Israel Chemicals (ICL) said it planned to keep paying hefty dividends and possibly buy back shares as it reported a 23% drop in quarterly net profit and braced for repercussions from the collapse of a potash cartel.

Facing a drop in potash prices that could reach 25%, ICL - the world's sixth-largest producer of the crop nutrient - unveiled a strategic plan on Wednesday that would expand its offerings beyond its core business.

ICL said it would focus on agriculture, food and engineered materials with an aim at achieving profits that exceed the global sector and boosting revenues by hundreds of millions dollars a year by 2016.

As part of the plan, which has received board approval, Tel Aviv-listed ICL intends also to list its shares on an international stock exchange and target regular distribution of dividends of up to 70% of net income.

ICL said a dual listing would potentially add foreign investors, bring greater flexibility for financings and mergers and acquisitions and better protect "against the possible further deterioration of Israel's business environment and stock market."

Israel's government wants to further increase the royalties ICL pays, after it agreed last year to double its payout to 10%.

ICL also said share repurchases or a one-time dividend of up to $500 million were under consideration as part of efforts to underpin the stock price.

"The new strategy looks attractive at first glance," said Citi analyst Andrew Benson in a note to clients. "ICL's self-help measures will mitigate some of the pressure on EPS (earnings per share) from the current potash war."

Russia's Uralkali last week said it would quit one of the world's two largest potash cartels and predicted potash prices would sink to about $300 per ton from $400.

ICL, which signed large contracts with companies in China and India earlier this year, said Uralkali's decision raised the risk of lower prices in the short run.

"But in the long term, higher demand would bring higher prices," it said.

Shares of ICL, controlled by conglomerate Israel Corp have fallen more than 20%, erasing some 10 billion shekels ($2.8 billion) from its market value, following Uralkali's announcement. Its shares rose 1.3% in Tel Aviv on Wednesday.

Benson said he continues to rate ICL as a "buy" since the company has low cash costs for potash - extracted from the Dead Sea rather than from mines - that allow it to stay profitable at prices well below the level of many of its competitors. He said it pays a high dividend and has a strong balance sheet.

Output Increase

ICL said it sold 955,000 tons of fertilizers in the first half of 2013, up 14% from the same period of 2012 and reflecting gains in Brazil and other major emerging markets.

Demand for potash, which improves yields of corn, rice, palm oil and other crops, has boomed in the past decade as a growing global population and better incomes and higher living standards in developing countries fuel global demand for food.

"Even with current challenging market developments, ICL continues to believe in the potash market, both in the short term and in the long term, and will therefore explore options for increasing its potash production, both in its existing mines and in new locations around the world," ICL Chief Executive Stefan Borgas said.

Its results in the second quarter were hurt by a fall in prices of potash and reduced sales in China, pushing down earnings to $316 million from $408 million a year earlier and compared with expectations of $323 million. Revenue slipped to $1.77 billion from $1.91 billion.

It declared a dividend of $221 million, or 17.4 cents per share, for the second quarter, up from 16.7 cents in the first quarter.

Potash Corp of Saskatchewan owns 14% of ICL. Its attempts to increase its stake have been rebuffed by the Israeli government, which holds a golden share.