBITDA to a range of $3,800 million to $4,000 million, from previous guidance of $3,500 million to $3,750 million.  Between $1,500 million to $1,600 million of 2022 EBITDA is expected to come from the company’s specialties focused businesses, up from previous expectations calling for contribution of $1,300 million to $1,400 million. (1a)

In addition, ICL has reached an understanding with the Israeli Tax Authority and settled the dispute concerning the Israeli Law for Taxation of Profits from Natural Resources.  The settlement agreement provides final assessments for the tax years 2016 to 2020, as well as outlines understandings for the calculation of the levy for the years from 2021 and onwards. As a result of the settlement agreement, in the second quarter of 2022, the Company recognized tax expenses for prior years in the amount of $188 million.  ICL welcomes the conclusion of this dispute, which ended through a dialogue and prevented the potential for years-long legal proceedings, while providing expected business certainty for years to come.
 
 ICL Group Limited Q2 2022 Results 1

Operating and Financial Review and Prospects
 
This Operating and Financial Review and Prospects is based on the Company’s unaudited interim condensed consolidated financial statements as of and for the six-month period ended June 30, 2022 (Interim Financial Statements) and is prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”, unless otherwise stated. The Operating and Financial Review and Prospects contain certain non‑IFRS financial measures and forward-looking statements, which are described in the “Financial Figures and non‑GAAP Financial Measures” section and the “Forward-looking Statements” section, respectively.
 
About ICL
 
ICL Group Ltd. is a leading global specialty minerals company that creates impactful solutions for humanity’s sustainability challenges in global food, agriculture, and industrial markets. ICL leverages its unique bromine, potash, and phosphate resources, its professional employees, and its strong focus on R&D and technological innovation to drive growth across its end markets. ICL shares are dually listed on the New York Stock Exchange and the Tel Aviv Stock Exchange (NYSE and TASE: ICL). The Company employs over 12,000 people worldwide, and its 2021 revenues totaled approximately $7 billion. For more information, visit the Company's website at www.icl-group.com1.
 
1 The reference to our website is intended to be an inactive textual reference and the information on, or accessible through, our website is not intended to be part of this Form 6-K.

 ICL Group Limited Q2 2022 Results 2

Financial Figures and non-GAAP Financial Measures

 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales

Sales
 2,880
-
 1,617
-
 5,405
-
 3,127
-
 6,955
-
Gross profit
 1,539
 53
 570
 35
 2,784
 52
 1,065
 34
 2,611
 38
Operating income
 1,139
 40
 243
 15
 2,041
 38
 428
 14
 1,210
 17
Adjusted operating income (1)
 1,139
 40
 236
 15
 2,019
 37
 421
 13
 1,194
 17
Net income attributable to the shareholders of the Company
 563
 20
 140
 9
 1,195
 22
 275
 9
 783
 11
Adjusted net income - shareholders of the Company (1)
 751
 26
 135
 8
 1,364
 25
 270
 9
 824
 12
Diluted earnings per share (in dollars)
 0.44
-
 0.11
-
 0.93
-
 0.22
-
 0.60
-
Diluted adjusted earnings per share (in dollars) (2)
 0.58
-
 0.11
-
 1.06
-
 0.21
-
 0.64
-
Adjusted EBITDA (2)
 1,258
 44
 360
 22
 2,260
 42
 662
 21
 1,687
 24
Cash flows from operating activities
 627
-
 242
-
 952
-
 448
-
 1,065
-
Purchases of property, plant and equipment and intangible assets (3)
 220
-
151
-
 351
-
298
-
611
-


(1)
See “Adjustments to Reported Operating and Net income (non-GAAP)” below.
 

 (2)
Commencing 2022, the Company’s adjusted EBITDA definition was updated. See the disclaimer below.
 

 (3)
See “Condensed consolidated statements of cash flows (unaudited)” in the accompanying financial statements.
 
We disclose in this quarterly report non-IFRS financial measures titled adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share and adjusted EBITDA. Our management uses adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share and adjusted EBITDA to facilitate operating performance comparisons from period to period. We calculate our adjusted operating income by adjusting our operating income to add certain items, as set forth in the reconciliation table under “Adjustments to reported operating and net income (non-GAAP)” below. Certain of these items may recur. We calculate our adjusted net income attributable to the Company’s shareholders by adjusting our net income attributable to the Company’s shareholders to add certain items, as set forth in the reconciliation table under “Adjustments to reported operating and net income (non-GAAP)” below, excluding the total tax impact of such adjustments. We calculate our diluted adjusted earnings per share by dividing adjusted net income by the weighted-average number of diluted ordinary shares outstanding. Our adjusted EBITDA is calculated as net income before financing expenses, net, taxes on income, share in earnings of equity-accounted investees, depreciation and amortization, and adjust items presented in the reconciliation table under “Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share for the periods of activity” below, which were adjusted for in calculating the adjusted operating income. Commencing with the year 2022, the Company’s “adjusted EBITDA” calculation is no longer adding back “minority and equity income, net". While “minority and equity income, net” reflects the share of an equity investor in one of our owned operations, since adjusted EBITDA measures the Company’s performance as a whole, its operations and its ability to satisfy cash needs before profit is allocated to the equity investor, management believes that adjusted EBITDA before deduction of such item is more reflective.
 
 ICL Group Limited Q2 2022 Results 3
 
You should not view adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share or adjusted EBITDA as a substitute for operating income or net income attributable to the Company’s shareholders determined in accordance with IFRS, and you should note that our definitions of adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share and adjusted EBITDA may differ from those used by other companies. Additionally, other companies may use other measures to evaluate their performance, which may reduce the usefulness of our non-IFRS financial measures as tools for comparison. However, we believe adjusted operating income, adjusted net income attributable to the Company’s shareholders, diluted adjusted earnings per share and adjusted EBITDA provide useful information to both management and investors by excluding certain items that management believes are not indicative of our ongoing operations. Our management uses these non-IFRS measures to evaluate the Company's business strategies and management's performance. We believe that these non‑IFRS measures provide useful information to investors because they improve the comparability of our financial results between periods and provide for greater transparency of key measures used to evaluate our performance.
 
(1a) The Company only provides guidance on a non-GAAP basis. The Company does not provide a reconciliation of forward-looking adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, in particular because special items such as restructuring, litigation and other matters, used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected adjusted EBITDA (non-GAAP). The guidance speaks only as of the date hereof. We undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law. Specialties focused businesses are represented by the Industrial Products and Innovative Ag Solutions segments and the specialties part of the Phosphate Solutions segment. We present EBITDA from the phosphate specialties part of the Phosphate Solutions segment as we believe this information is useful to investors in reflecting the specialty portion of our business.
 
We present a discussion in the period-to-period comparisons of the primary drivers of change in the Company’s results of operations. This discussion is based in part on management’s best estimates of the impact of the main trends on our businesses. We have based the following discussion on our financial statements. You should read such discussion together with our financial statements.
 
 ICL Group Limited Q2 2022 Results 4

Adjustments to Reported Operating and Net income (non-GAAP)

 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Operating income
1,139
243
2,041
428
1,210
Divestment related items and transaction costs from acquisitions (1)
-
(8)
(22)
(8)
(22)
Dispute and other settlement expenses (2)
-
-
-
-
5
Impairment and disposal of assets, provision for closure and restoration costs (3)
-
1
-
1
1
Total adjustments to operating income
-
(7)
(22)
(7)
(16)
Adjusted operating income
1,139
236
2,019
421
1,194
Net income attributable to the shareholders of the Company
563
140
1,195
275
783
Total adjustments to operating income
-
(7)
(22)
(7)
(16)
Total tax adjustments (4)
188
2
191
2
57
Total adjusted net income - shareholders of the Company
751
135
1,364
270
824
 

 (1)
For 2022, reflects a capital gain related to the Company’s divestment of a 50%-owned joint venture, Novetide. For 2021, it reflects a capital gain related to the sale of an asset in Israel and the divestment by the Company’s Industrial Products segment of its Zhapu site in China, partially offset by an earnout adjustment relating to divestment in previous years, as well as transaction costs related to acquisitions in Brazil.
 

 (2)
For 2021, reflects settlement costs related to the termination of a partnership between ICL Iberia and Nobian, as well as reimbursement of arbitration costs related to a potash project in Ethiopia, which was partially offset by reversal of a VAT provision following a court ruling in Brazil.
 

 (3)
For 2021, reflects the disposal of a pilot investment in Spain that did not materialize and an increase in restoration costs, offset by a reversal of impairment due to the strengthening of phosphate prices.
 

 (4)
For 2022, reflects tax expenses in respect of prior years following a settlement with the Israeli Tax Authority regarding Israel's surplus profit levy, which outlines understandings for the calculation of the levy, including for the measurement of fixed assets, and the tax impact of adjustments made to operational income. For additional information, see Note 6 to the Company’s interim Financial Statements. For 2021, the amount includes tax expenses related to the release of trapped earnings of the Company and certain Israeli subsidiaries and the tax impact of adjustments made to operational income.
 
 ICL Group Limited Q2 2022 Results 5

Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share for the periods of activity
 
Calculation of adjusted EBITDA was made as follows:
 
 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Net income
 585
 150
 1,242
 292
 832
Financing expenses, net
 14
 30
 48
 50
 122
Taxes on income
 540
 64
 751
 87
 260
Less: Share in earnings of equity-accounted investees
-
 (1)
-
 (1)
 (4)
Operating income
 1,139
 243
 2,041
 428
 1,210
Depreciation and amortization
 119
 124
 241
 241
 493
Adjustments (1)
-
 (7)
 (22)
 (7)
 (16)
Total adjusted EBITDA (2)
 1,258
 360
 2,260
 662
 1,687
 

 (1)
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
 

 (2)
Commencing 2022, the Company’s adjusted EBITDA definition was updated, see the disclaimer above.
 
Calculation of diluted adjusted earnings per share was made as follows:
 
 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Net income attributable to the shareholders of the Company
 563
 140
 1,195
 275
 783
Adjustments (1)
-
 (7)
 (22)
 (7)
 (16)
Total tax adjustments
 188
 2
 191
 2
 57
Adjusted net income - shareholders of the Company
 751
 135
 1,364
 270
 824
Weighted-average number of diluted ordinary shares outstanding (in thousands)
 1,291,696
 1,285,658
 1,291,243
 1,284,873
 1,287,051
Diluted adjusted earnings per share (in dollars) (2)
 0.58
 0.11
 1.06
 0.21
 0.64


(1)
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
 

 (2)
The diluted adjusted earnings per share is calculated as follows: dividing the adjusted net income‑shareholders of the Company by the weighted-average number of diluted ordinary shares outstanding (in thousands).
 
 ICL Group Limited Q2 2022 Results 6


Events in the reporting period
 

 1.
Global potash supply further tightened after the first quarter of 2022, following a ban on Belaruskali potash rail shipments by Ukraine, in addition to an existing Belarus potash exports ban imposed by Lithuania. Export volumes by Belaruskali slightly increased during the quarter as it used alternative export routes through Russia, mainly to China, but remained significantly lower year-over-year.
 

 2.
The Russian invasion of Ukraine during the first quarter led to a humanitarian crisis in Ukraine and the imposition of significant economic sanctions on Russia. This resulted in the curtailment of exports of fertilizers from Russia, rising gas prices and continued significant increases in crop prices, mainly of wheat, which further increased pressure on already rising fertilizer prices. However, global uncertainty diminished somewhat in the second quarter due to partial continued wheat exports by both countries, as well as Russian export of fertilizers, leading to a moderate decrease in fertilizer prices toward the end of the quarter.
 
