ICL Group Ltd

Good morning, ladies and gentlemen, and welcome to the ICL Fourth Quarter 2025 Earnings International Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference call over to Peggy Riley-Sarp. Vice President of Global Investor Relations. Please go ahead.

Thank you. Hello, everyone. I'm Peggy Riley-Sarp, Vice President of Global Investor Relations for ICAIL Group. I'd like to welcome you and thank you for joining us today for our earnings conference call. This event is being webcast live on our website at icl-group.com, and there will be a replay available a few hours after the live call, and a transcript will be available shortly thereafter. Earlier today, we filed our our presentation with the securities authorities and the stock exchanges in both Israel and the United States. Those reports, as well as the press release and our presentation, are also available on our website. Please be sure to review the disclaimer on slide two of the presentation. Our comments today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. The company undertakes no obligation to update any information discussed on this call at any time. We will begin with a presentation by our CEO, Mr. Anad Aronson, followed by Mr. Abraham Nahab, our CFO. After the presentation, we'll open the line for a Q&A session. I would now like to turn the call over to Anad.

Thank you, Peggy, and welcome everyone to review our fourth quarter 2025 earnings. We delivered a solid finish to the year and achieved our annual guidance target with $1 billion of specialty-driven EBITDA. In the fourth quarter, we also made significant progress towards our new strategic principles, which you can see on slide three. This includes the acquisition of Bartek Ingredients, the global leader in food-grade malic and turmeric acid. Bartek serves hundreds of customers and distributors in the food, beverages, and other end markets, and distributes its products to more than 40 countries worldwide. This acquisition allows us to extend our portfolio deeper into specialty food solutions. It also helps to position us for further growth as we leverage our existing global food presence to extend into other food ingredient segments. It further advances our recently refined strategy, which focuses on the significant growth engines of specialty crop nutrition and specialty food solutions. two areas where we already have deep experience and broad exposure. We will continue to seek additional non-organic growth opportunities in these two markets, driven by a commitment to creating long-term value and sustainable growth for our shareholders. At the same time, we will stay focused on our mission to maximize our core business segments, and this includes our potash resources. As you know, we signed an MOU with the State of Israel regarding the Dead Sea concession assets in November of last year. In January of this year, we signed a binding agreement based on the principles agreed upon in the NOU. We secured compensation for our assets at the Dead Sea and established certainty on the timing of this payment. It also included the insurance of Brom and Supply through at least 2035. Additionally, as part of our strategic efforts, we have been conducting a review of our capital allocation priorities and re-evaluating less synergetic and low potential activities. As a result, in the fourth quarter, we made several adjustments with the majority related to advancing our new strategic principles. These were essentially moving ICL forward and designed to help fund our two profitable growth engines. These shifts in our priorities will help us to redirect our resources to where better aligned opportunities. Adjustments included the discontinuation of ICL's LFP battery material projects in St. Louis and in Spain, the closure of a minor R&D facility in Israel, and the initiation of a sale process for operations in the UK. We expect to share updates on our strategic efforts throughout 2026 and look forward to strengthening and growing ICL for the long term. Now, if you will please turn to slide four for a brief overview of the quarter. Sales were $1,701,000,000, up 6% year over year, with all four segments delivering sales growth. For our industrial products, phosphate solutions, and growing solutions segments, Sales of $1,281,000,000 were up 4%. We remain committed to growing our leadership position in these three segments. Consolidated adjusted EBITDA was $380,000,000 in the fourth quarter, and this amount improved 10% year over year. For the quarter, EBITDA for our industrial products, phosphate solutions, and growing solution segments was $249,000,000. In the fourth quarter, adjusted diluted earnings per share were $0.09 and up 13% versus last year. Operating cash flow of $340 million improved 2% on sequential basis. In general, the quarter was in line with expectations with year-over-year growth in key adjusted financial metrics. Prices continued to increase for bromine, potash, and phosphate fertilizers