Dead Sea Works Ld - 3rd Quarter & 9 Mths Results

RNS No 3997j
DEAD SEA WORKS LIMITED
9th November 1998


Results for third quarter 1998


Following are the financial results of Dead Sea Works Ltd to 30 September 1998
on a consolidated basis.

The consolidated reports include primarily Dead Sea Magnesium Ltd. and the
company's share (50%) in Clearon Corp.

Net income for this quarter was $14.1 million, compared to $13.7 million for the
same quarter last year (an increase of 3%). The consolidated operating income of
the company for this quarter was $26.1 million compared to $22.4 for the same
quarter last year (an increase of 16%).

Net income for the quarter remained at a relatively high level due mainly to
continued high potash prices and the volume of potash sold remaining higher than
production. The company's current potash inventory is at a relatively low level,
such that the company does not expect sales volumes to exceed production
quantities in the upcoming quarters.

A significant devaluation in the value of the Israeli currency (NIS) against the
U.S. dollar and major European currencies during the quarter, and continuing
after the balance sheet date, has also had a positive influence on the group's
operating income. While some 95% of sales revenues are payable in foreign
currency, particularly U.S. dollars, imputs are mostly local and payable in
Israeli currency. Financing costs, while not directly affected in a significant
manner by the devaluation due to the group's loans being denominated in U.S.
dollars, may be subject to an, as yet undetermined, effect from currency hedging
transactions undertaken. Tax on income is expected to increase due to a rise in
deferred tax resulting from erosion of the value of fixed assets for tax
purposes.

On 22 July 1998 a consortium in which the company has approximately a 60% share
was successful in its bidding for the purchase of Grupo Potasas from the Spanish
government. The purchase agreement was signed on 21 October 1998, giving the
consortium all issued share capital of Grupo Potasas in exchange for 17.2
billion pesetas. The approximate remaining 40% of the consortium is equally
divided between two Spanish companies. Grupo Potasas produces over one million
tons of potash per year from three mines north of Barcelona.

On 29 October 1998 an agreement for a joint initiative in China was signed. Dead
Sea Works Ltd., in partnership with United Development Incorporated (UDI), which
is a related party to the company, entered into a joint venture with a Chinese
Government owned company to establish a potash plant in China. The share of Dead
Sea Works Ltd. in the partnership with UDI is 92.5%, and the share of the
partnership in the joint venture is 33.3%, with the remaining 66.7% held by the
Chinese company. The total projected investment in the project is approximately
$486 million, with 2/3 financed through the "Project Financing" method whereby
the assets of the project, including its cash flow, will serve as collateral.
The remaining third of the investment will be provided by each of the parties to
the joint venture proportionate to its share. The investment by Dead Sea Works
Ltd. will total approximately $50 million.

The magnesium metal production rate stands at the planned production level for
the first phase - 25,000 tons per annum. Earlier in 1998 investments totalling
$47 million were approved for "de-bottlenecking" the production process at the
magnesium plant and raising total production capacity to 35,000 tons per annum.
This investment will be completed during 1999.


                              Consolidated results 
                               ($ U.S. millions)

                     1 - 9/98         1 - 9/97         7 - 9/98        7 - 9/97

Net turnover           377.3            343.2            124.9           123.7

Profit before tax       57.7             60.9             22.3            21.8

Tax on income          (25.2)           (24.3)           (10.6)           (8.3)

Net profit              39.6             36.9             14.1            13.7

Number of              297.2            297.2            297.2           297.2
 shares (millions)

EPS ($)                 0.13             0.12             0.05            0.05


END

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