The duration of the crisis in Ukraine cannot be predicted and it is difficult to assess its future impact on ICL’s results and operations. However, in the Company's estimation, no material adverse effects on its business operations are expected. The Company continuously reviews developments relating to the crisis and its potential consequences and will make necessary adjustments to minimize any negative effects on the results of its activities, as much as possible.
 

 3.
As the COVID-19 pandemic continues to create business and economic interruptions and its effect on global markets remains noticeable, the Company continues to take measures to ensure the health and safety of its employees, suppliers, other business partners and the communities in which it operates to ensure continuation of its operations and proper functioning of its facilities worldwide to minimize the pandemic's potential impact on the Company’s business.
 
 ICL Group Limited Q2 2022 Results 7

Consolidated Results Analysis

Results analysis for the period April – June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
$ millions
$ millions
  
Q2 2021 figures
 1,617
 (1,374)
 243
  
Total adjustments Q2 2021*
-
 (7)
 (7)
  
Adjusted Q2 2021 figures
 1,617
 (1,381)
 236
  
New Brazilian Business' contribution
 177
 (139)
 38
Quantity
 (12)
 (8)
 (20)
  
Price
 1,211
-
 1,211
  
Exchange rates
 (113)
 80
 (33)
  
Raw materials
-
 (173)
 (173)
  
Energy
-
 (25)
 (25)
  
Transportation
-
 (48)
 (48)
  
Operating and other expenses
-
 (47)
 (47)
  
Adjusted Q2 2022 figures
 2,880
 (1,741)
 1,139
  
Total adjustments Q2 2022*
-
-
-
  
Q2 2022 figures
 2,880
 (1,741)
 1,139
  
 
* See "Adjustments to reported Operating and Net income (non-GAAP)" above.
 

 -
New Brazilian business' contribution - In July 2021, the Company completed the acquisition of a South American plant nutrition business, ADS.
 

 -
Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of bromine and phosphorus-based flame retardants, phosphate fertilizers, and bromine-based industrial solutions, mainly elemental bromine. This trend was partly offset by higher sales volumes of clear brine fluids, acids and salts, mainly in Asia and Europe.
 

 -
Price - The positive impact on operating income was primarily related to an increase of $469 in the average realized price per ton of potash year-over-year, as well as to an increase in the selling prices of phosphate fertilizers, acids, salts, specialty agriculture and FertilizerpluS products, bromine and phosphorus-based flame retardants and bromine-based industrial solutions.
 

 -
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the euro and the Chinese yuan against the US dollar, which led to a negative impact on sales that exceeded the positive effect on operational costs.
 

 -
Raw materials – The negative impact on operating income was primarily due to higher prices of sulphur consumed during the quarter, as well as higher prices of commodity fertilizers and raw materials used in the production of phosphorus-based flame retardants.
 

 -
Energy – The negative impact on operating income was due to an increase in electricity prices, mainly in Europe.
 
 ICL Group Limited Q2 2022 Results 8


-
Transportation – The negative impact on operating income was due to an increase in marine and inland transportation costs.
 

 -
Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs, and royalty payments as a result of higher revenue.
 
The following table sets forth sales by geographical regions based on the location of the customers:
 
 
4-6/2022
4-6/2021
 
$ millions
% of Sales
$ millions
% of Sales
Asia
 729
25
 462
29
Europe
 806
28
 519
32
South America
 828
29
 262
16
North America
 359
12
 271
17
Rest of the world
 158
 6
 103
 6
Total
 2,880
 100
 1,617
 100
 

 -
Asia – The increase primarily relates to higher selling prices of potash, phosphate fertilizers, bromine-based flame retardants and bromine-based industrial solutions, as well as an increase in selling prices and sales volumes of acids, specialty agriculture and FertilizerpluS products. The increase was partly offset by a decrease in sales volumes of potash and bromine-based flame retardants.
 

 -
Europe – The increase primarily relates to higher selling prices and sales volumes of potash, white phosphoric acid (WPA), FertilizerpluS and specialty agriculture products, and phosphate-based food additives, as well as higher selling prices of phosphate fertilizers and industrial salts. The increase was partly offset by an unfavorable impact of the depreciation of the average exchange rate of the euro against the US dollar.
 

 -
South America – The increase primarily relates to higher sales volumes and selling prices of potash and specialty agriculture products, which include sales from our acquired ADS business, as well as higher selling prices of phosphate fertilizers, white phosphoric acid (WPA) and higher sales volumes of FertilizerpluS products. The increase was partly offset by a decrease in sales volumes of clear brine fluids.
 

 -
North America – The increase primarily relates to higher selling prices of phosphorus-based flame retardants, phosphate fertilizers, specialty agriculture products and potash, as well as higher sales volumes of clear brine fluids. The increase was partly offset by a decrease in sales volumes of potash, phosphorus-based flame retardants and phosphate fertilizers.
 

 -
Rest of the world – The increase in sales was primarily related to higher sales volumes and selling prices of potash and specialty agriculture products.
 
 ICL Group Limited Q2 2022 Results 9

Financing expenses, net
 
Net financing expenses in the second quarter of 2022 amounted to $14 million compared to $30 million in the corresponding quarter last year, a decrease of $16 million.
 
The main change is due to long-term employee benefits provisions and lease revaluation income, which increased by $57 million, due to depreciation of the Israeli shekel against the US dollar compared to appreciation in the corresponding quarter. On the other hand, for the same reason, there was an increase of $38 million in losses from hedging transactions.
 
Tax expenses
 
In the second quarter of 2022, the Company’s reported tax expenses amounted to $540 million, reflecting, in part, a settlement agreement with the Israeli Tax Authority regarding the surplus profit levy. Following the settlement agreement, the Company recorded tax expenses in respect of prior years in the amount of $188 million. The quarter's tax expenses, excluding the said prior year's expenses, amounted to $352 million compared to $64 million in the corresponding quarter last year, reflecting an effective tax rate of 31% and 30%, respectively. The Company’s relatively high effective tax rate for this quarter was the result of tax expenses relating to the surplus profit levy for the current period, partially offset by the favorable impact of the devaluation of the Israeli shekel against the US dollar. The Company's relatively high tax rate in the corresponding quarter was mainly affected by the appreciation of the Israeli shekel against the US dollar, which had a negative effect on the shekel denominated tax provisions.
 
 ICL Group Limited Q2 2022 Results 10


Results analysis for the period January – June 2022
 

 
Sales
Expenses
Operating income
  
 
$ millions
  
YTD 2021 figures
 3,127
 (2,699)
 428
  
Total adjustments YTD 2021*
-
 (7)
 (7)
  
Adjusted YTD 2021 figures
 3,127
 (2,706)
 421
  
New Brazilian Business' contribution
 302
 (248)
 54
Quantity
 (25)
 10
 (15)
  
Price
 2,156
-
 2,156
  
Exchange rates
 (155)
 99
 (56)
  
Raw materials
-
 (326)
 (326)
  
Energy
-
 (48)
 (48)
  
Transportation
-
 (74)
 (74)
  
Operating and other expenses
-
 (93)
 (93)
  
Adjusted YTD 2022 figures
 5,405
 (3,386)
 2,019
  
Total adjustments YTD 2022*
-
 22
 22
  
YTD 2022 figures
 5,405
 (3,364)
 2,041
  
 
* See "Adjustments to reported operating and net income (non-GAAP)" above.
 

 -
New Brazilian businesses' contribution – In July 2021, the Company completed the acquisition of the South American Plant Nutrition business of ADS.
 

 -
Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of bromine-based industrial solutions, mainly elemental bromine and clear brine fluids, as well as phosphorus and bromine-based flame retardants. This decrease was partly offset by higher sales volumes of acids, salts, phosphate fertilizers and phosphate-based food additives.
 

 -
Price – The positive impact on operating income was primarily related to an increase of $406 in the average realized price per ton of potash year-over-year, as well as an increase in the selling prices of phosphate fertilizers, acids, salts, specialty agriculture and FertilizerpluS products, bromine, and phosphorus-based flame retardants, bromine and phosphorus-based industrial solutions, and specialty minerals.
 

 -
Exchange rates - The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the euro against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Raw materials – The negative impact on operating income was primarily due to higher prices of sulphur consumed during the quarter, as well as higher prices of commodity fertilizers and raw materials used in the production of bromine and phosphorus-based flame retardants.
 

 -
Energy - The negative impact on operating income was due to an increase in electricity and gas prices, mainly in Europe.
 

 -
Transportation – The negative impact on operating income was due to an increase in marine and inland transportation costs.
 
 ICL Group Limited Q2 2022 Results 11
 

 -
Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs, and royalty payments due to higher revenue.
 
The following table sets forth sales by geographical regions based on the location of the customers:
 
 
1-6/2022
1-6/2021
 
$ millions
% of Sales
$ millions
% of Sales
Asia
 1,466
 27
 846
 27
Europe
 1,530
 28
 1,147
 37
South America
 1,344
 25
 371
 12
North America
 774
 14
 566
 18
Rest of the world
 291
 6
 197
 6
Total
 5,405
 100
 3,127
 100
 

 -
Asia – The increase primarily relates to higher sales volumes and selling prices of potash, bromine-based industrial solutions products, phosphate fertilizers, acids and specialty agriculture and FertlizerpluS products, as well as an increase in the selling prices of bromine-based flame retardants. The increase was partly offset by a decrease in sales volumes of bromine-based flame retardants.
 

 -
Europe – The increase relates to higher selling prices and volumes of potash, phosphate fertilizers and bromine-based flame retardants, as well as white phosphoric acid (WPA), industrial salts, FertilizerpluS and specialty agriculture products, phosphorus-based flame retardants and phosphate-based food additives. The increase was partly offset by a decrease in sales volumes of potash and an unfavorable impact of the depreciation of the average exchange rate of the euro against the US dollar.
 

 -
South America – The increase primarily relates to higher sales volumes and selling prices of potash, as well as higher sales volumes of specialty agriculture and FertlizerpluS products, which include sales from our recently acquired Fertiláqua and ADS businesses, together with higher selling prices of phosphate fertilizers and white phosphoric acid (WPA). The increase was partly offset by a decrease in sales volumes of clear brine fluids.
 

 -
North America – The increase primarily relates to higher selling prices of potash, phosphate fertilizers, white phosphoric acid (WPA), phosphate-based food additives, phosphorus-based flame retardants, as well as specialty agriculture products and industrial salts. The increase was partly offset by a decrease in sales volumes of potash, phosphorus-based flame retardants and phosphate fertilizers.
 

 -
Rest of the world – The increase primarily relates to higher sales volumes of potash and specialty agriculture products.
 
 ICL Group Limited Q2 2022 Results 12

Financing expenses, net
 
Net financing expenses in the six-month period ended June 30, 2022, amounted to $48 million, compared to $50 million in the corresponding period last year, a decrease of $2 million.
 
The main change is due to provisions for long-term employee benefits and lease revaluation income, which increased by $51 million, due to higher depreciation of the Israeli shekel against the US dollar compared to the corresponding period. On the other hand, for the same reason, there was an increase of $32 million in losses from hedging transactions, as well as $7 million decrease in capitalized interest income and a $7 million increase in short-term hedging expenses.
 
Tax expenses
 
For the six-month period ended June 30, 2022, the Company's reported tax expenses amounted to $751 million, reflecting a settlement agreement with the Israeli Tax Authority regarding the surplus profit levy. Following the settlement agreement, the Company recorded tax expenses in respect of prior years in the amount of $188 million. The tax expenses for the period, excluding the said prior years expenses, amounted to $560 million compared to $87 million in the corresponding period last year, reflecting an effective tax rate of 28% and 23%, respectively. The Company’s relatively high effective tax rate was the result of tax expenses relating to the surplus profit levy for the current period.
 