in the fourth quarter. Similar to the previous three quarters, overall performance remains varied across the wide array of end markets and region research. Turning to slide five and the review of annual results. Consolidated sales for 2025 were $7,153,000,000 and up 5% versus 2024. Sales for industrial products, phosphate solutions, and growing solutions were $5,000,000,000 $650 million in 2025, also up 5%. Full year EBITDA of $1,488,000,000 was up slightly, while EBITDA for industrial products, phosphate solutions, and growing solutions came in at $1,021,000,000. Adjusted diluted EPS was $0.36 for 2025, and we delivered operating cash flow of $1,056,000,000. During the course of 2025, we faced shifting macro forces and industry issues while simultaneously achieving our goals. From an ITL perspective, we gained significant clarity regarding the value of the ZC assets, which I just discussed. Also, as previously mentioned, we completed a comprehensive review of the company and identified two strategic growth engines, specialty crop nutrition and specialty food solutions. We intend to expand in these two areas while continuing to benefit from our distinctive global presence and regionally diversified operations. Now let's review our division and begin with our industrial products business on slide six. For the full year, sales of $1,254,000,000 were up slightly year over year with EBITDA of $280,000,000. For the fourth quarter, sales of $296,000,000 were up 6%, with EBITDA of $68 million. So, a solid end to a good year. In the fourth quarter, bromine prices maintained their upward trajectory, even as some end markets, such as building and construction, remained soft. For flame retardant, sales of both our brominated and phosphorus-based solutions were flat versus the prior year. For bromine-based products, higher prices were offset by lower volumes due to continued soft demand. For cells of phosphorus-based products, higher volumes and prices in the U.S. were unable to fully offset lower volumes in other regions, mainly in Europe. Cells of clear brine fluids, which are used by the oil and gas industry during well completion, remained solid and were driven by increased demand in South America and Europe. Specialty mineral sales increased on strong pre-season demand for magnesium chloride after an early snowfall in the fourth quarter in the U.S. This was followed by a massive winter storm in North America in January. Turning to our potash division on slide 7. For the full year, sales of $1,714,000,000 were up 4%, with EBITDA of $552 million up 12%. In the fourth quarter, potash sales of $473 million were also up 12% year-over-year, while EBITDA of $150 million increased 15%. Our average potash price for the fourth quarter was $348 CIF return. This amount was up more than 20% year over year. Potash sales volume of 1,200,000 metric tons in the fourth quarter were up roughly 15% on annual basis. This marks a strong finish to 2025 as we successfully addressed operational issues in the Dead Sea related to the war. For our Spanish operations, our focus on deep bottlenecking and optimizing helped us to improve reliability and advance our production goals. These efforts also helped us to deliver a quarterly production record in Spain in the fourth quarter. In the fourth quarter, we also signed a contract with our Chinese customers for supply at $348 per metric ton, which is in line with other recent industry contract settlements. Finally, potash affordability remained attractive in the fourth quarter, and we continued to maximize the profitability of our potash resources. Whenever possible, we prioritize potash supply to the best global markets. Now turning to review of the phosphate solutions division on slide 8. For 2025, sales of $2,333,000,000 were up 5%. However, EBITDA of $528,000,000 was impacted by higher sulfur costs. In the fourth quarter, sales increased 2% to $518,000,000, while EBITDA came in at $121 million. Food specialty sales increased slightly in the fourth quarter versus the previous year and reflected growing volumes in North America and Asia as we leverage our regional expansion strategy. In the fourth quarter, Our overall food business gained additional sales and also expanded its new product pipeline for dairy in the US and EMEA. We also saw an increase in global processed meat sales across the US and the EU. In China, our food sales increased 15% in the fourth quarter, our best quarter of the year. For 2025, sales were up 12% as our business expansion in this region has been successful since its debut. In total, we expanded our food project pipeline with nearly 40 new solutions since mid-2025. While we are committed to growing this business organically, you can also expect us to continue to evaluate M&A opportunities. As I mentioned earlier, in January, we completed our acquisition of approximately 50% of Bartek ingredients, and for 2026, we are targeting a wide array of growth options. This includes expansion