ICL Group’s Phosphate Margin Outlook and Brazil Recovery Timelines Clash in 2026 Q2 Earnings Call

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $2.1 billion, up 17% year-over-year
• EPS: $0.12 adjusted earnings per share, an increase of 33%

Guidance:

• Reiterating 2026 consolidated EBITDA guidance of $1.5B-$1.7B, reflecting impacts of higher raw material costs and currency headwinds.
• Phosphate sales volume expected to be between 4.5 and 4.7 million metric tons.
• Annual adjusted tax rate expected to be approximately 30%.

Business Commentary:

Strong Financial Performance in Q2 2026:

• ICL Group reported sales of $2.1 billion, up 17% year-over-year, and an adjusted EBITDA of $448 million, which increased 28% compared to the prior year.
• This strong performance was driven by higher prices for potash, bromine, and phosphate, despite facing $100 million higher raw material costs and over $40 million in exchange rate impacts.

Industrial Products Segment Success:

• The Industrial Products segment achieved sales of $440 million, up 30% year-over-year, with an EBITDA of $130 million, up 88%.
• This success was mainly due to higher bromine prices and increased demand in electronics, despite some moderation in bromine prices in May and June.

Potash Division Growth:

• The Potash division reported sales of $468 million, up 22% year-over-year, with an EBITDA of $154 million, up 34%.
• The growth was attributed to higher potash prices, increased production volumes, and a focus on process optimization and cost reduction.

Phosphate Solutions Division Performance:

• The Phosphate Solutions division saw sales increase 13% to $722 million, driven by higher prices for both commodity and specialty phosphates.
• The EBITDA of $136 million slightly increased, supported by price increases and volume growth, although it was impacted by high production costs, especially for sulfur.

Strategic Initiatives: Elevate and Organizational Restructuring:

• ICL Group announced the Elevate initiative, targeting more than $150 million in annual EBITDA improvements by the end of 2027 and over $350 million by 2028.
• The company is also reorganizing into four segments to enhance focus on growth engines, with changes taking effect in Q1 2027.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated: 'We delivered another quarter of strong results' and 'the future looks bright' for growth engines. CFO noted: 'It is an exciting time to join ICL' and highlighted strong balance sheet and cash flow improvements.

Q&A:

• Question from Ben Theurer (Barclays): Could you bridge how much Industrial Products' strong results were driven by price versus demand, and what is the outlook for the second half?
  Response: Strong Q2 performance driven by high bromine prices locked in during the quarter, with prices currently moderating to ~$4,500/ton. Future performance depends on market conditions.

• Question from Ben Theurer (Barclays): What gives you confidence to achieve the Elevate program's $350M EBITDA improvement target within two years?
  Response: Management is conservative in public targets; internal goals are higher. The extensive, previously under-focused production and logistics network offers significant efficiency potential.

• Question from Joel Jackson (BMO Capital Markets): Should we expect earnings in Industrial Products to drop in Q3/Q4 compared to Q2?
  Response: Bromine prices are currently ~$4,500/ton, lower than April's peak but higher than Q1. Q2 represented a high level; future quarters will depend on market conditions.

• Question from Joel Jackson (BMO Capital Markets): How are you handling the sulfur challenge and what is the outlook for phosphate margins in H2 2026?
  Response: Sulfur availability and cost are key challenges. Spot prices are ~$1,200/ton. The company has secured supply for Q3/Q4 start but costs will increase, pressuring phosphate margins.

• Question from Joel Jackson (BMO Capital Markets): What are your views on the long-term impact of sodium-ion batteries potentially taking share from LFP in energy storage?
  Response: LFP demand is currently increasing, and ICL's exposure is not significant. For the next five years, no concern; potential impact is longer term.

• Question from Joel Jackson (BMO Capital Markets): What is the current state of the potash market, and any commentary on Brazil's business outlook?
  Response: Potash market is stable around $400/ton. Brazil's weak market conditions are expected to continue in Q3 due to credit challenges and high input costs, impacting Growing Solutions.

• Question from Ben Theurer (Barclays): Given current trends, why is the EBITDA guidance range still wide, and what are the risks to reaching the higher end?
  Response: Headwinds include high sulfur prices, currency (shekel/dollar), and soft Brazil demand. Tailwinds exist but H2 is expected to be a bit lower than H1.