 ICL Group Limited Q2 2022 Results 13


 
Industrial Products Segment information as of June 30, 2022 (Unaudited)

Segment Information
 
Industrial Products
 
The Industrial Products segment produces bromine out of a highly concentrated solution in the Dead Sea, and bromine‑based compounds at its facilities in Israel, the Netherlands and China. In addition, the segment produces salts, magnesium chloride, magnesia-based products, phosphorus-based, products, and functional fluids.
 
Results of operations
 
 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Segment Sales
 486
 410
 980
 808
 1,617
   Sales to external customers
 478
 406
 966
 800
 1,601
   Sales to internal customers
 8
 4
 14
 8
 16
Segment Operating Income
 191
 114
 379
 219
 435
Depreciation and amortization
 15
 14
 30
 31
 65
Segment EBITDA
 206
 128
 409
 250
 500
Capital expenditures
 18
14
 40
31
 74
 
Highlights and business environment
 

 •
Sales of bromine-based flame retardants increased year-over-year mainly due to higher pricing in most market segments, such as electronics, EVs, construction, and textiles. However, electronics demand was softer.
 

 •
The segment recorded lower year-over-year sales of elemental bromine, driven by COVID-19 related lockdown restrictions in China.
 

 •
Higher oil prices led to increased drilling activities in several areas and higher year-over-year demand for clear brine fluids.
 

 •
Sales of the segment's phosphorus-based flame retardants decreased year-over-year, following the reemergence of production and exports from China.
 

 •
Most of the segment's magnesia and calcium product lines are sold out due to strong demand in the dietary supplements market.
 

 •
Sales of Dead Sea salts increased year-over-year due to higher pricing, mainly of industrial KCl for the oil drilling market.
 
 ICL Group Limited Q2 2022 Results 14


Industrial Products Segment information as of June 30, 2022 (Unaudited)
 
Results analysis for the period April – June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
  
Q2 2021 figures
 410
 (296)
 114
  
Quantity
 (47)
 33
 (14)
Price
 135
-
 135
  
Exchange rates
 (12)
 7
 (5)
  
Raw materials
-
 (18)
 (18)
  
Energy
-
 (1)
 (1)
  
Transportation
-
 (8)
 (8)
  
Operating and other expenses
-
 (12)
 (12)
  
Q2 2022 figures
 486
 (295)
 191
  
 

 -
Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of bromine and phosphorus-based flame retardants, as well as bromine-based industrial solutions, mainly elemental bromine. This decrease was partially offset by a sales volume increase of clear brine fluids.
 

 -
Price – The positive impact on operating income was due to higher selling prices of bromine and phosphorus-based flame retardants, as well as bromine industrial solutions, mainly elemental bromine.
 

 -
Exchange rates – The unfavorable impact on operating income was primarily related to depreciation of the average exchange rate of the euro against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Raw materials – The negative impact on operating income was primarily due to an increase in prices of raw materials used in the production of phosphorus-based flame retardants.
 

 -
Transportation - The negative impact on operating income primarily resulted from higher marine transportation costs.
 

 -
Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalties payments due to higher revenue.
 
 ICL Group Limited Q2 2022 Results 15

Industrial Products Segment information as of June 30, 2022 (Unaudited)
 
Results analysis for the period January – June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
  
YTD 2021 figures
 808
 (589)
 219
  
Quantity
 (94)
 66
 (28)
Price
 285
-
 285
Exchange rates
 (19)
 8
 (11)
  
Raw materials
-
 (44)
 (44)
  
Energy
-
 (4)
 (4)
  
Transportation
-
 (16)
 (16)
  
Operating and other expenses
-
 (22)
 (22)
  
YTD 2022 figures
 980
 (601)
 379
  
 

 -
Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of bromine and phosphorus-based flame retardants, as well as bromine-based industrial solutions, mainly elemental bromine and clear brine fluids.
 

 -
Price – The positive impact on operating income was due to higher selling prices of bromine and phosphorus-based flame retardants, as well as bromine industrial solutions, mainly elemental bromine.
 

 -
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the euro against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Raw materials – The negative impact on the segment’s operating income was primarily related to higher prices of raw materials used in production of bromine- and phosphorus-based flame retardants.
 

 -
Transportation – The negative impact on the segment’s operating income was primarily related to higher marine transportation costs.
 

 -
Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalties payments due to higher revenues.
 
 ICL Group Limited Q2 2022 Results 16


Potash Segment information as of June 30, 2022 (Unaudited)

Potash
 
The Potash segment produces and sells mainly potash, salts, magnesium, and electricity. Potash is produced in Israel and Spain using an evaporation process to extract potash from the Dead Sea in Israel and conventional mining from an underground mine in Spain. The segment also includes the production and sale of pure magnesium and magnesium alloys, as well as the production and sale of chlorine. In addition, the segment sells salt products produced at its potash site in Spain. The segment operates a power plant in Sodom, which supplies electricity to ICL companies in Israel (surplus electricity is sold to external customers) and steam to all facilities at the Sodom site.
 
Results of operations
 
 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Segment Sales
 951
 380
 1,746
 729
 1,776
   Potash sales to external customers
 810
 296
 1,458
 550
 1,401
   Potash sales to internal customers
 50
 27
 93
 49
 94
   Other and eliminations (1)
 91
 57
 195
 130
 281
Gross Profit
 698
 154
 1,221
 289
 870
Segment Operating Income
 576
 42
 986
 71
 399
Depreciation and amortization
 40
 38
 80
 71
 148
Segment EBITDA
 616
 80
 1,066
 142
 547
Capital expenditures
 113
68
 175
127
 270
Average realized price (in $) (2)
 750
 281
 675
 269
 337


(1)
Primarily includes salt produced in Spain, metal magnesium-based products, chlorine and sales of excess electricity produced by ICL’s power plants at the Dead Sea in Israel.
 

(2)
The average realized price (dollar per ton) of potash is calculated by dividing total potash revenue by total sales quantities. The difference between the Free on Board (FOB) price and the average realized price is primarily due to marine transportation costs, local market (Israel) sales and internal consumption sales.
 
Highlights and business environment
 

 •
ICL's average potash realized price per ton of $750 was 25% higher compared to the first quarter of 2022 and 167% higher year-over-year.
 

 •
During the second quarter, the Grain Price Index decreased following lower prices for wheat, soybean and corn which decreased by 12.2%, 4.7%, and 2.3%, respectively. However, the Index remained high compared to the previous quarter. The wheat price decrease is due to a forecast of significant increases in exports, including by Ukraine, despite its war with Russia, which is easing supply concerns. The decrease in soybean price is related to lower demand by China due to declining pork requirements. The decline in the corn price relates mainly to forecasted imports of corn by China and an increase in production by Ukraine.
 

 •
The WASDE (World Agricultural Supply and Demand Estimates) report, published by the USDA (United States Department of Agriculture) in June 2022, shows a decrease in the expected ratio of global inventories of grains to consumption to 28.2% for the 2022/23 agriculture year, compared to 28.7% for the 2021/22 agriculture year, and 29.3% for the 2020/21 agriculture year.
 
 ICL Group Limited Q2 2022 Results 17
Potash Segment information as of June 30, 2022 (Unaudited)


 •
Potash prices continued to rise globally during the beginning of the second quarter. This trend continued in Asia toward the end of the quarter due to tight supply, including in China, which continued its imports from Laos via a new cross-border rail line, but also from Belarus despite the related sanctions imposed by the US, EU, UK and Canada. In contrast, in the US and Brazil the above trend reversed toward the end of the second quarter due to decreasing demand in parallel with declining soybean prices, as described above, supported by availability of imports from Russia, despite the war with Ukraine, leading to a significant buildup of stocks in Brazil. For additional information on potash prices and imports in key markets, see the “Global potash market - average prices and imports” table below.
 
ICL Dead Sea
 

 •
In June 2022, unexpected flow of brine was discovered above ground at the outskirts of an alluvial fan area, which according to initial tests by the Company, appear to have resulted from a combination of seepage from a certain area of the feeder canal of ICL Dead Sea’s pumping station P-9 (hereinafter P-9), which according to the Company's estimations does not exceed the approved design specifications of P-9, and unique ground conditions. The Company has acted, and is continuously acting, to explore solutions for the short and long term and to rectify any environmental impacts caused to the extent required. For further information please see note 6 to the Company’s interim Financial Statements.
 
ICL Iberia
 

 •
Operational challenges and geological challenges at ICL Iberia’s mine negatively impacted production during the second quarter. ICL Iberia has initiated performance improvement measurements, which are expected to increase production during the second half of the year. In addition, a ramp-up at the sites flotation plant is planned for the third quarter. These actions will enable ICL Iberia to reach and sustain a one-million-ton production level while lowering its cost per ton.
 
Metal Magnesium
 

 •
Metal Magnesium sales increased year-over-year due to annual contracts secured at higher prices following continuous recovery of demand in global end-markets.
 
 ICL Group Limited Q2 2022 Results 18

Potash Segment information as of June 30, 2022 (Unaudited)

Additional segment information
 
Global potash market - average prices and imports:
 
Average prices
  
04-06/2022
04-06/2021
VS Q2 2021
01-03/2022
VS Q1 2022
Granular potash – Brazil
CFR spot
($ per ton)
1,115
383
191.1%
877
27.1%
Granular potash – Northwest Europe
CIF spot/contract
(€ per ton)
869
256
239.5%
618
40.6%
Standard potash – Southeast Asia
CFR spot
($ per ton)
929
281
230.6%
656
41.6%
Potash imports
            
To Brazil
million tons
3.6
3
20.0%
3.1
16.1%
To China
million tons
2
2
            -
2.1
(4.8)%
To India
million tons
0.55
0.59
(6.8)%
0.72
(23.6)%

Sources: CRU (Fertilizer Week Historical Price: July 2022), FAI, Brazilian and Chinese customs data.
 
Potash – Production and Sales
 
Thousands of tons
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
Production
 1,211
 1,022
 2,304
 2,174
 4,514
Total sales (including internal sales)
 1,147
 1,148
 2,297
 2,223
 4,434
Closing inventory
 362
 226
 362
 226
 355
 
Second quarter 2022
 

 -
Production – Production was 189 thousand tons higher year-over-year mainly due to an increase in production as a result of operational improvements implemented at ICL Dead Sea, in addition to the previous year production shutdown in April 2021 (which in 2022 occurred in March), as well as higher production at ICL Iberia, following the connection of a ramp to the Cabanasses mine.
 

 -
Sales – The quantity of potash sold was 1 thousand tons lower year-over-year, as sales quantities to China, India, the US, the UK and Spain were lower, offset by higher sales to Brazil.
 
First half 2022
 

 -
Production – In the six-month period ended June 30, 2022, potash production was 130 thousand tons higher than the corresponding period last year, mainly due to higher production at ICL Iberia following the connection of the ramp to the Cabanasses mine and the operational improvements implemented at ICL Dead Sea.
 

 -
Sales – The quantity of potash sold in the six-month period ended June 30, 2022, was 74 thousand tons higher year-over-year, mainly due to higher sales to Brazil, India and the Netherlands, partially offset by lower sales to China and the UK.
 
 ICL Group Limited Q2 2022 Results 19

Potash Segment information as of June 30, 2022 (Unaudited)

Results analysis for the period April – June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
  
Q2 2021 figures
 380
 (338)
 42
  
Quantity
 (4)
-
 (4)
Price
 603
-
 603
Exchange rates
 (28)
 11
 (17)
Raw materials
  
 (4)
 (4)
  
Energy
-
 (14)
 (14)
  
Transportation
-
 (12)
 (12)
  
Operating and other expenses
-
 (18)
 (18)
  
Q2 2022 figures
 951
 (375)
 576
  
 

 -
Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of potash from the ICL Dead Sea site.
 

 -
Price – The positive impact on operating income resulted primarily from an increase of $469 in the average realized price per ton of potash year-over-year.
 