into emulsifiers along with other R&D efforts, such as the development of a high-protein drink stabilization system for GLP-1 users. We expect additional growth to come from portfolio expansion in seafood and soy protein, and as the segment looks to deliver more localized food solutions to emerging markets. In China, our YPH joint venture benefited from both higher prices and volumes, and an increase in demand for battery materials in the fourth quarter. We also celebrated the 10th anniversary of our Chinese partnership in January of this year. Overall phosphate specialties performance continued into the fourth quarter as expected, with most regions remaining stable. However, market softness was maintained in Europe, a trend that lingered as anticipated. Higher costs of raw materials, especially sulfur, persisted in the fourth quarter and showed no signs of abating in 2020-6. This brings us to our growing solutions business division on slide 9. Trends for 2025 were $2.63 billion and improved 6% year-over-year, while EBITDA of $213 million increased 5%. This growth was due to our continued strategic focus on global specialty solutions, which have been customized for our customers on a regional basis. For the fourth quarter, growing solution sales increased 6% to $467 million, while EBITDA of $60 million was up 18% versus the prior year. In the fourth quarter, we saw profit improvement in both North America and Europe. In North America, higher prices helped drive an increase in profits. In Europe, we continued to benefit from our successful product mix strategy, which is focused on our higher margin products. Sales in Asia also improved in the fourth quarter, but rising raw material costs impacted profits as expected. In Brazil, the overall market remained under pressure as farmers faced affordability issues and distributors ship their buying behavior. Although this did impact our profitability, sales performance remained solid, and we were able to expand our specialty market share. I would ask you to now turn to slide 10 and some key takeaways. We have already made progress in advancing our strategic principles, which we announced in the third quarter. We added basic ingredients to our specialty food solutions portfolio, and you can expect to see more acquisitions in the coming year. We also took a comprehensive look at our existing portfolio and elected to discontinue our downstream LFP battery materials expansion, which we announced in the third quarter. In the fourth quarter, we initiated a sale process for our Volbi operations in the UK, in the hope of getting this facility into the best hands for the future. During 2025, we also worked diligently to provide clarity around the 2030 Dead Sea Concession process, which I discussed earlier. We continue to believe that ICL is the most suitable candidate to be awarded the future concession. We currently intend to participate in this process once it begins, assuming of course that the terms are economically viable and we will ensure stable regulatory environment. I would now like to look outside of ICL towards the markets where we operate. Across our minerals, which include potash, phosphate and bromine, we see prices are stable to improving and these trends are expected to continue into the first quarter of 2026. For our specialty phosphate, we are seeing pressure related to both competitive forces and higher raw material costs, and we are actively monitoring and reacting to these dynamics. While some cost inputs are rising, the sulfur market is experiencing exceptional volatility on a global basis. Prices have surged to multi-year highs driven by supply and geopolitical issues. These increases are causing issues across several of our businesses and significantly impacting other agriculture and chemical manufacturers. At ICL, we are actively working to mitigate higher costs, including sulfur, and we will keep you up to date on our efforts as the year progresses. We are also experiencing pressure as the shekel continues to strengthen versus the US dollar. This makes it more costly for us, to do business in Israel as a dollar-dominated company. However, we are using hedging tactics to help eliminate some, but not all, of this exposure. Now, before turning the call to Avira, I would ask you to turn to slide 11 and review our guidance for 2026. For this year, we expect consolidated EBITDA, comprising all four of our business segments, to be between $1.4 billion to $1.6 billion. As the price of potash has stabilized over the past few years, we believe providing consolidated guidance is now more relevant. For potash sales volumes, we expect this amount to be between 4.5 million and 4.7 million metric tons as we continue to benefit from the operational improvements made at the Dead Sea and in Spain in 2025. Finally, we expect our annual adjusted tax rate to be approximately 30% in 2026. And with that, I would like to turn the call over to Aviram for a brief financial overview.

