ICL Group Ltd. Q4 FY2025 Earnings Call

Good morning, everyone, and thank you for joining the ICL Fourth Quarter 2025 Earnings International Conference Call. I will now hand the call over to Peggy Reilly Tharp, Vice President of Global Investor Relations. Please proceed.

Thank you. Hello, everyone. I'm Peggy Reilly Tharp, Vice President of Global Investor Relations for ICL Group. And 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 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 2 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. Elad Aharonson, followed by Mr. Aviram Lahav, 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 Elad.

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 3. This includes the acquisition of Bartek Ingredients, the global leader in food-grade malic and fumaric acids. 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 expand 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 expand 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, 2 areas where we already have deep experience and broad exposure. We will continue to seek additional nonorganic growth opportunities in these 2 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 MOU. 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 bromine supply through at least 2035. Additionally, as part of our strategic efforts, we have been conducting a review of our capital allocation priorities and reevaluating 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 essential in moving ICL forward and designed to help fund our 2 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 our operations in the U.K. 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 4 for a brief overview of the quarter. Sales were $1.701 billion, up 6% year-over-year with all 4 segments delivering sales growth. For our Industrial Products, Phosphate Solutions, and Growing Solutions segment, sales of $1.281 billion were up 4%. We remain committed to growing our leadership position in these 3 segments. Consolidated adjusted EBITDA was $380 million in the fourth quarter, and this amount improved 10% year-over-year. For the quarter, EBITDA for our Industrial Products, Phosphate Solutions, and Growing Solutions segments was $249 million. 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 a 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. And similar to the previous 3 quarters, overall performance remained varied across the wide array of end markets and regions we serve. Turning to Slide 5 and the review of annual results. Consolidated sales for 2025 were $7.153 billion and up 5% versus 2024. Sales for Industrial Products, Phosphate Solutions, and Growing Solutions were $5.650 billion in 2025, also up 5%. Full year EBITDA of $1.488 billion was up slightly, while EBITDA for Industrial Products, Phosphate Solutions, and Growing Solutions came in at $1.021 billion. Adjusted diluted EPS was $0.36 for 2025, and we delivered operating cash flow of $1.056 billion. During the course of 2025, we faced shifting macro forces and industry issues while simultaneously achieving our goals. From an ICL perspective, we gained significant clarity regarding the value of the Dead Sea assets, which I just discussed. Also, as previously mentioned, we completed a comprehensive review of the company and identified 2 strategic growth engines, specialty crop nutrition and specialty food solutions. We intend to expand in these 2 areas while continuing to benefit from our distinctive global presence and regionally diversified operations. Now let's review our divisions and begin with our Industrial Products business on Slide 6. For the full year, sales of $1.254 billion were up slightly year-over-year with EBITDA of $280 million. For the fourth quarter, sales of $296 million 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 retardants, 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 sales 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. Sales 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 minerals 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 billion 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 per tonne. This amount was up more than 20% year-over-year. Potash sales volume of 1.2 million metric tons in the fourth quarter were up roughly 15% on an 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 debottlenecking 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 continue to maximize the profitability of our potash resources. Whenever possible, we prioritize potash supply to the best global markets. Now turning to a review of the Phosphate Solutions division on Slide 8. For 2025, sales of $2.333 billion were up 5%. However, EBITDA of $528 million was impacted by higher sulfur costs. In the fourth quarter, sales increased 2% to $518 million, while EBITDA came in at $121 million. Food specialties 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 U.S. and EMEA. We also saw an increase in global processed meat sales across the U.S. and 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 cost of raw materials and specialty sulfur persisted in the fourth quarter and show no signs of abating in 2026. This brings us to our Growing Solutions business division on Slide 9. Sales for 2025 were $2.063 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 Solutions 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 profit. In Europe, we continue 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 shifted 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 Bartek 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 Boulby operations in the U.K. 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 multiyear 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 U.S. dollar. This makes it more costly for us to do business in Israel as a dollar-denominated company. However, we are using hedging techniques to help eliminate some but not all of this exposure. Now before turning the call to Aviram, I would ask you to turn to Slide 11 and a review of our guidance for 2026. For this year, we expect consolidated EBITDA comprising all 4 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, Elad, 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 remain 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 starts trended up slightly by the end of the fourth quarter. For fertilizers 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 mid- to high single-digit 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 5 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 in perpetuity. Over the same time frame, there was a significant reduction in ocean freight rates of nearly 25%. Beyond agricultural indicators, we also track other indicators relevant to our Phosphate Solutions and Industrial Products segments. Our Phosphate Specialty Solutions 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 Products 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 Products and Phosphate Solutions, growth was up approximately 1% on a sequential basis and 2% year-over-year. If you now turn to Slide 14 for a look at our fourth quarter sales bridges, on a year-over-year basis, sales were up $100 million or 6% with all 4 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. Exchange 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 exchange rate fluctuations, and you should expect to see this continue in 2026 if the shekel continues to strengthen versus the dollar. We also saw a significant increase in raw material costs, especially sulfur. This trend is continued into 2026, and it is becoming more difficult to pass this increase along. Additionally, as we shared publicly last December, the Israeli Supreme Court ruled that ICL is obligated to pay fees for water extracted from wells in the Dead Sea concession area. This equaled $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 for 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 of approximately $61 million. In the fourth quarter, we also closed a minor R&D facility in Israel, and this adjustment was approximately $6 million. As Elad mentioned, we also recorded an impairment of our Boulby assets in the U.K. related to our shifting strategy, and this amount is approximately $50 million. We also recently initiated a sale 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 fees for water extracted from wells in the Dead Sea concession 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 if you will turn to Slide 17 for a quick review of our full year sales bridges for 2025. All 4 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 volumes, exchange rate fluctuation 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 1.3x. 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 of 3.1%. And with that, I would like to turn the call back over to the operator for the Q&A.