 -
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the euro against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Energy - The negative impact on operating income was due to an increase in electricity and gas prices, mainly in Europe.
 

 -
Transportation – The negative impact on operating income resulted primarily from an increase in marine and inland transportation costs.
 

 -
Operating and other expenses - The negative impact on operating income was primarily related to higher operational costs and royalty payments due to higher revenues.
 
 ICL Group Limited Q2 2022 Results 20

Potash Segment information as of June 30, 2022 (Unaudited)

Results analysis for the period January – June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
  
YTD 2021 figures
 729
 (658)
 71
  
Quantity
 13
 (15)
 (2)
  
Price
 1,044
-
 1,044
  
Exchange rates
 (40)
 13
 (27)
  
Raw materials
  
 (4)
 (4)
  
Energy
-
 (26)
 (26)
  
Transportation
-
 (21)
 (21)
  
Operating and other expenses
-
 (49)
 (49)
  
YTD 2022 figures
 1,746
 (760)
 986
  
 

 -
Quantity – The minor negative impact on operating income was primarily related to a decrease in sales volumes of potash from the ICL Dead Sea site.
 

 -
Price – The positive impact on operating income resulted primarily from an increase of $406 in the average realized price per ton of potash year-over-year.
 

 -
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the euro against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Energy - The negative impact on operating income was due to an increase in electricity and gas prices, mainly in Europe.
 

 -
Transportation – The negative impact on operating income resulted primarily from an increase in marine and inland transportation costs.
 

 -
Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalty payments due to higher revenues.
 
 ICL Group Limited Q2 2022 Results 21


Phosphate Solutions Segment information as of June 30, 2022 (Unaudited)

Phosphate Solutions
 
The Phosphate Solutions segment operates ICL's phosphate value chain and uses phosphate rock and fertilizer-grade phosphoric acid to produce phosphate-based specialty products with higher added value, as well as to produce and sell phosphate-based fertilizers.
 
Phosphate specialties sales of $493 million and operating income of $117 million in the second quarter of 2022, were approximately 50% and 216% higher, respectively, compared to the second quarter of 2021. The increase in operating income was driven mainly by strong sales volumes and higher prices, which offset increased raw material prices and production costs. Despite ongoing supply chain challenges, the segment’s global production footprint enabled it to provide reliable supply to its customers worldwide.
 
Sales of phosphate commodities amounted to $422 million, approximately 67% higher than the second quarter of 2021, mostly due to a significant increase in market prices. Operating income of $151 million, a year-over-year increase of $111 million, was mostly due to higher prices and strong results from YPH, partially offset by higher costs of raw materials, mainly sulphur.
 
Results of operations
 
 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Segment Sales
 915
 582
 1,713
 1,084
 2,254
   Sales to external customers
 832
 539
 1,580
 1,006
 2,087
   Sales to internal customers
 83
 43
 133
 78
 167
Segment Operating Income
 268
 77
 468
 119
 294
Depreciation and amortization*
 47
 56
 94
 108
 207
Segment EBITDA
 315
 133
 562
 227
 501
Capital expenditures
 60
67
 109
115
 228
 
* For Q2 2022, comprised of $14 million in phosphate specialties and $33 million in phosphate commodities. For Q2 2021, $13 million in phosphate specialties and $43 million in phosphate commodities.
 
Highlights and business environment
 

 •
The specialty phosphates business benefited from strong demand and increased prices in all regions, despite continuing supply-chain challenges that impacted raw material prices and production costs.
 

 •
White phosphoric acid (WPA) sales increased year-over-year, driven by strong sales volumes and higher prices in all regions, partially offset by increasing raw material costs.
 

 •
The Company's YPH J.V. in China continued to experience growing demand for specialty phosphates based on phosphoric acid, used in Cathode Active Materials (CAM) for lithium iron phosphate (LFP), designed for electric vehicle batteries and other energy storage solutions.
 

 •
Sale of dairy proteins increased substantially year-over-year driven by strong demand for the segment's specialty milk powders, including an innovative milk protein which provides for better taste and texture in Greek yogurt and other food applications.
 
 ICL Group Limited Q2 2022 Results 22
Phosphate Solutions Segment information as of June 30, 2022 (Unaudited)


 •
Phosphate fertilizer prices continued to increase in the second quarter, compared to the previous quarter, but moderated somewhat toward the end of the quarter due to increased supply and lower crop prices. Increased supply was attributed to the renewal of China's exports following a relief in government ban on exports, the continuation of exports from Russia, and the cancellation by Turkey of its DAP exports ban. Trends in the global DAP/MAP markets include:
 

 -
In India DAP prices increased for most of the second quarter compared to the previous quarter but decreased toward the end of the quarter, as a result of greater availability of imports from Saudi Arabia and Russia. In addition, India’s Department of Fertilizers limited maximum imported DAP prices to between $920 and $925/ton CFR India, and a relatively low DAP subsidy for the 2022/23 agriculture year was announced in April.
 

 -
In the US DAP/MAP prices increased compared to the previous quarter but decreased towards the end of the quarter, due to drought weather conditions that weighed on the agricultural sector.
 

 -
In Brazil MAP prices increased compared to the first quarter, but later decreased during the quarter due to a build-up of domestic stocks, resulting from available imports from Russia and a decrease in demand resulting from lower crop prices.
 

 •
During the quarter global sulphur market prices increased but at a slower pace of growth during the quarter, following downstream phosphate fertilizers prices.
 

 •
OCP (Morocco) did not conclude its phosphoric acid supply contracts to India for the second and third quarters due to ongoing negotiations. In February 2022, OCP reported that its Imacid joint venture concluded its first quarter phosphoric acid supply contract with India at a price of $1,530 per ton (CFR 100% P2O5), an increase of $200 per ton compared to the previous quarter. OCP indicated that it does not intend to announce its contracts prices in the near future. In July, IFFCO (India) agreed to phosphoric acid supply contracts with multiple suppliers for the second and third quarters of 2022 at $1,715 per ton (CFR 100% P2O5), an increase of $185 per ton over the first quarter's prices.
 
 ICL Group Limited Q2 2022 Results 23


Phosphate Solutions Segment information as of June 30, 2022 (Unaudited)

Additional segment information
 
Global phosphate commodities market - average prices:
 
Average prices
$ per ton
04-06/2022
04-06/2021
VS Q2 2021
01-03/2022
VS Q1 2022
DAP
CFR India Bulk Spot
955
565
69%
940
2%
TSP
CFR Brazil Bulk Spot
1034
527
96%
813
27%
SSP
CFR Brazil inland 18-20% P2O5 Bulk Spot
602
250
141%
435
38%
Sulphur
Bulk FOB Adnoc monthly Bulk contract
455
185
146%
325
40%
 
Source: CRU (Fertilizer Week Historical Prices, July 2022).
 
Results analysis for the period April - June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
  
Q2 2021 figures
 582
 (505)
 77
  
Quantity
 55
 (44)
 11
Price
 315
-
 315
Exchange rates
 (37)
 27
 (10)
Raw materials
-
 (114)
 (114)
Energy
-
 (2)
 (2)
Transportation
-
 (7)
 (7)
Operating and other expenses
-
 (2)
 (2)
Q2 2022 figures
 915
 (647)
 268
  
 

 -
Quantity – The positive impact on operating income was primarily related to strong sales volumes of acids and salts, mainly in Asia and Europe. This trend was partly offset by a decrease in sales volumes of phosphate fertilizers.
 

 -
Price – The positive impact on operating income was primarily related to an increase in the selling prices of phosphate fertilizers, acids, salts, and phosphate-based food additives.
 

 -
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the euro and the average exchange rate of the Chinese yuan against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Raw materials – The negative impact on operating income was due to higher prices of sulphur consumed during the quarter.
 

 -
Transportation – The negative impact on operating income resulted primarily from an increase in marine and inland transportation costs.
 
 ICL Group Limited Q2 2022 Results 24

Phosphate Solutions Segment information as of June 30, 2022 (Unaudited)

Results analysis for the period January – June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
  
YTD 2021 figures
 1,084
 (965)
 119
  
Quantity
 134
 (92)
 42
Price
 544
-
 544
Exchange rates
 (49)
 35
 (14)
Raw materials
-
 (201)
 (201)
Energy
-
 (4)
 (4)
Transportation
-
 (11)
 (11)
Operating and other expenses
-
 (7)
 (7)
YTD 2022 figures
 1,713
 (1,245)
 468
 

 -
Quantity – The positive impact on operating income was driven mainly by strong sales volumes of acids, salts, phosphate fertilizers, and phosphate-based food additives.
 

 -
Price – The positive impact on operating income was primarily related to an increase in the selling prices of phosphate fertilizers, acids, salts, and phosphate-based food additives.
 

 -
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the euro against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Raw materials – The negative impact on operating income was due to higher prices of sulphur consumed during the quarter.
 

 -
Transportation – The negative impact on operating income resulted primarily from an increase in marine and inland transportation costs.
 

 -
Operating and other expenses – The negative impact on operating income was primarily related to higher payments of royalties, as well as higher operational costs.
 
 ICL Group Limited Q2 2022 Results 25

Innovative Ag Solutions Segment information as of June 30, 2022 (Unaudited)

Innovative Ag Solutions
 
The Innovative Ag Solutions segment aims to achieve global leadership in specialty fertilizers markets by enhancing its position in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, fertilizers and FertilizerpluS, targeting high-growth markets such as Brazil, India, and China. The segment also looks to leverage its unique R&D capabilities, substantial agronomic experience, global footprint, backward integration to potash, phosphate, polysulphate and its chemistry know-how, as well as its ability to integrate and generate synergies from acquired businesses. ICL works continuously to expand its broad portfolio of specialty plant nutrition, plant stimulation and plant health solutions, which consist of enhanced efficiency and controlled release fertilizers (CRF), water-soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid), the FertilizerpluS range, soil and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.
 
As the Company continues to focus on targeting long-term growth through its diversified specialty solutions, it decided to change its managerial structure so that, as of January 2022, the activities of ICL Boulby and other European business components were allocated from the potash and phosphate solutions segments, respectively, to the Innovative Ag Solutions segment. Comparative figures have been restated to reflect the structural change of the reportable segments.
 
Results of operations
 
 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Segment Sales
 700
 334
 1,266
 674
 1,670
   Sales to external customers
 689
 331
 1,245
 668
 1,644
   Sales to internal customers
 11
 3
 21
 6
 26
Segment Operating Income
 141
 21
 234
 41
 135
Depreciation and amortization
 14
 13
 31
 26
 62
Segment EBITDA
 155
 34
 265
 67
 197
Capital expenditures
 21
10
 38
*23
 *74
 

 *
Not including capital expenditures as part of the business combination. For further information, see Note 3 to the Company’s Interim Financial Statements.
 
Highlights and business environment
 

 •
The Innovative Ag Solution segment's profit for the second quarter increased year-over-year mainly due to higher selling prices in most regions and business lines.
 

 •
The increase in market prices was driven by higher raw material prices, primarily nitrogen, phosphate, and potash.
 

 •
Sales to the specialty agriculture market increased year-over-year, due to higher sales prices of straights fertilizers, liquid NPK's, water soluble NPK's, and controlled-release fertilizers, as well as the strong performance of newly acquired companies in Brazil. An increase in selling prices was prevalent in all regions.
 

 •
Sales of the Turf and Ornamental business (T&O) increased year-over-year mainly due to higher selling prices.
 
 ICL Group Limited Q2 2022 Results 26
Innovative Ag Solutions Segment information as of June 30, 2022 (Unaudited)


 •
Sales of Fertilizerplus (the Company’s Polysulphate line of products) increased year-over-year due to higher selling prices and sales volumes.
 