Thank you, Alad, and to all of you for joining us today. Let us get started on slide 13 with a quick look at quarterly changes in key market metrics. On a macro basis, average global inflation rate improved versus the prior quarter, with the exception of the U.S., which was flat, and China, which swung positive. Interest rates were a bit more mixed. While rates in most regions were relatively stable, rates in the U.S. improved by nearly 40 basis points. For Brazil, while the central bank held its target rate unchanged at 15%, rates remained elevated on a year-over-year basis. Looking to exchange rates, the shekel has strengthened versus the U.S. dollar, when compared to long-term historical rates. Wrapping up our macro metrics, you can see that U.S. housing stats trended up slightly by the end of the fourth quarter. For fertilizer metrics, the picture was more mixed. The grain price index declined on a quarterly basis, with rice showing a significant reduction. On the positive side, corn and soybeans both improved in the quarter and on an annual basis, with soy showing solid meat to high single-vegetarian growth for both periods. While farmer sentiment improved by the end of the fourth quarter, those gains were reversed in January. When asked specifically about soybeans, 21% of U.S. producers said they expect soybean exports to abate over the next five years with increasing competition from Brazil weighing on their minds. In the fourth quarter, potash prices moderated slightly, mainly due to sentiment and seasonality, while P2O5 prices trended higher in 2025. This is not expected to continue near perpetuity. Over the same time frame, there was a significant reduction in ocean freight rate of nearly 25%. Beyond agricultural indicators, we also track other indicators, are an important part of the food and beverage end markets. This is an area we are targeting for growth both organically and via M&A. In the U.S., retail trade and food services improved both through November and year over year. For our industrial product segment, the price of bromine in China is an important metric, and these prices continue to improve in the fourth quarter. Durable goods are another indicator for industrial products. and they picked up slightly through November. For remodeling activity, which is a good metric for both industrial product and phosphate solutions, growth was up approximately 1% on a sequential basis and 2% year-over-year. We shall now turn to slide 14. For a look at our four-quarter sales bridges, on a year-over-year basis, sales were up $100 million, or 6%, with all four segments demonstrating growth. Turning to the right side of the slide, you can see a $98 million benefit from higher prices this quarter, which was partially offset by a reduction in volumes. Sales rates also had a positive impact. On slide 15, you can see our fourth quarter adjusted EBITDA, which improved approximately 10% versus the prior year. Similar to sales, we saw higher prices and reduced volumes. There was also an impact from exchanges fluctuations, and you should expect to see this continue in 2026, if the shape-shape continues to strengthen versus the dollar. We also saw a significant increase in raw material costs, especially culture. This trend is continuing into 2026, and it is becoming more difficult to pass this increase along. Additionally, as we shared publicly last December, the Israeli session area. This equates to $14 million for 2025, and this entire amount was recorded in the fourth quarter. As Elad mentioned earlier, we had a number of adjustments this quarter, so I want to spend just a few moments on slide 16. Here you can see a representation of these items. I would like to point out that the majority of these items are related to advancing our new strategy. These adjustments are essential in moving ICL forward as we look to fund our profitable growth engines, specialty crop nutrition and specialty food solutions, and as we focus on extracting value from our core businesses. These changes will help us redirect our resources towards better-aligned opportunities. First, as you know, we announced the discontinuation of our LFP battery material project in St. Louis and in Spain on our third quarter call, and in the fourth quarter, we took an adjustment a minor R&D facility in Israel, and this adjustment was approximately $6 million. As Elad mentioned, we also recorded an impairment of our BOLBI assets in the UK related to our shifting strategy, and this amount is approximately $50 million. We also recently initiated a sales process for these operations. Additionally, we made a $19 million provision for early retirement programs at several other sites. Turning to the ruling related to session area. While this ruling was the opposite of the legal opinion issued by the Israeli Ministry of Justice, we, nonetheless, recognized approximately $80 million in the fourth quarter of this year for prior periods. Now, to return to Site 17 for a quick review of our fully-assessed bridges for 2025, all four of our segments contributed to the 5% year-over-year growth we delivered. While we experienced a reduction in volumes, we benefited from generally improving prices across our businesses. On slide 18, you can see a breakout of our adjusted EBITDA, both by segment and inputs. Once again, we benefited from higher pricing, however, a reduction in volume, exchange rate saturation, and higher raw material and energy costs tempered our EBITDA growth. Before I turn the call back to the operator, I would like to quickly share a few fourth quarter financial highlights on slide 19. Our balance sheet remains strong with available resources of $1.6 billion. Our net debt to adjusted EBITDA rate is at a stable 1.3 times and we delivered operating cash flow of $314 million. Once again, we are distributing 50% of adjusted net income to our shareholders. This translates to a total dividend of $224 million in 2025 and results in a trailing 12-month dividend yield 3.1%. And with that, I would like to turn the call back over to the operator for the Q&A.