Contradiction Point 1

Phosphate Margin Outlook and Sulfur Cost Impact

Contradiction on whether phosphate prices will fully offset rising sulfur costs.

What expectations does BMO Capital Markets have for this quarter's earnings? - Joel Jackson (BMO Capital Markets)

2026Q2: Phosphate margins are expected to face pressure. ICL's diversified portfolio provides flexibility to optimize sulfur allocation. - Eyal Aharonson(CFO) & Asaf Alperovitz(CFO)

How are you addressing sulfur supply and cost challenges, and what are your expectations for phosphate margins in the second half? - Laurence Alexander (Jefferies)

2026Q1: There is a significant correlation between sulfur prices and phosphate margins. ICL does not expect phosphate prices to fully compensate for the increase in sulfur costs. - Aviram Lahav(CFO)

Contradiction Point 2

Overall Business Outlook and Guidance Confidence

Contradiction in confidence level regarding achieving EBITDA improvement targets.

Could you discuss the company's financial performance and key priorities for the next quarter? - Ben Theurer (Barclays)

2026Q2: Management is conservative in public targets; internal goals are higher. The confidence stems from ICL's extensive global operations offering significant efficiency and cost-allocation opportunities... - Eyal Aharonson(CFO)

What gives confidence in achieving the $150M EBITDA improvement by 2027 and $350M by 2028 under the Elevate cost-saving program, particularly in productivity? - Benjamin Theurer (Barclays)

2026Q1: The guidance increase is primarily driven by the potash business, but bromine prices are also expected to be higher than anticipated. Both segments are experiencing better demand than expected. - Elad Aharonson(CFO) & Aviram Lahav(CFO)

Contradiction Point 3

Brazil Market Outlook and Business Performance

Contradiction on the expected recovery and stability of the Brazilian market and ICL's position within it.

Joel Jackson (BMO Capital Markets) - Joel Jackson (BMO Capital Markets)

2026Q2: Brazil is a key market, currently weak... The Brazilian market is expected to remain soft in the second half... High input costs and financing challenges (real interest rates >9%) outweigh benefits from higher grain prices. - Eyal Aharonson(CEO), Asaf Alperovitz(CFO)

What is the outlook for your Brazil operations, including Growing Solutions, in the second half given economic challenges? - Daniel Rizzo (Jefferies LLC)

2025Q4: Believes the market has 'acclimated' to the tough conditions. ICL's performance reflects this, with stable levels of doubtful debt and collections. The situation is expected to be 'somehow better' in 2026, though it remains to be seen. - Aviram Lahav(CFO)

Contradiction Point 4

Threat Assessment from Sodium-Ion Batteries to LFP

Contradiction on the timeline and significance of sodium-ion battery competition for LFP.

Joel Jackson (BMO Capital Markets) - Joel Jackson (BMO Capital Markets)

2026Q2: LFP demand is currently increasing, and no significant threat from sodium-ion is anticipated in the next 5 years. - Eyal Aharonson(CEO)

How do you assess the long-term impact of sodium-ion batteries potentially capturing market share from LFP (LiFePO4) in energy storage, considering ICL's exposure to LFP cathode materials? - Daniel Rizzo (Jefferies LLC)

2025Q4: The LFP market landscape has changed fundamentally in the last 1.5 years, with significant government support withdrawn in the U.S. and slower adoption/affordability issues in Europe. - Aviram Lahav(CFO), Elad Aharonson(CEO)

Contradiction Point 5

Outlook for the Brazilian Market

Contradiction on the timing and severity of market recovery.

Joel Jackson (BMO Capital Markets) - Joel Jackson (BMO Capital Markets)

2026Q2: Brazil is a key market, currently weak... The Brazilian market is expected to remain soft in the second half, especially during the traditional high season (Q3/Q4). - Eyal Aharonson(CFO), Asaf Alperovitz(CIO)

Given Brazil's credit and interest rate challenges, what is the outlook for your businesses in Brazil, including Growing Solutions, in the second half? - Benjamin Theurer (Barclays Bank PLC)

2025Q3: The challenges in Brazil are due to tight credit availability for farmers... Q4 may not see a significant turnaround. Brazil remains a top agricultural country, and these issues are expected to resolve over time. - Aviram Lahav(CFO)