 •
In June 2022, ICL announced it signed a long-term agreement with India Potash Limited (IPL) to supply Polysulphate through 2026, with a renewal option. The five-year term is for an aggregate amount of 1 million metric tons, with quantities increasing for each year of the agreement. Each shipment will be a minimum of 25,000 tons and equally distributed across the calendar year, with prices and payment terms to be fixed between IPL and ICL from time to time. The availability of Polysulphate is expected to help boost the Government of India’s organic agriculture program.
 
ICL Boulby
 

 •
In the second quarter of 2022, the production of Polysulphate increased by 20% year-over-year to 246 thousand tons.
 
Results analysis for the period April – June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
  
Q2 2021 figures
 334
 (313)
 21
  
New Brazilian Business' contribution
 177
 (139)
 38
  
Quantity
 10
 (8)
 2
  
Price
 215
-
 215
  
Exchange rates
 (36)
 31
 (5)
  
Raw materials
-
 (90)
 (90)
  
Energy
-
 (7)
 (7)
  
Transportation
-
 (21)
 (21)
  
Operating and other expenses
-
 (12)
 (12)
  
Q2 2022 figures
 700
 (559)
 141
  
 

 -
New Brazilian business' contribution - In July 2021, the Company completed its acquisition of the South American plant nutrition business of Compass Minerals América do Sul S.A. (hereinafter - ADS).
 

 -
Quantity – The positive impact on operating income was due to higher sales volumes of FertilizerpluS products.
 

 -
Price – The positive impact on operating income was due to higher selling prices across most business lines, primarily specialty agriculture and FertilizerpluS products.
 

 -
Exchange rates – The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the euro against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Raw materials – The negative impact on operating income was primarily related to higher costs of commodity fertilizers.
 

 -
Energy – The negative impact on operating income was primarily due to an increase in electricity prices, mainly in Europe.
 

 -
Transportation – The negative impact on operating income resulted primarily from an increase in marine transportation costs.
 

 -
Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs.
 
 ICL Group Limited Q2 2022 Results 27

Innovative Ag Solutions Segment information as of June 30, 2022 (Unaudited)

Results analysis for the period January – June 2022
 
 
Sales
Expenses
Operating income
  
 
$ millions
  
YTD 2021 figures
 674
 (633)
 41
  
New Brazilian Business' contribution
 302
 (248)
 54
Quantity
 (22)
 15
 (7)
  
Price
 360
-
 360
  
Exchange rates
 (48)
 42
 (6)
  
Raw materials
-
 (149)
 (149)
  
Energy
-
 (15)
 (15)
  
Transportation
-
 (26)
 (26)
  
Operating and other expenses
-
 (18)
 (18)
  
YTD 2022 figures
 1,266
 (1,032)
 234
  
 

 -
New Brazilian businesses' contribution – In July 2021, the company completed the acquisition of the South American Plant Nutrition business of Compass Minerals América do Sul S.A. (hereinafter - ADS).
 

 -
Quantity – The negative impact on operating income was due to lower sales volumes of specialty agriculture. This trend was partially offset by an increase in sales volumes of FertilizerpluS products.
 

 -
Price – The positive impact on operating income was due to higher selling prices across most business lines, primarily specialty agriculture and FertilizerpluS products.
 

 -
Exchange rate –The unfavorable impact on operating income was primarily related to the depreciation of the average exchange rate of the euro against the US dollar, which led to a negative impact on sales that exceeded the positive impact on operational costs.
 

 -
Raw materials – The negative impact on operating income was primarily related to higher costs of commodity fertilizers.
 

 -
Energy – The negative impact on operating income was primarily due to an increase in electricity prices, mainly in Europe.
 

 -
Transportation – The negative impact on operating income resulted primarily from an increase in marine transportation costs.
 

 -
Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs.
 
 ICL Group Limited Q2 2022 Results 28


Liquidity and Capital Resources

Source and uses of cash
 
Net cash provided by operating activities
 
In the second quarter of 2022, cash flow provided by operating activities amounted to $627 million, compared to $242 million in the corresponding quarter last year. The increase was mainly due to stronger operating results in the current quarter.
 
Net cash used in investing activities
 
In the second quarter of 2022, net cash used in investing activities amounted to $264 million compared to $58 million in the corresponding quarter last year. The increase was mainly due to higher investment in property, plant and equipment and the settlement of the earn-out payment relating to the acquisition of ADS.
 
Net cash used in financing activities
 
In the second quarter of 2022, net cash used in financing activities amounted to $351 million, compared to $31 million in the corresponding quarter last year. The increase was mainly due to higher dividend payments and higher repayment of long-term debt in the current quarter.
 
Outstanding net debt
 
As of June 30, 2022, ICL’s net financial liabilities amounted to $2,241 million, a decrease of $208 million compared to December 31, 2021.
 
Credit facilities
 
The total amount of the Company's securitization facility framework is $300 million. As of June 30, 2022, ICL has utilized approximately $179 million of the facility’s framework.
 
ICL has long-term credit facilities of $1,200 million, of which $291 million were utilized as of June 30, 2022. Subsequent to the date of the report, in July 2022, the long-term credit facility decreased by $100 million following agreement on an early termination of one of the banks a few months prior to its official termination date. The updated total credit facility is $1,100 million.
 
In April 2022, the Company prepaid its MUFG credit facility loan of BRL180 million and terminated its BRL 230 million (about $48 million) credit facility in Brazil.
 
Ratings and financial covenants
 
Fitch Ratings
 
In June 2022, Fitch Ratings reaffirmed the Company’s long-term issuer default rating and senior unsecured rating at 'BBB-'. The outlook on the long-term issuer default rating is stable.
 
S&P Ratings
 
As of July 5, 2022, the S&P credit rating agency reaffirmed the Company’s international credit rating and senior unsecured rating of 'BBB-'. In addition, the S&P Maalot credit rating agency reaffirmed the Company’s credit rating of 'ilAA' with a stable rating outlook.
 
Financial covenants
 
As of June 30, 2022, the Company was in compliance with all of its financial covenants stipulated in its financing agreements.
 
 ICL Group Limited Q2 2022 Results 29
 
Critical Accounting Estimates
 
In the six and three month period ended June 30, 2022, there were no material changes in the critical accounting estimates previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2021.
 
Board of Directors and Senior Management Updates
 
In March 2022, a temporary amendment to the Israeli Companies Regulations (Rules regarding Compensation and Expenses to an External Director) was published, allowing the boards of directors to adopt criteria for reclassification for compensation purposes, of participation of directors in meetings held electronically, as physical participation in meetings, during the period of a health condition was declared due to COVID-19. Accordingly, on May 25, 2022, the Company's Board of Directors adopted the criteria. Following implementation of the criteria, the Company paid the relevant directors additional compensation of approximately NIS 202 thousand.
 
On June 29, 2022, further to the recommendation of an appointment committee comprised of independent and non-independent board members, the Company’s Board of Directors appointed Ms. Michal Silverberg to serve as a director of the Company, effective as of July 1, 2022, until the next annual general meeting of shareholders of the Company.
 
Risk Factors
 
In the six and three month period ended June 30, 2022, there were no material changes in the risk factors previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2021.
 
Quantitative and Qualitative Exposures stemming from Market Risks
 
Reference is made to “Item 11 – Quantitative and Qualitative Disclosures about Market Risks” in our Annual Report on Form 20-F for the year ended December 31, 2021.
 
Legal Proceedings
 
For information regarding legal proceedings and other contingencies, see Note 6 to the Company's Interim Financial Statements.
 
 ICL Group Limited Q2 2022 Results 30

Forward-looking Statements
 
This announcement 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”, “strive”, “forecast”, “targets” and “potential”, among others.
 
Forward‑looking statements appear in a number of places in this announcement and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward‑looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward‑looking statements due to various factors, including, but not limited to:
 
Changes in exchange rates or prices compared to those we are currently experiencing; loss or impairment of business licenses or mineral extractions permits or concessions; volatility of supply and demand and the impact of competition; the difference between actual reserves and our reserve estimates; natural disasters; failure to "harvest" salt which could lead to accumulation of salt at the bottom of the evaporation Pond 5 in the Dead Sea; construction of a new pumping station; disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; delays in the completion of major projects by third party contractors and/or termination of engagements with contractors and/or governmental obligations; the inflow of significant amounts of water into the Dead Sea could adversely affect production at our plants; labor disputes, slowdowns and strikes involving our employees; pension and health insurance liabilities; the ongoing COVID-19 pandemic, which has impacted, and may continue to impact our sales, operating results and business operations by disrupting our ability to purchase raw materials, by negatively impacting the demand and pricing for some of our products, by disrupting our ability to sell and/or distribute products, impacting customers' ability to pay us for past or future purchases and/or temporarily closing our facilities or the facilities of our suppliers or customers and their contract manufacturers, or restricting our ability to travel to support our sites or our customers around the world; changes to governmental incentive programs or tax benefits, creation of new fiscal or tax related legislation; changes in our evaluations and estimates, which serve as a basis for the recognition and manner of measurement of assets and liabilities; higher tax liabilities; failure to integrate or realize expected benefits from mergers and acquisitions, organizational restructuring and joint ventures; currency rate fluctuations; rising interest rates; government examinations or investigations; disruption of our, or our service providers', information technology systems or breaches of our, or our service providers', data security; failure to retain and/or recruit key personnel; inability to realize expected benefits from our cost reduction program according to the expected timetable; inability to access capital markets on favorable terms; 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; sales of our magnesium products being affected by various factors that are not within our control; our ability to secure approvals and permits from the authorities in Israel to continue our phosphate mining operations in Rotem Amfert Israel; volatility or crises in the financial markets; uncertainties surrounding the withdrawal of the United Kingdom from the European Union; hazards inherent to mining and chemical manufacturing; the failure to ensure the safety of our workers and processes; cost of compliance with environmental regulatory legislative and licensing restrictions; laws and regulation related to, and physical impacts of climate change and greenhouse gas emissions; litigation, arbitration and regulatory proceedings; exposure to third party and product liability claims; product recalls or other liability claims as a result of food safety and food-borne illness concerns; insufficiency of insurance coverage; closing of transactions, mergers and acquisitions; war or acts of terror and/or political, economic and military instability in Israel and its region; filing of class actions and derivative actions against the Company, its executives and Board members; The Company is exposed to risks relating to its current and future activity in emerging markets; and other risk factors discussed under ”Item 3 - Key Information— D. Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 23, 2022 (the “Annual Report”).
 
Forward‑looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
 
This report for the second quarter of 2022 (the “Quarterly Report”) should be read in conjunction with the Annual Report and the report for the first quarter of 2022 published by the Company (the "prior quarterly report"), including the description of events occurring subsequent to the date of the statement of financial position, as filed with the US SEC.
 