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one in a touch-tone phone. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star 1 should you wish to ask a question. Your first question is from Ben Therer from Barclays. Your line is now open.

Yeah, good morning. Thank you very much for taking my question. Two quick ones. So first of all, thanks for the guidance. And obviously, kind of like at the midpoint, looks more or less like a similar year, 2026, than what was 2025. Maybe can you help us frame the upside risk to the higher end and the downside risk to the lower end as you look into 2026 across the different segments? Like what are the drivers to get it to the upper end and what would be

uh issues that you may face that could drive you more topics below and that would be my first question okay uh thank you ben and so so i think the uh for the upside i think we'll uh we'll see higher uh potash quantities uh for production and sales And maybe there will be an upside on the price per ton of the potash. Also on the bromine, we see an increase in bromine prices. We'll see what happens after the Chinese New Year. China is the biggest market for bromine and there could be upside there as well. Also, we need to see the demand. So that's about upside. On downside, so the two headwinds that we have right now, one is the cost of sulfur, which went up from around 141.50 a year and a half ago to more than 500. And you know, the sulfur is the most dominant raw material for the phosphate portfolio. So this is a headache for us. We mitigate it, but still it's an issue. And the second one is the exchange rate of shekel versus dollar. You know, our functional currency is dollar, while we have expenses in shekels here in Israel. And as the shekel continues to stress versus the dollar, that could be a challenge for us.

Ben, I would add one thing specifically. It applies to basically most things that are described, but the cost of sulfur specifically, It's also the timing in the year when it would happen. I mean, basically, we are not sitting on significant inventories of sulfur, which means that when it goes up, we pretty much quickly absorb it in the course of manufacturing, but when it will eventually go down, then we will be rid of expensive sulfur pretty quickly. Now, the guidance is for the year. We are giving it in February. So basically, everybody can do the math. It depends not only the extent to which it will happen, but the timing when it will happen. I think that's quite important to mention that.

And also maybe it's worth mentioning the Brazilian market. The last season in Brazil, in general, not only for ICL, was a difficult one for the agribusiness. I think we performed better than the average, but still it wasn't a great year in the agribusiness in Brazil. If next year, or this year, 2026, will be a normal one, or even higher than normal, then there could be an upside related to that. Please go ahead.

Yeah, actually, I wanted to follow up on the growing solution side and what you're seeing. I mean, obviously, this is a lot of, like, different pieces. And you talked about the market share gains and specialty, but with performance affordability issues. So probably this is what you wanted to comment on. So what are you seeing, like, on the ground in terms of, like, demand within the Brazilian farmers? Because given that the interest rate environment is still high, we've talked about this over the last couple of quarters as that being an issue, but it feels like it could potentially get better into 2026 with maybe rates coming down. It's an election year, so there's a lot of potential. So I wanted to understand how you feel about ICL's position in Brazil in particular within growing solutions.