Your first question is from Ben Theurer from Barclays.

Two quick ones. So first of all, thanks for the guidance. And obviously, it 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 risks to the higher end and the downside risks 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 issues that you may face that could drive you more towards the lower end? That would be my first question.

Okay. Thank you, Ben. So I think for the upside, I think we'll see higher potash quantities for production and sales. And maybe there will be an upside on the price per tonne 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. And on downside, so the 2 headwinds that we have right now, one is the cost of sulfur, which went up from around $140, $150 1.5 years ago to more than $500. And the sulfur is the most dominant raw material for the phosphate portfolio. So this is a headache for us. So we mitigate it, but still it's an issue. And the second one is the exchange rate of shekel versus dollar. Our functional currency is dollar, while we have expenses in shekel here in Israel. And as the shekel continues to strengthen versus the dollar, that would be a challenge for us.

Ben, I would add one thing specifically. It applies to basically most things that Elad described, but the cost of sulfur specifically, it's also the timing in the year when it will 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 cost 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 agri business. I think we performed better than the average, but still it wasn't a great year in the agri business 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.

Yes. I wanted to follow up on the Growing Solutions side and what you're observing. There are many factors involved. You mentioned the market share gains in specialty, but given the issues related to farmer affordability, I’d like your input on that. What are you noticing regarding demand among Brazilian farmers? Considering that interest rates remain high, we've discussed how this has been a concern over the last few quarters. However, it seems there might be an improvement by 2026 with potentially lower rates, especially since it's an election year. There’s a lot of potential. I’d like to understand your perspective on ICL's position in Brazil, particularly concerning Growing Solutions.

Overall, I'm encouraged by our progress in Growing Solutions, and you can see positive EBITDA development for Q4. However, Brazil, which accounts for about a third of our Growing Solutions business, faced a tough year due to high interest rates and other factors. We believe interest rates will decline, although not dramatically. We will wait to see the impact of the upcoming elections. We have adjusted our cost structure in Brazil, and I am optimistic that this year, 2026, will be an improvement for us. Regarding Growing Solutions more broadly, we are changing our product mix in Europe, which also comprises about a third of the business. We began this adaptation in 2025 and expect to see results in 2026 and beyond, though we remain cautious about general conditions in Europe. Lastly, in the Far East, particularly China, we are seeing good progress, but we are facing challenges related to the cost of raw materials, including sulfur. Would you like to add anything, Aviram?