 ICL Group Limited Q2 2022 Results 31

Consolidated Financial Statements (Unaudited)
 
As of June 30, 2022 in Millions of US Dollars


Condensed Consolidated Statements of Financial Position as of (Unaudited)

 
June 30,
2022
June 30,
2021
December 31,
2021
 
$ millions
$ millions
$ millions
Current assets
      
Cash and cash equivalents
 426
 318
 473
Short-term investments and deposits
 90
 92
 91
Trade receivables
 1,812
 1,097
 1,418
Inventories
 1,857
 1,207
 1,570
Prepaid expenses and other receivables
 572
 524
 357
Total current assets
 4,757
 3,238
 3,909
       
Non-current assets
      
Deferred tax assets
 132
 143
 147
Property, plant and equipment
 5,749
 5,601
 5,754
Intangible assets
 867
 725
 867
Other non-current assets
 273
 373
 403
Total non-current assets
 7,021
 6,842
 7,171
       
Total assets
 11,778
 10,080
 11,080
       
Current liabilities
      
Short-term debt
 466
630
 577
Trade payables
 1,132
 801
 1,064
Provisions
 53
 55
 59
Other payables
 1,227
 659
 912
Total current liabilities
 2,878
 2,145
 2,612
       
Non-current liabilities
      
Long-term debt and debentures
 2,291
 2,212
 2,436
Deferred tax liabilities
 450
 368
 384
Long-term employee liabilities
 435
 622
 564
Long-term provisions and accruals
 266
 278
 278
Other
 62
 76
 70
Total non-current liabilities
 3,504
 3,556
 3,732
       
Total liabilities
 6,382
 5,701
 6,344
       
Equity
      
Total shareholders’ equity
 5,153
 4,201
 4,527
Non-controlling interests
 243
 178
 209
Total equity
 5,396
 4,379
 4,736
       
Total liabilities and equity
 11,778
 10,080
 11,080

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 33

Condensed Consolidated Statements of Income (Unaudited)
(In millions except per share data)

 
For the three-month
period ended
For the six-month
period ended
For the year
ended
 
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
December 31, 2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Sales
 2,880
 1,617
 5,405
 3,127
 6,955
Cost of sales
 1,341
 1,047
 2,621
 2,062
 4,344
           
Gross profit
 1,539
 570
 2,784
 1,065
 2,611
           
Selling, transport and marketing expenses
 321
 246
 600
 475
 1,067
General and administrative expenses
 74
 67
 143
 129
 276
Research and development expenses
 17
 14
 35
 29
 64
Other expenses
 6
 25
 6
 30
 57
Other income
 (18)
 (25)
 (41)
 (26)
 (63)
           
Operating income
 1,139
 243
 2,041
 428
 1,210
           
Finance expenses
 138
 64
 205
 62
 216
Finance income
 (124)
 (34)
 (157)
 (12)
 (94)
           
Finance expenses, net
 14
 30
 48
 50
 122
           
Share in earnings of equity-accounted investees
-
 1
-
 1
 4
           
Income before taxes on income
 1,125
 214
 1,993
 379
 1,092
           
Taxes on income
 540
 64
 751
 87
 260
           
Net income
 585
 150
 1,242
 292
 832
           
Net income attributable to the non-controlling interests
 22
 10
 47
 17
 49
           
Net income attributable to the shareholders of the Company
 563
 140
 1,195
 275
 783
           
Earnings per share attributable to the shareholders of the Company:
          
           
Basic earnings per share (in dollars)
 0.44
 0.11
 0.93
 0.22
 0.61
           
Diluted earnings per share (in dollars)
 0.44
 0.11
 0.93
 0.22
 0.60
           
Weighted-average number of ordinary shares outstanding:
          
           
Basic (in thousands)
 1,286,380
 1,281,977
 1,286,097
 1,281,192
 1,282,807
           
Diluted (in thousands)
 1,291,696
 1,285,658
 1,291,243
 1,284,873
 1,287,051
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
ICL Group Limited Quarterly Report 34

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

 
For the three-month period ended
For the six-month period ended
For the year ended
 
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
December 31, 2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Net income
 585
 150
 1,242
 292
 832
           
Components of other comprehensive income that will be reclassified subsequently to net income
          
Foreign currency translation differences
 (194)
 46
 (137)
 (18)
 (105)
Change in fair value of cash flow hedges transferred to the statement of income
 59
 (13)
 76
 16
 (15)
Effective portion of the change in fair value of cash flow hedges
 (90)
 11
 (109)
 (26)
 13
Tax relating to items that will be reclassified subsequently to net income
 7
-
 8
 2
-
 
 (218)
 44
 (162)
 (26)
 (107)
           
Components of other comprehensive income that will not be reclassified to net income
          
Net changes of investments at fair value through other comprehensive income
-
 91
-
 119
 155
Actuarial gains from defined benefit plans
 18
 8
 60
 18
 85
Tax relating to items that will not be reclassified to net income
 (3)
 (13)
 (10)
 (15)
 (44)
 
 15
 86
 50
 122
 196
           
Total comprehensive income
 382
 280
 1,130
 388
 921
           
Comprehensive income attributable to the non-controlling interests
 9
 14
 34
 20
 54
           
Comprehensive income attributable to the shareholders of the Company
 373
 266
 1,096
 368
 867
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 35

Condensed Consolidated Statements of Cash Flows (Unaudited)
 
 
For the three-month period ended
For the six-month period ended
For the year ended
 
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
December 31, 2021
 
$ millions
$ millions
$ millions
$ millions
$ millions
Cash flows from operating activities
          
Net income
 585
 150
 1,242
 292
 832
Adjustments for:
          
Depreciation and amortization
 119
 124
 241
 241
 490
Reversal of fixed assets impairment
-
 (9)
-
 (9)
 (6)
Exchange rate, interest and derivative, net
 75
-
 116
 53
 99
Tax expenses
 540
 64
 751
 87
 260
Change in provisions
 (41)
 12
 (59)
 (9)
 (4)
Other
 6
 8
 (14)
 10
 (21)
 
 699
 199
 1,035
 373
 818
           
Change in inventories
 (208)
 (3)
 (295)
 27
 (267)
Change in trade receivables
 21
 (27)
 (448)
 (174)
 (426)
Change in trade payables
 105
 36
 99
 75
 274
Change in other receivables
 (89)
 (31)
 (90)
 (40)
 9
Change in other payables
 (52)
 (17)
 (9)
 (29)
 107
Net change in operating assets and liabilities
 (223)
 (42)
 (743)
 (141)
 (303)
           
Interest paid, net
 (39)
 (37)
 (55)
 (55)
 (89)
Income taxes paid, net of refund
 (395)
 (28)
 (527)
 (21)
 (193)
           
Net cash provided by operating activities
 627
 242
 952
 448
 1,065
           
Cash flows from investing activities
          
Proceeds (payments) from deposits, net
 (30)
 90
 (38)
 98
 355
Business combinations
 (18)
-
 (18)
 (64)
 (365)
Purchases of property, plant and equipment and intangible assets
 (220)
 (151)
 (351)
 (298)
 (611)
Proceeds from divestiture of assets and businesses, net of transaction expenses
 2
 1
 22
 1
 39
Other
 2
 2
 14
 2
 3
Net cash used in investing activities
 (264)
 (58)
 (371)
 (261)
 (579)
           
Cash flows from financing activities
          
Dividends paid to the Company's shareholders
 (307)
 (67)
 (476)
 (101)
 (276)
Receipt of long-term debt
 190
 187
 533
 497
 1,230
Repayments of long-term debt
 (259)
 (144)
 (615)
 (455)
 (1,120)
Receipts (repayments) of short-term debt, net
 25
 25
 (72)
 (16)
 (58)
Receipts (payments) from transactions in derivatives
-
 (32)
 19
 (18)
 (17)
Other
-
-
-
-
 (3)
Net cash used in financing activities
 (351)
 (31)
 (611)
 (93)
 (244)
           
Net change in cash and cash equivalents
 12
 153
 (30)
 94
 242
Cash and cash equivalents as of the beginning of the period
 439
 157
 473
 214
 214
Net effect of currency translation on cash and cash equivalents
 (25)
 8
 (17)
 10
 17
Cash and cash equivalents as of the end of the period
 426
 318
 426
 318
 473

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 36


Condensed Consolidated Statements of Changes in Equity (Unaudited)

 
Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
 
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
    
 
$ millions
For the three-month period ended June 30, 2022
                  
Balance as of April 1, 2022
 548
 225
 (387)
 138
 (260)
 4,819
 5,083
 234
 5,317
                   
Share-based compensation
-
 2
-
 2
-
-
 4
-
 4
Dividends
-
-
-
-
-
 (307)
 (307)
-
 (307)
Comprehensive income
-
-
 (181)
 (24)
-
 578
 373
 9
 382
Balance as of June 30, 2022
 548
 227
 (568)
 116
 (260)
 5,090
 5,153
 243
 5,396

 
Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
 
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
    
 
$ millions
For the three-month period ended June 30, 2021
                  
Balance as of April 1, 2021
 546
 207
 (397)
 43
 (260)
 3,861
 4,000
 164
 4,164
                   
Share-based compensation
 1
 10
-
 (9)
-
-
 2
-
 2
Dividends
-
-
-
-
-
 (67)
 (67)
-
 (67)
Comprehensive Income
-
-
 42
 77
-
 147
 266
 14
 280
Balance as of June 30, 2021
 547
 217
 (355)
 111
 (260)
 3,941
 4,201
 178
 4,379
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 37
Condensed Consolidated Statements of Changes in Equity (Unaudited) (cont'd)

 
Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
 
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
    
 
$ millions
For the six-month period ended June 30, 2022
                  
Balance as of January 1, 2022
 548
 224
 (444)
 138
 (260)
 4,321
 4,527
 209
 4,736
                   
Share-based compensation
-
 3
-
 3
-
-
 6
-
 6
Dividends
-
-
-
-
-
 (476)
 (476)
-
 (476)
Comprehensive income
-
-
 (124)
 (25)
-
 1,245
 1,096
 34
 1,130
Balance as of June 30, 2022
 548
 227
 (568)
 116
 (260)
 5,090
 5,153
 243
 5,396

 
Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
 
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
    
 
$ millions
For the six-month period ended June 30, 2021
                  
Balance as of January 1, 2021
 546
 204
 (334)
 22
 (260)
 3,752
 3,930
 158
 4,088
                   
Share-based compensation
 1
 13
-
 (10)
-
-
 4
-
 4
Dividends
-
-
-
-
-
 (101)
 (101)
-
 (101)
Comprehensive income
-
-
 (21)
 99
-
 290
 368
 20
 388
Balance as of June 30, 2021
 547
 217
 (355)
 111
 (260)
 3,941
 4,201
 178
 4,379

The accompanying notes are an integral part of these condensed consolidated financial statements

ICL Group Limited Quarterly Report 38
Condensed Consolidated Statements of Changes in Equity (Unaudited) (cont'd)

 
Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
 
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
    
 
$ millions
For the year ended December 31, 2021
                  
Balance as of January 1, 2021
 546
 204
 (334)
 22
 (260)
 3,752
 3,930
 158
 4,088
                   
Share-based compensation
 2
 20
-
 (16)
-
-
 6
-
 6
Dividends
-
-
-
-
-
 (276)
 (276)
 (3)
 (279)
Comprehensive income
-
-
 (110)
 132
-
 845
 867
 54
 921
Balance as of December 31, 2021
 548
 224
 (444)
 138
 (260)
 4,321
 4,527
 209
 4,736

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 39


Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 1 – General


 A.
The Reporting Entity

ICL Group Ltd. (hereinafter – the Company), is a company domiciled and incorporated in Israel. The Company's shares are traded on both the Tel-Aviv Stock Exchange (TASE) and the New York Stock Exchange (NYSE) under the ticker: ICL. The address of the Company’s registered headquarters is 23 Aranha St., Tel Aviv, Israel. The Company is a subsidiary of Israel Corporation Ltd., a public company traded on the TASE under the ticker: ILCO:TA. The State of Israel holds a Special State Share in ICL and in some of its subsidiaries, entitling the State the right to safeguard the State of Israel vital interests.
 
The Company, together with its subsidiaries, associated companies and joint ventures (hereinafter ‑ the Group or ICL), is a leading specialty minerals group that operates a unique, integrated business model. The Company competitively extracts certain minerals as raw materials and utilizes processing and product formulation technologies to add value to customers in two main end-markets: agriculture and Industrial (including food). ICL’s products are used mainly in agriculture, electronics, food, fuel and gas exploration, water purification and desalination, construction, detergents, cosmetics, pharmaceuticals and automotive.
 
Note 2 – Significant Accounting Policies


 A.
Basis of Preparation

The Company's financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (IASB) and the Company uses IFRS as its generally accepted accounting principles (“GAAP”).
 