So I'll say the following. All in all, I'm encouraged by the progress that we are making on growing solutions, and you can see the nice development on the EBITDA for Q4 for growing solutions. Having said that, Brazil, which is give or take one-third of growing solutions business, it was a difficult year in Brazil because of the reasons that you mentioned, interest and so on. We like to believe that the interest rate will go down. I don't think it will go dramatically down, but it will go a bit down. And then we'll see what happens in the next elections. We adapted our cost structure in Brazil. and I do believe that next year, or this year, 2026, will be better for us. Talking about growing solutions in general, also we are changing our mix of product portfolio in Europe. Europe is also around one third of the business for growing solutions, and our portfolio there has to be adapted, and we started doing it in 2025. I believe we'll see the results in 2026 and onwards. Still, we'll see what happens in general in Europe. And the last comment is about the Far East, China and the region, where we see a nice progress. Here, the issue is more about the cost of raw materials, and this comes back to the comment about sulfur and some other problems.

Maybe to say something further. Thank you a lot. Say something further about Brazil. I think it will resonate with you guys. It's, you know, credit is tricky. There's the rate of credit. there is the availability of credit. So what's happening on the ground in Brazil, Ben, you're totally correct, the rate is extremely high. The real rate is probably around 10%, if not more than that. The nominal is about 15%, inflation is killed below 5%. That's exactly, by the way, why the Brazilian Central Bank is keeping rates so high. But that's only part of the story. The second thing is that commercial banks are not giving credit, not fully of course, to the industry, which means that the farmers and the agricultural industry is using the suppliers as banks. And therefore, the issue of availability of credit is something that we obviously have to take into account, reckon with, and decide how much exposure are we willing to take. Now, notoriously, companies that have given too much credit in the Brazilian market have been beaten. It happens time after time, and we are very careful with our allocation, which means that we will keep an open eye. Notwithstanding that, we can very well have a better year in 26, but this remains to be seen. And by the way, during this process, you can see the pressure that exists and what's happening in the distribution companies. Distribution companies in Brazil are basically squashed. between the suppliers and actually the farmers. That's a place that you really do not want to be. Okay, that's about that. Let's continue.

Perfect. Thank you very much. Thank you, Ben.

Thank you. Your next question is from Daniel from DML Capital Market.

Hi. Thanks for taking my question. everyone. I'm going to follow up a little bit on some of this. I'm sort of surprised about the, like I think you've laid out the opportunities and challenges in 26, but I'm trying to figure out which businesses are up and down in 26 in your guidance. So potash volume higher, that's clear. Prices are higher. Like if you just compare 25 versus 26, you know, expectations. So potash should be up. And does that mean that, You've got the other businesses like growing solutions and IP growing a little bit and phosphate down to get to a flattish midpoint.

No, I think the following. First of all, Potash, indeed, as you said, quantities should be in a better place. Prices should be in a better place. But there is a but. The shekel is in a worse place. which means that all, and this is one particular division with heavy, heavy expenses, obviously on the shekel side, you can imagine by the size of the facilities in Israel, all of them obviously being paid for in shekels, which means that if we look at the 26 and we benchmark it to 25, It should be better, but less so than it could have been if the shekel would have been at a better place. That's about the potash side. When you look at the bromine side, I would tend to say that we should be pretty much around the same ballpark that we were this year. When you look at the phosphate solution side, then to an extent, on the EBITDA, it makes sense that it becomes somewhat lower, and this is due to the sulfur price, or the caveat that we previously discussed, we don't know for how long this will prevail. uh and the last but not least is growing solutions it's one division that actually is uh is not uh is actually gaining a little bit even from the uh from the currencies because it is less dependent on the shekel side and it obviously sells around the world and most currencies vis-a-vis the dollar the phenomenon of the weak dollar is not only vis-a-vis the shekel, it is vis-a-vis the euro, vis-a-vis the pound, etc., etc. I guess you all know that, and actually we can find ourselves in a somewhat better position in growing solutions than in 26 versus 25. And all in, when you bake it all in and you look at what we are seeing for next year we should see a very similar picture again some gaining a bit like olive as i said about the potash some remaining the same and some weakening to a degree but these are not that dramatic so if i had to I guess I would say that all in perineal with a little bit more potash, a little bit less vis-a-vis the phosphate. I hope that answers the question, John.