Yes, thank you, Elad. I would like to expand on Brazil, which I think will resonate with you. Credit conditions are challenging. There are issues with both the rates of credit and its availability. In Brazil, as Ben pointed out, the credit rate is very high, with the real rate likely around 10% or more, while the nominal rate is about 15% and inflation is below 5%. This high rate is precisely why the Brazilian Central Bank is maintaining such elevated interest rates, but that's just part of the picture. Additionally, commercial banks are not fully extending credit to the industry, which means that farmers and the agriculture sector are relying on suppliers for financing. Therefore, we must consider how much credit exposure we are willing to take on. Historically, companies that have overextended credit in Brazil have faced significant challenges, and we remain cautious in our approach. While there is potential for a better year in 2026, that remains to be determined. During this time, you can observe the pressure on distribution companies in Brazil, as they find themselves squeezed between suppliers and farmers, a position that is particularly unfavorable. That's the situation, and it continues to evolve.

Your next question is from Joel Jackson from BMO Capital Markets.

I'm going to follow up on some of this. I'm a bit surprised by the guidance for '26. I'm trying to understand which businesses are expected to perform well or poorly. It's clear that potash volume will be higher and prices are expected to increase when comparing '25 to '26, so potash should be up. Does this indicate that other businesses like Growing Solutions and IP will experience slight growth while phosphates decline to achieve a stable midpoint?

No. First of all, potash quantities and prices should improve. However, the shekel has weakened, which affects this division with significant expenses, especially since all the costs in Israel are incurred in shekels. When we compare 2026 to 2025, things should be better, but the improvement might be less significant due to the shekel's position. As for bromine, I expect it to remain around the same level as this year. For Phosphate Solutions, we might see a slight decrease in EBITDA due to sulfur prices, although we aren't certain how long this will last. Lastly, Growing Solutions is actually benefiting somewhat from currencies since it is less reliant on the shekel and sells internationally in various currencies against the dollar. The weak dollar affects not just the shekel but also the euro, pound, etc. We might find ourselves in a slightly better position in Growing Solutions in 2026 compared to 2025. Overall, when we consider everything for next year, the picture looks quite similar. Some areas may slightly improve, like potash, while others, like phosphate, may see a slight decline. However, these changes are not dramatic. If I had to guess, I would say we're nearing similar results overall, with potash possibly seeing a little more growth and phosphates a little less. I hope that answers your question, Joel.

Very helpful. Could you remind us your sensitivity to the shekel how in U.S.?

Yes, we are generally above $1 billion in short shekel. It does fluctuate, but you can do the math. Every 1 percentage point is approximately $10 million. Our financials are influenced by the hedged shekel rather than the naked shekel that reflects the daily representative rate. We have a significant portion of our exposure hedged, so when the shekel strengthens against the dollar, it strengthens less against our hedges. However, over the long term, it does have an effect. If this trend continues, we can't predict how long this situation will last. Currently, the shekel is unusually high for various reasons unrelated to our industry. The key question is how long this will last. Generally, for every 1%, it equates to about $10 million.

Okay. Finally, just following up on that. What is your guidance for this year 2026 regarding your U.S. dollar shekel assumption? And how much of that is hedged right now?

Yes. So without any hedging, we would have estimated around $310 million. However, with hedging, it exceeds $320 million, which is our assumption. I have noticed a significant amount of guidance from companies and Israeli exporters in various sectors, and I would suggest that a range of $315 million to over $320 million is a reasonable benchmark for where we anticipate the market heading. Nonetheless, it can change... Yes, around 50% at that time. Normally, we hedge around 60%, but when the rates go down, our analysis says that we can allow us to be a little bit more exposed because there's a limit to how much it can go down.

And your next question is from Laurence Alexander from Jefferies.

This is Dan Rizzo standing in for Laurence. Can we revisit Brazil for a moment? Have we encountered this situation before? How long did it last when suppliers primarily acted as creditors for their customers in Brazil? What was the outcome last time, and how long did it continue?