The condensed consolidated interim financial statements were prepared in accordance with IAS 34, “Interim Financial Reporting” and do not include all the information required in complete, annual financial statements. These condensed consolidated interim financial statements and notes are unaudited and should be read together with the Company's audited financial statements included in its Annual Report on Form 20-F for the year ended December 31, 2021 (hereinafter – the Annual Financial Statements), as filed with the Securities and Exchange Commission ("SEC").
 
The accounting policies and assumptions used in preparation of these condensed consolidated interim financial statements are consistent with those used in preparation of the Company's Annual Financial Statements and in the Company's opinion, include all the adjustments necessary to fairly present such information. Interim results are not necessarily indicative of the Company's expected results for the entire year.
 
Classifications
 
The Company made a number of insignificant classifications in comparative figures in order to adjust them to the manner of classification in the current financial statements. The said classifications have no effect on the total profit (loss).
 
ICL Group Limited Quarterly Report 40


Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments

A. General

1. Information on operating segments

ICL is a global specialty minerals company operating bromine, potash and phosphate mineral value chains in a unique, integrated business model. Our operations are organized under four segments: Industrial Products, Potash, Phosphate Solutions and Innovative Ag Solutions.
 
As the Company continues to focus on targeting long-term growth through its diversified specialty solutions, it decided to change its managerial structure so that, as of January 2022, the activities of ICL Boulby and other European business components were allocated from the potash and phosphate solutions segments, respectively, to the Innovative Ag Solutions segment. Comparative figures have been restated in order to reflect the structural change of the reportable segments.
 
Industrial Products – The Industrial Products segment produces bromine derived from a solution that is a by‑product of the potash production process in Sodom, Israel, as well as bromine‑based compounds. Industrial Products uses most of the bromine it produces for self‑production of bromine compounds at its production sites in Israel, the Netherlands and China. In addition, the Industrial Products segment produces several grades of salt, magnesium chloride and some other specialty mineral products. Industrial Products is also engaged in the production and marketing of phosphorous-based flame retardants and additional phosphorus‑based products.

Potash – The Potash segment produces and sells mainly potash, salt, magnesium and electricity. Potash is produced in Israel and Spain using an evaporation process to extract potash from the Dead Sea in Israel, and from conventional mining of an underground mine in Spain. The segment also includes production and sales of pure magnesium and magnesium alloys, as well as production and sales of chlorine and sylvinite. In addition, the segment sells salt products produced in its potash site in Spain. The Company operates a power plant in Sodom which supplies electricity to ICL companies in Israel (surplus electricity is sold to external customers) and steam to all facilities at the Sodom site.
 
Phosphate Solutions – The Phosphate Solutions segment is based on a phosphate value chain which uses phosphate commodity products, such as phosphate rock and fertilizer-grade phosphoric acid (“green phosphoric acid”), to produce specialty products with higher added value. The segment also produces and markets phosphate-based fertilizers. Phosphate rock is mined and processed from open pit mines, three of which are located in the Negev Desert in Israel, while the fourth is situated in Yunnan province in China. Sulphuric acid, green phosphoric acid and phosphate fertilizers are also produced in the facilities in Israel and China.
 
The Phosphate Solutions segment manufactures pure phosphoric acid by purifying green phosphoric acid. Pure phosphoric acid and green phosphoric acid are used to manufacture downstream products with high added value, such as phosphate salts and acids, for a wide range of food and industrial applications. Phosphate salts and acids are used in various industrial end markets, such as oral care, cleaning products, paints and coatings, water treatment, asphalt modification, construction, metal treatment and more. The segment's products for the food industry include functional food ingredients and phosphate additives, which provide texture and stability solutions for processed meat, meat alternatives, poultry, seafood, dairy, beverage and baked goods. In addition, the segment supplies pure phosphoric acid to ICL’s specialty fertilizers business and produces organic milk components and whey proteins for the food ingredients industry.
 
ICL Group Limited Quarterly Report 41
 
Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)
 
Note 3 - Operating Segments (cont’d)

A. General (cont’d)

1.  Information on operating segments (cont’d)

Innovative Ag Solutions – The Innovative Ag Solutions segment aims to achieve global leadership in specialty fertilizers markets by enhancing its global positions in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, targeting high-growth markets such as Brazil, India and China, by leveraging its unique R&D capabilities, vast agronomic experience, global footprint, backward integration to potash, phosphate and polysulphate and chemistry know-how, while integrating and generating synergies from acquired businesses.
 
ICL is continuously working to expand its broad portfolio of specialty plant nutrition, plant stimulation and plant health solutions, which consists of enhanced efficiency and controlled release fertilizers (CRF), organic fertilizers, water soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid), soil and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.
 
The Innovative Ag Solutions segment develops, manufactures, markets and sells its products globally, mainly in South America, Europe, Asia, North America and Israel. It produces water soluble specialty fertilizers in Belgium, Israel and Spain, organic, ornamental horticulture, turf and landscaping products in the UK and the Netherlands, liquid fertilizers in Israel, Spain and China, straights soluble fertilizers in China and Israel, controlled‑release fertilizers in the Netherlands, Brazil and the United States, as well as secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants in Brazil.
 
Other Activities – Business activities include, among other things, ICL’s innovative arm, promoting innovation, developing new products and services, as well as digital platforms and technological solutions for farmers and agronomists. This category includes Growers and Agmatix, innovative start-ups that are developing agricultural data processing and analysis capabilities for the future of agriculture. These activities are not presented as reportable segments as they do not meet required quantitative thresholds.
 
2. Segment capital investments

Capital investments made by the segments for each of the reporting periods include mainly property, plant and equipment as well as intangible assets acquired in the ordinary course of business and as part of business combinations.
 
3. Inter–segment transfers and unallocated income (expenses)

Segment revenue, expenses and results include inter-segment transfers, which are based on transactions prices in the ordinary course of business. This is aligned with reports that are regularly reviewed by the Chief Operating Decision Maker. Inter-segment transfers are eliminated as part of the financial statements' consolidation process.
 
ICL Group Limited Quarterly Report 42


Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments (cont’d)

B. Operating segment data

 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the three-month period ended June 30, 2022
              
               
Sales to external parties
 478
 877
 832
 689
 4
-
 2,880
Inter-segment sales
 8
 74
 83
 11
 1
 (177)
-
Total sales
 486
 951
 915
 700
 5
 (177)
 2,880
               
Segment operating income (loss)
 191
 576
 268
 141
 (1)
 (36)
 1,139
Other income not allocated to the segments
            
-
Operating income
            
 1,139
               
Financing expenses, net
            
 (14)
Income before income taxes
            
 1,125
               
Depreciation and amortization
 15
 40
 47
 14
-
 3
 119
               
Capital expenditures
 18
 113
 60
 21
 3
 2
 217

ICL Group Limited Quarterly Report 43
Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments (cont'd)

B. Operating segment data (cont'd)

 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the three-month period ended June 30, 2021
              
               
Sales to external parties
 406
 334
 539
 331
 7
-
 1,617
Inter-segment sales
 4
 46
 43
 3
-
 (96)
-
Total sales
 410
 380
 582
 334
 7
 (96)
 1,617
               
Segment profit (loss)
 114
 42
 77
 21
 (2)
 (16)
 236
Other expenses not allocated to the segments
            
 7
Operating income
            
 243
               
Financing expenses, net
            
 (30)
Share in earnings of equity-accounted investees
            
 1
Income before income taxes
            
 214
               
Depreciation, amortization and impairment
 14
 38
 56
 13
 1
 (7)
 115
               
Capital expenditures
 14
 68
 67
 10
 2
 3
 164

ICL Group Limited Quarterly Report 44

Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments (cont’d)

B. Operating segment data

 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the six-month period ended June 30, 2022
              
               
Sales to external parties
 966
 1,605
 1,580
 1,245
 9
-
 5,405
Inter-segment sales
 14
 141
 133
 21
 2
 (311)
-
Total sales
 980
 1,746
 1,713
 1,266
 11
 (311)
 5,405
               
Segment operating income (loss)
 379
 986
 468
 234
 (4)
 (44)
 2,019
Other income not allocated to the segments
            
 22
Operating income
            
 2,041
               
Financing expenses, net
            
 (48)
Income before income taxes
            
 1,993
               
Depreciation and amortization
 30
 80
 94
 31
 1
 5
 241
               
Capital expenditures
 40
 175
 109
 38
 4
 4
 370

ICL Group Limited Quarterly Report 45
Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments (cont'd)

B. Operating segment data (cont'd)

 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the six-month period ended June 30, 2021
              
               
Sales to external parties
 800
 639
 1,006
 668
 14
-
 3,127
Inter-segment sales
 8
 90
 78
 6
 1
 (183)
-
Total sales
 808
 729
 1,084
 674
 15
 (183)
 3,127
               
Segment profit (loss)
 219
 71
 119
 41
 (4)
 (25)
 421
Other expenses not allocated to the segments
            
 7
Operating income
            
 428
               
Financing expenses, net
            
 (50)
Share in earnings of equity-accounted investees
            
 1
Income before income taxes
            
 379
               
Depreciation, amortization and impairment
 31
 71
 108
 26
 1
 (5)
 232
               
Capital expenditures
 31
 127
 115
 23
 3
 6
 305
Capital expenditures as part of business combination
-
-
-
 70
-
-
 70

ICL Group Limited Quarterly Report 46

Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments (cont'd)

B. Operating segment data (cont'd)

 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the year ended December 31, 2021
              
               
Sales to external parties
 1,601
 1,598
 2,087
 1,644
 25
-
 6,955
Inter-segment sales
 16
 178
 167
 26
 3
 (390)
-
Total sales
 1,617
 1,776
 2,254
 1,670
 28
 (390)
 6,955
               
Segment operating income (loss)
 435
 399
 294
 135
 (8)
 (61)
 1,194
Other income not allocated to the segments
            
 16
Operating income
            
 1,210
               
Financing expenses, net
            
 (122)
Share in earnings of equity-accounted investees
            
 4
Income before income taxes
            
 1,092
               
Depreciation amortization and impairment
 65
 148
 207
 62
 2
-
 484
               
Capital expenditures
 74
 270
 228
 74
 6
 17
 669
Capital expenditures as part of business combination
-
-
-
 377
-
-
 377

ICL Group Limited Quarterly Report 47
Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments (cont'd)
 
C. Information based on geographical location
 
The following table presents the distribution of the operating segments sales by geographical location of the customer:
 
 
4-6/2022
4-6/2021
1-6/2022
1-6/2021
1-12/2021
 
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales
Brazil
 797
 28
 230
 14
 1,287
 24
 316
 10
 1,178
 17
China
 421
 15
 255
 16
 870
 16
 500
 16
 1,060
 15
USA
 326
 11
 245
 15
 706
 13
 520
 17
 1,091
 16
United Kingdom
 127
 4
 88
 5
 246
 5
 215
 7
 386
 6
India
 107
 4
 61
 4
 184
 3
 86
 3
 213
 3
Germany
 106
 4
 94
 6
 220
 4
 189
 6
 345
 5
Spain
 101
 4
 66
 4
 196
 4
 148
 5
 280
 4
Israel
 98
 3
 75
 5
 181
 3
 138
 4
 291
 4
Netherlands
 92
 3
 29
 2
 153
 3
 62
 2
 127
 2
France
 89
 3
 67
 4
 167
 3
 141
 5
 270
 4
All other
 616
 21
 407
 25
 1,195
 22
 812
 25
 1,714
 24
Total
 2,880
 100
 1,617
 100
 5,405
 100
 3,127
 100
 6,955
 100
 
ICL Group Limited Quarterly Report 48
 
Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments (cont'd)

C. Information based on geographical location (cont'd)
 
The following tables present the distribution of the operating segments sales by geographical location of the customer:
 
 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the three-month period ended June 30, 2022
              