Very helpful. Could you remind us your sensitivity to the shekel?

Yes. Yes, yes, yes. Generally, we are above $1 billion short shekel. Obviously, it fluctuates, but you can make the math. So basically, everyone's percentage points is about $10 million. That is, we are not actually, when we, our financials are driven by the hedged shekel, it's not the naked Shekel, that is the representative rate every day. So basically, we have got quite a significant amount of our exposure hedged, and therefore when the Shekel strengthens against the dollar, it effectively strengthens less against our hedges. However, in the longer term, obviously it takes an effect. So, if this continues for very long, and again, we do not know, the shaking at this stage is quite abnormally high. For many reasons, nothing to do with our industry. The question is how long it will prevail. But generally, the yardstick, every about 1% equals about $10 million.

Okay, finally, just following up on that. what is your, in your guidance for this year, 26, what is your U.S. dollar shekel assumption, and how much of that is hedged right now?

Yeah, so the naked, absolute naked, we would have taken somewhat around 310, but hedged, it is over 320. That's our assumption. It will be, and it, by the way, I saw quite a lot of, of guidances coming from companies, Israeli exporters in different fields. And I would say that anywhere from 315 to 320 plus would be a common yardstick for where we see the market going. However, it can be... Sorry, how much of the billion are you hedging? I'm sorry. Sorry, how much percentage do we hedge?

How much of the billion are you hedging right now?

Yeah, around 50%. uh at that time normally we had around 60 but when the rates uh go down our analysis says that we can allow us to be a little bit more exposed because there's a there's a limit to how much we go down okay thank you very much welcome welcome absolutely thank you once again please press star one should you wish to ask a question

And your next question is from Lawrence Alexander from Jefferies. Your line is now open.

Hi. This is Dan Rizwan for Lawrence. Thank you for taking my question. If we could just go back to Brazil for half a sec. Have we seen this before, and how long has it lasted with suppliers basically acting as the main creditors for their customers in Brazil? What happened last time? Yeah, and again, how long did it last?

Yeah, Dan, I've been following and working in the Brazilian market about 15 years now, probably going on 20, and it's waves. It has a lot of waves. I mean, basically, you're able to cope with it if you work in a smart way. I mean, the Brazilian market in agriculture is the number one agricultural market in the world. If you're not in Brazil, you're actually not playing in agriculture. End of story. I mean, we are active, by the way, in Brazil and other divisions as well, but predominantly, I would say, it's in agriculture. Now, The Brazilian agricultural economy is obviously very, very important, especially around soy. You know the story there. And if you play it carefully, you can get very good results. Now, you have to be aware at certain points of time, again, I'm trying to recollect from my past, By the way, you can see it reflected in the currency. I've seen the real at 4, I've seen it at 160, I've seen it at 6, and now it is at 520 or something around that. It toggles. I mean, I believe that it will prevail. They will sort it out. I think that this, the last year, has been probably a shift to a new reality. this year should be stable. Why am I saying this? Because what happens normally when things start to get tougher, it takes time for people to acclimate. I believe they've acclimated. And I believe that what we're seeing, and we're seeing it in our performance, we are doing not great, but we're doing okay. Our level of doubtful deaths does not grow. We are able to collect. uh we could have sold much more but it would have taken a significant amount of more risk so we are playing the game i think we've got the experience the knowledge how to play the game and i do not believe that there is any particularly uh let's say uh bad news that should come down i would i would gather that the next stage will be somewhat better than we've seen in the past year but it remains to be seen of course does that answer your question that that

No, it does. It does. Because it sounds like we're at the trough. I believe so.

Yeah, I believe so.

Okay. And then, so with the moves you made with your portfolio, with kind of de-emphasizing or stopping the big battery project, how should we think about batteries going forward? Is this a temporary pause waiting for the market? Or are you just kind of moving away from this end market thing that is not really relevant anymore?

