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ICICL

ICL Group (ICL) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Materials· Aug 5, 2026

Source: earnings call transcript

Executive summary

ICL Group Q2 FY26 — Strong Performance Driven by Higher Prices and Cost Transformation Program

ICL Group delivered a strong second quarter, driven by higher prices across its segments and operational improvements. The company is implementing new strategic principles, including a significant organizational restructuring effective Q1 2027, and launched the "Elevate" cost transformation program targeting substantial annual EBITDA improvements by 2028. While facing headwinds from rising raw material costs and currency impacts, management remains focused on execution and leveraging its diversified portfolio.

Highlights

5

  • Sales increased 17% year-over-year to $2.1 billion, exceeding expectations.

  • Adjusted EBITDA improved 28% versus the prior year to $448 million.

  • Adjusted net income grew 35% to $149 million, translating to adjusted EPS of $0.12, up 33%.

  • Free cash flow increased 34% year-over-year to $94 million.

  • Industrial Products segment achieved its best quarterly performance since late 2022, with EBITDA up 88%.

Concerns

5

  • Experienced $100 million of higher raw material costs, particularly sulfur.

  • Impacted by more than $40 million due to exchange rate fluctuations.

  • Sulfur spot prices increased 72% sequentially and over 210% annually, impacting phosphate margins.

  • Ocean freight rates increased 45% on average due to Middle East disruptions.

  • Soft market conditions persisted in Brazil, impacting the Growing Solutions segment.

Guidance & targets

CategoryTargetConfidence
Consolidated EBITDA
$1.5 billion to $1.7 billion
high materiality
Medium
Elevate Program Annual EBITDA Improvement
More than $150 million
high materiality
High
Elevate Program Annual EBITDA Improvement
More than $350 million
high materiality
High
Potash Sales Volumes
4.5 million to 4.7 million metric tons
medium materiality
High
Annual Adjusted Tax Rate
Approximately 30%
low materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Industrial Products
Best quarterly performance since end of 2022, mainly driven by higher bromine prices and increased volumes. Bromine-based flame retardants benefited from higher prices and improved electronics demand. Specialty Minerals sales increased with strong magnesia demand.
EBITDA growth: 88% YoY
$414 million30%—$130 million EBITDA
Potash
Gains achieved through strong focus on process optimization and cost reduction. Benefited from higher potash prices, which remain relatively affordable compared to nitrogen and phosphate fertilizers, supporting continued demand.
EBITDA growth: 34% YoYAverage potash price: $376 CIF per tonPotash price growth: 13% YoYPotash price growth: 4% sequentiallyPotash production volumes: 1,058,000 metric tonsPotash production volume growth: 11% YoY
$468 million22%—$154 million EBITDA
Phosphate Solutions
Higher prices for both commodity and specialty phosphates drove sales growth. EBITDA increased slightly as price increases partially offset the impact of higher raw material prices, particularly sulfur. Specialty food phosphates saw volume growth across various use cases and expansion markets.
$722 million13%—$136 million EBITDA
Growing Solutions
EBITDA was down versus prior year due to pressure from higher raw material costs, geopolitical tensions, and supply chain volatility. Team focused on favorable price and mix, disciplined SG&A management, and commercial actions. Europe saw improved sales and profitability, while Brazil remained soft.
$605 million12%—$50 million EBITDA

Risks & headwinds

Higher Raw Material Costs Q2 FY26, expected to continue into H2 FY26

$100 million higher raw material costs in Q2 FY26; sulfur spot prices increased 72% sequentially and more than 210% annually to $1,200/metric ton.

Mitigation:Consumed lower cost sulfur inventory in Q2; leveraging breadth and diversity of product portfolio for sulfur allocation; hedging strategies.

Exchange Rate Impact Q2 FY26, ongoing

$40 million exchange rate impact in Q2 FY26; exposed to the shekel in more than $1 billion equivalent.

Mitigation:Hedging strategies to help mitigate currency risks; monitoring changes in dollar to shekel exchange rate.

Soft Market Conditions in Brazil Q3 FY26, H2 FY26

Brazil represents 1/3 of Growing Solutions business; Q3 FY26 expected to be weaker than usual for specialty fertilizers.

Mitigation:Growing Solutions team focused on favorable price and mix, disciplined SG&A management, and commercial actions targeting profitability; optimizing product mix in Europe.