South America
 9
 412
 180
 243
-
 (16)
 828
Europe
 149
 211
 259
 241
 4
 (58)
 806
Asia
 189
 206
 250
 97
-
 (13)
 729
North America
 114
 41
 155
 50
 1
 (2)
 359
Rest of the world
 25
 81
 71
 69
-
 (88)
 158
Total
 486
 951
 915
 700
 5
 (177)
 2,880
 
 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the three-month period ended June 30, 2021
              
South America
 22
 104
 106
 31
-
 (1)
 262
Europe
 142
 86
 155
 173
 6
 (43)
 519
Asia
 148
 117
 150
 54
-
 (7)
 462
North America
 87
 30
 125
 30
-
 (1)
 271
Rest of the world
 11
 43
 46
 46
 1
 (44)
 103
Total
 410
 380
 582
 334
 7
 (96)
 1,617
 
ICL Group Limited Quarterly Report 49
Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

C. Information based on geographical location (cont'd)
 
The following tables present the distribution of the operating segments sales by geographical location of the customer:
 
 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the six-month period ended June 30, 2022
              
South America
 20
 656
 297
 389
-
 (18)
 1,344
Europe
 305
 360
 471
 492
 9
 (107)
 1,530
Asia
 400
 438
 489
 163
-
 (24)
 1,466
North America
 211
 141
 325
 99
 1
 (3)
 774
Rest of the world
 44
 151
 131
 123
 1
 (159)
 291
Total
 980
 1,746
 1,713
 1,266
 11
 (311)
 5,405

 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the six-month period ended June 30, 2021
              
South America
 35
 128
 164
 45
-
 (1)
 371
Europe
 286
 241
 301
 388
 13
 (82)
 1,147
Asia
 278
 187
 290
 102
-
 (11)
 846
North America
 182
 86
 239
 62
 1
 (4)
 566
Rest of the world
 27
 87
 90
 77
 1
 (85)
 197
Total
 808
 729
 1,084
 674
 15
 (183)
 3,127
 
ICL Group Limited Quarterly Report 50
Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 3 - Operating Segments (cont'd)
 
C. Information based on geographical location (cont'd)
 
The following table presents the distribution of the operating segments sales by geographical location of the customer:
 
 
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
 
$ millions
For the year ended December 31, 2021
              
South America
 64
 467
 343
 436
-
 (5)
 1,305
Europe
 530
 430
 611
 727
 23
 (162)
 2,159
Asia
 597
 478
 617
 206
 1
 (23)
 1,876
North America
 363
 209
 491
 127
 1
 (5)
 1,186
Rest of the world
 63
 192
 192
 174
 3
 (195)
 429
Total
 1,617
 1,776
 2,254
 1,670
 28
 (390)
 6,955
 
ICL Group Limited Quarterly Report 51


Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 4 – Loans, Financial Instruments and Risk Management

A. Fair value of financial instruments

The carrying amounts in the financial statements of certain financial assets and financial liabilities, including cash and cash equivalents, investments, short-term deposits and loans, receivables and other debit balances, long-term investments and receivables, short-term credit, payables and other credit balances, long-term loans bearing variable interest and other liabilities, and derivative financial instruments, correspond to or approximate their fair value.
 
The following table details the carrying amount and fair value of financial instrument groups presented in the financial statements not in accordance with their fair value:
 
 
June 30, 2022
June 30, 2021
December 31, 2021
 
Carrying amount
Fair value
Carrying amount
Fair value
Carrying amount
Fair value
 
$ millions
$ millions
$ millions
$ millions
$ millions
$ millions
Loans bearing fixed interest
 343
 327
 106
 112
 407
 408
Debentures bearing fixed interest
            
Marketable
 1,341
 1,292
 1,495
 1,713
 1,524
 1,730
Non-marketable
 196
 198
 196
 210
 195
 208
 
 1,880
 1,817
 1,797
 2,035
 2,126
 2,346

B. Fair value hierarchy

The following table presents an analysis of the financial instruments measured by fair value, using the valuation method.
 
The following levels were defined:
 
Level 1: Quoted (unadjusted) prices in an active market for identical instruments
 
Level 2: Observed data (directly or indirectly) not included in Level 1 above.

Level 1
June 30,
2022
June 30,
2021
December 31,
2021
 
$ millions
$ millions
$ millions
Investments at fair value through other comprehensive income
-
 180
-

Level 2
June 30,
2022
June 30,
2021
December 31,
2021
 
$ millions
$ millions
$ millions
Derivatives designated as economic hedge, net
 (27)
 (3)
 15
Derivatives designated as cash flow hedge, net
 (1)
 77
 120
 
 (28)
 74
 135
 
ICL Group Limited Quarterly Report 52

Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 4 – Loans, Financial Instruments and Risk Management (cont'd)

C. Foreign currency risks

The Company is exposed to changes in the exchange rate of the shekel against the dollar in respect of principal and interest in certain debentures, loans, labor costs and other operating expenses. The Company's risk management strategy is to hedge the changes in cash flows deriving from liabilities, labor costs and other operational costs denominated in shekels by using derivatives. These exposures are hedged from time to time, according to the assessment of the exposure and inherent risks against which the Company elects to hedge, in accordance with the Company's risk management strategy.
 
Note 5 – Long Term Compensation Plans and Dividend Distributions


 A.
Share based payments - non-marketable options
 

 1.
On March 30, 2022, the general meeting of shareholders approved an equity-based award in the form of about 3 million non-marketable and non-transferable stock options for the years 2022 – 2024, under the amended 2014 Equity Compensation Plan, to the CEO and Chairman of the Board. The vesting period of the options will be in three equal tranches, upon the lapse of 12 months, 24 months and 36 months from the grant date (March 30, 2022). The fair value at the grant date was about $8 million.
 

 2.
During the six and three-month periods ended June 30, 2022, 2.1 million options and 1.2 million options were exercised, respectively.
 

 B.
Dividend distributions
 
Decision date for dividend distribution by the Board of Directors
Actual date of dividend distribution
Distributed amount
($ millions)
Dividend per share ($)
February 8, 2022
March 8, 2022
169
0.13
May 10, 2022
June 15, 2022
307
0.24
July 26, 2022 *
September 14, 2022
375
0.29

*    The dividend will be distributed on September 14, 2022, with a record date for eligibility of August 31, 2022.
 
ICL Group Limited Quarterly Report 53


Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)

Note 6 – Provisions, Contingencies and Other Matters


 1.
Further to Note 15 to the Annual Financial Statements regarding the calculation of the Surplus Profit Levy, according to the Israeli Law for Taxation of Profits from Natural Resources (hereinafter - the Law), at the end of June 2022, a settlement agreement was signed with the Israeli Tax Authority, which entered into force on July 26, 2022. The settlement agreement provides final assessments for the tax years 2016-2020, as well as outlines understandings for the calculation of the levy for the years from 2021 and onwards.
 
In the second quarter of 2022, the Company recorded tax expenses for prior years in the amount of $188 million, including interest and linkage and net of corporate income tax, of which $124 million was in connection with the understandings reached regarding the measurement of fixed assets in the said final assessments (for 2016-2020).
 

 2.
In June 2022, an unexpected flow of brine was discovered above the ground at the outskirts of an alluvial fan area, which seems according to initial tests by the Company, appears to have resulted from a combination of seepage from a certain area of the feeder canal of ICL Dead Sea’s pumping station P-9 (hereinafter P-9), which according to the Company's estimations does not exceed the approved design specifications of P-9, and unique ground conditions. The Company has acted and is continuously acting to explore solutions for the short and long term and to rectify any environmental impacts caused to the extent required, including, at the request of the Israeli Nature and Parks Authority, implementing a conservation project involving the installation of sealing sheets over a 1.4km long section of the 15km feeder canal in the area of the fan, a section that is required for the operational continuity of P-9 (hereinafter – the project). Completion of the project is expected within a few months. Currently, the Company implements complementary actions to prevent increased salinity flow to the surface. Execution of such actions is subject to the receipt of required permits and approvals from the relevant authorities. On June 28, 2022, as part of a hearing process, the District Director of the Ministry of Environmental protection recommended opening an investigation by the Green Police. As of the reporting date, the Company is not aware of any such investigation.

In the event of difficulties in the implementation of the Company’s actions, including due to objections by the authorities and/or a delay in obtaining the required permits and approvals, the operational continuity of P-9 may be impaired, which may lead also to a significant decline in the water level of Pond 5, which also serves as a beach for tourism purposes, and accordingly, may materially adversely affect the continued operations of the Company and its business and financial results. Considering the preliminary stage of the process and uncertainty relating to the final restoration plans to be determined by the relevant authorities, it is a difficult to estimate its outcome. Nevertheless, as of the reporting date, in the Company’s estimation, no material impact on the Company’s financial statements is expected.
 

 3.
Further to Note 18 to the Company’s Annual Financial Statements regarding the regulation of Rotem Amfert Israel's Phosphogypsum storage area and the new approved master plan, in April 2022 Israel’s Planning Administration stated its position that the Company should pay insignificant fees to obtain required building permits. On June 16, 2022, the Tamar Regional Council rejected said position. As of the reporting date, the Company believes that it is more likely than not that its position will be accepted in a legal proceeding to determine the fees amounts under the current law.
 
ICL Group Limited Quarterly Report 54

Notes to the condensed consolidated interim financial statements as of June 30, 2022 (Unaudited)
 
Note 6 – Provisions, Contingencies and Other Matters (cont’d)
 

 4.
Note 18 to the Annual Financial Statements provides disclosure regarding the application for certification of a class action against the Company for alleged environmental hazards that resulted from the leakage of wastewater to a groundwater aquifer in the vicinity of the Bokek stream. The leakage began in the 1970’ during which time the Company was government owned and ended by 2000. Following a decision in April 2022 by the Be'er Sheva District Court to dismiss the application with prejudice, the plaintiffs filed an appeal in June 2022 to Israel’s Supreme Court against the district court’s decision. It is difficult to estimate the outcome of the appeal at this preliminary stage.
 

 5.
Further to Note 18 to the Annual Financial Statements, regarding Energean's continued delays in supply of natural gas (NG) and the measures that the Company is taking to secure its supply of NG until full gas supply is obtained from Energean, or other sources, during the first quarter of 2022, the Company signed NG supply agreements with various market sources, including Leviathan reservoir, to ensure the ongoing operations of its facilities in the coming months. Furthermore, following the Ministry of Energy’s directive to Israeli NG suppliers to ensure the full supply of NG required for the domestic market, and together with spot-base contracts in place, the Company believes it is more likely than not that it will obtain sufficient NG for its facilities in Israel until the full supply is obtained. The Company intends to exercise all its legal rights in connection with Energean's continuous delays.
 

 6.
As part of the Company's strategy to divest low synergy businesses and non-core business activities, in January 2022, the Company entered into a definitive agreement to sell its 50% share in the joint venture Novetide Ltd., which was accounted for according to the equity method. In March 2022, the sale transaction was completed. The sale's consideration is $33 million, of which $8 million represent an estimate for the fair value of a contingent consideration. As a result, the Company recognized a capital gain of $22 million.
 

 7.
Further to Note 18 to the Annual Financial Statements, regarding the expansion of gypsum and flotation ponds at YPH, in April 2022, the Company received an official certification enabling the required expansion of the ponds.
 
ICL Group Limited Quarterly Report 55
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
ICL Group Ltd.
  
 
 
  
 
By:
/s/ Aviram Lahav
  
 
 
Name:
Aviram Lahav
  
 
 
Title:
Chief Financial Officer
  
 
 
ICL Group Ltd.
  
 
 
  
 
By:
/s/ Aya Landman
  
 
 
Name:
Aya Landman
  
 
 
Title:
VP, Company Secretary & Global Compliance
  
 
Date: July 27, 2022