Yeah, that's a very good question. I think that something very fundamental has happened in the market. I mean, ultimately, when you look at the horizon, electricity, electric cars, electric other systems are here to stay. There's no question about that. The question is the pace, and the question is who will be the winners and losers in this industry. Now, if you look at the U.S., contrary to what was the aspirations and the thoughts a year and a half ago, they are very different at this stage for many things. It's the infrastructure, it's the support the government gives, direct and indirect, and it is a situation where it will be a much, much more You can see this by the way that Ford are reacting. You are seeing that by the way that GM are reacting. GM are not reacting the same way, but notwithstanding that, they took a significant hit. And it's probably going to take a lot longer. And for somebody novice starting to play the game, we came to a definitive conclusion that was not our game. We should have gotten a lot of support from the government. That support is off the table. Many factors were baked in. In Europe, the issue is quite different. The result is very similar, but different. Different things. First of all, in Europe, there is an issue with the level of adoption, of theoretical adoption is higher than the States. However, the propensity to consume is hampered, the real wages in Europe are not going up, and there was always the notion that the cars need to be cheap enough in order to play in this game. And of course the Chinese are much freer to work in Europe than they are in the US, and the situation came which culminated in the announcement, dramatic announcement, that Stellantis came about two weeks ago. They dropped a very significant amount of their project. Share was down 25% that day. It's quite dramatic. Ford pulled out of Germany. There are many stories here. So when we look at it in the global market, We, obviously, have got an extremely successful operation in China, supplying to the best players in the market. We continue that. But our dreams of going downstream to become a full-fledged LFP producer, or let's say, in the cat food side, that has been put off. And I may say, you have to see off the group with me. He's the one that makes the calls. But I don't think we're going to come there anytime soon, if at all.

The bottom line is that the industry of LFP cathode material remains in China and only in China. Aviram explained that about the US and Europe. And we don't have any competitive advantage in moving forward in the supply chain for the cathode material. So we will remain a supplier of raw material, of MAP, chemical grade, to others in China, which is a great market for us. We are doing great there. But we don't have to continue with the projects in Spain and in the U.S. I think it was a very good decision, if I may.

And for us, just to finally close, we said all along, if you remember, time after time, that we're investing in a qualification site, we're investing in technology, but we are not going to go to continue and to set up facilities until we have all the stars aligned. I think it was a very, very smart decision, and you can see that ultimately when things indeed didn't turn out as we would have hoped, it was relatively minor. It could have been a completely different magnitude if we'd gone downstream and gone to a manufacturing site. So that's, I believe, the story on that one.

Okay. Thank you very much. I'll be back in a moment. You're welcome.

Thank you. There are no further questions at this time. I will now hand the call back over to Lord Aronson for the closing remarks.

Okay, so thank you everyone for participating today. Look, we set the strategy, new strategy in the third quarter. And as you can see, we are moving forward by executing this strategy. So on one hand, we acquired La Vie Bio for growing solutions. Recently, we acquired Barpec for the food business. And you can expect some more M&A's. along the year. As for maximizing the core, we signed this definitive agreement with the State of Israel, which is very important for us to secure the future, and we are very happy with this agreement. same time we improved the production rate of the potash both in the Dead Sea and in Spain towards the end of the year and we will continue like that in 2026 as you can see in the in the guidance and as for efficiency and optimization So we took the decision to stop the LFP project and we just explained why. And also we put on the shelf Bulbi because we are very disciplined with the capital allocation and we want to direct the capital of the company to those areas where we see most of the potential and which are more synergetic. And probably next week, next quarter, sorry, We will talk about the cost transformation program as we need to take care of this as well. So we are pushing and making an investment on the three pillars of the strategy. It's a bit like transformation phase. It will take some time, not a lot, but I guess we all see the results soon. Again, thank you very much. And probably we'll be in touch in different forums.

Thank you. Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all disconnect your lines.