Yes, Dan, I have been following and working in the Brazilian market for about 15 to 20 years. It has its ups and downs, but if you navigate it wisely, it can be very rewarding. Essentially, the Brazilian agricultural market is the most significant in the world. If you're not involved in Brazil, you're missing out on agriculture entirely. We are active in Brazil and other divisions, primarily agriculture. The Brazilian agricultural economy is crucial, especially concerning soy. If approached cautiously, you can achieve excellent results. However, one must be mindful of the fluctuations — for example, I have seen the real fluctuate from 4 to 160 to 6, and now it stands around 5.20. It varies, but I believe it will stabilize. Last year marked a shift to a new reality, and I think this year will be more stable. Typically, when conditions toughen, it takes time for people to adjust, but I believe they have. Our current performance reflects this; while we are not excelling, we are managing well. Our level of doubtful debt remains stable, and we are able to collect payments. We could have increased sales significantly, but that would have involved a lot more risk. We know how to navigate this market, and I don’t foresee any major negative developments. I would expect the next phase to show improvement compared to last year, but we will have to wait and see. Does that answer your question?

That does. No, it does, it does because it sounds like we're at the trough for...

I believe so. Yes, I believe so. Yes, yes, yes.

Okay. With the recent changes to your portfolio, particularly the shift away from the big battery project, how should we view the future of batteries? Is this just a temporary pause as you assess the market, or are you moving away from this market altogether as it's no longer relevant?

That's a very good question. Something fundamental has changed in the market. When looking ahead, it's clear that electricity, electric cars, and other electric systems are here to stay. The key issues are the pace of adoption and determining the winners and losers in this industry. If we compare the U.S. today to aspirations from about a year and a half ago, the landscape has shifted significantly in many aspects. This includes infrastructure and the support provided by the government, both directly and indirectly. The road ahead is going to be much rockier. This is evident in the reactions from Ford and GM. While they are responding differently, GM has also encountered significant challenges and is likely facing a longer recovery. For newcomers in this space, we've concluded that pursuing this path isn't our strength. We anticipated more government support, which is no longer an option we can rely on. Numerous factors have contributed to this situation. In Europe, the challenges are quite different, although the outcomes are similar. Adoption rates in theory appear higher than the actual state of affairs, but consumer willingness to spend is restricted. Real wages in Europe are stagnant, and there's a belief that cars must remain affordable to succeed in this market. Additionally, Chinese companies have more freedom to operate in Europe compared to the U.S. Recently, Stellantis made a significant announcement about scaling back their projects, which resulted in a 25% drop in their shares. Ford has also withdrawn from Germany, and there are various stories surrounding this. Looking at the global market, we have a highly successful operation in China, supplying prominent players in the field. We are committed to that. However, our ambitions to become a full-fledged LFP producer or to focus on the cathode side have been postponed. While I have the CEO of the group with me, who ultimately makes the decisions, I don't believe we will move in that direction anytime soon, if at all.

No, no. But the bottom line is that the industry of LFP cathode material remains solely in China. Aviram discussed the situation regarding the U.S. and Europe. We do not have any competitive advantage in advancing along the supply chain for cathode material. Therefore, we will continue to supply MEP chemical grade raw material to others in China, which is a strong market for us. We are performing well there, but we do not need to proceed with projects in Spain and the U.S. I believe it was a very good decision.

And for us, just to finally close, we said all along, if you remember, time after time that we're investing in the qualification side, 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 to us is relatively minor. It could have been completely different magnitude if we've gone downstream and go to manufacturing sites. So that's, I believe, the story on that one.

There are no further questions at this time. I will now hand the call back over to Elad Aharonson for the closing remarks.

Thank you all for joining us today. We shared our new strategy in the third quarter, and it's clear that we are making progress in executing it. We recently acquired Lavie Bio for Growing Solutions and Bartek for our food business, and you can anticipate additional mergers and acquisitions throughout the year. To maximize our core operations, we reached an important agreement with the State of Israel, which is vital for securing our future, and we're pleased with this development. Additionally, we've improved the production rate of potash in both the Dead Sea and Spain toward the end of the year, and we plan to maintain this momentum into 2026, as reflected in our guidance. In terms of efficiency and optimization, we made the decision to pause the LFP project and provided an explanation for it. We also decided to shelve Boulby, as we are being disciplined with capital allocation and want to focus our resources on areas that show the most potential and synergy. In the next quarter, we will discuss our cost transformation program, as it requires our attention. We are committed to investing in the three pillars of our strategy, which is a transformation phase that will take some time, but we expect to see results soon. Thank you again, and we look forward to connecting in different forums.

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