Ocean Freight Rates Q2 FY26, ongoing

Prices increased 45% on average in Q2 FY26 due to disruptions in the Middle East, continued to increase in July.

Mitigation:Not explicitly stated, but implies operational adjustments to manage supply chain.

What to watch in Q3 FY26

Elevate Program Progress

by end of 2027
Current Initiated, targeting >$150M annual EBITDA improvement by end of 2027
Target On track for >$150M annual EBITDA improvement by end of 2027

Why it matters

This program is expected to deliver significant cost transformation and margin expansion, crucial for strengthening earnings power.

I have no doubt that we are going to win this $350 million -- $350 million until the end of 2028.

Find out whether ICL delivers this. Inve re-checks your case every morning.

Q&A highlights

How much of the strong Industrial Products performance was driven by price versus demand, and what is the outlook for the segment in H2?

Management confirmed strong performance was driven by high bromine prices, which peaked in April at $6,000/ton, moderated in May/June, and are currently around $4,500/ton. They noted the ability to lock in strong transactions and that current prices remain attractive.

“So overall, certainly, we enjoy the high prices in Q2. In April, we were able to lock in strong prices and transaction towards -- and now again, we are at 4,500 levels. So certainly, a pretty attractive prices as well.”

asked by Benjamin Theurer · answered by Asaf Alperovitz

2 min read 6 chapters

Detailed narrative

New Strategic Principles and Growth Engines

ICL Group outlined three new strategic principles: driving profitable growth in specialty crop nutrition and specialty food solutions, maximizing core businesses (phosphate, potash, bromine), and optimizing portfolio with cost efficiency. The company identified Specialty Crop Nutrition and Specialty Food Solutions as significant growth engines, with Specialty Crop Nutrition sales growing from $1 billion in 2020 to $2 billion in 2025, and Specialty Food Solutions targeting to double sales to $1.5 billion by 2029 by expanding into functional food ingredients.

Organizational Restructuring for Market Alignment

To align its corporate structure with end markets, ICL announced a new organizational structure effective Q1 2027. This includes four segments: Nutrition Solutions (food, beverage, health), Industrial Products (performance and safety solutions for electronics, energy, construction), Growing Solutions (specialty plant nutrition), and Essential Minerals (potash and phosphate fertilizers). This change aims to strengthen management focus on key growth engines and enhance investor visibility.

Elevate Cost Transformation Program

The company launched 'Elevate,' a corporate-wide cost transformation program designed to reduce costs, expand margins, improve cash generation, and strengthen earnings. This initiative is expected to deliver over $150 million in annual EBITDA improvement by the end of 2027, growing to more than $350 million annually by the end of 2028. Productivity gains and operational efficiencies are projected to drive 50-60% of these savings, with external spend reduction contributing 30-40% and SG&A optimization 10-20%.

Q2 Financial Performance Highlights

ICL reported Q2 FY26 sales of $2.1 billion, up 17% year-over-year, with adjusted EBITDA of $448 million, up 28%. Adjusted net income rose 35% to $149 million, resulting in adjusted EPS of $0.12. Operating cash flow was $290 million (+8% YoY) and free cash flow was $94 million (+34% YoY). These results were achieved despite $100 million in higher raw material costs and a $40 million exchange rate impact.

Segment-Specific Performance and Market Dynamics

Industrial Products saw sales up 30% and EBITDA up 88%, driven by higher bromine prices and volumes. Potash sales increased 22% with EBITDA up 34%, benefiting from an average price of $376 CIF/ton and 11% higher production volumes. Phosphate Solutions sales grew 13%, but EBITDA only slightly increased due to significantly higher sulfur costs. Growing Solutions sales were up 12%, but EBITDA was down due to raw material cost pressures and soft market conditions in Brazil, which represents one-third of the business.

Sulfur and Geopolitical Headwinds

Sulfur prices emerged as a significant headwind, with spot prices increasing 72% sequentially and 210% annually, impacting phosphate margins. Geopolitical disruptions in the Middle East also led to a 45% increase in ocean freight rates. Management noted that while they have secured sulfur quantities for Q3 and early Q4, consumption costs will continue to rise. The company is leveraging its diversified portfolio and S&OP process to optimize sulfur allocation.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.