EANS-News: K+S Aktiengesellschaft
K+S Presents its Half-Year Figures
Demand for Fertilizers Remains Low
K+S Aktiengesellschaft / K+S Presents its Half-Year Figures Demand for Fertilizers Remains Low
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balance/companies/finances
Kassel (euro adhoc) - Kassel, 13 August 2009
K+S Presents its Half-Year Figures Demand for Fertilizers Remains Low
. At just under EUR 739 million, quarterly revenues down 38% year on year
. Q2 operating earnings reach about EUR 18 million
. Non-recurrent charge on financial result leads to adjusted earnings per
share of EUR (0.27) in Q2 (Q2/08: EUR 1.40)
. H1 revenues down 24% and operating earnings down 65% year on year
. Continued difficult market environment as well as sharp decline in
earnings expected for H2
In the second quarter of 2009, the K+S fertilizer business was alsocharacterised by continued weak global demand. Against a backdrop that saw agreements yet to be concluded with India and China in the second quarter and continued uncertainty in agriculture over its future earnings situation, demand for potash fertilizers remained exceptionally weak. While trade sector inventories continued to decline, producers - according to their statements - have reduced output once again to prevent inventories from increasing further. The limited room for manoeuvre for financing resulting from the financial crisis still had a negative impact.
"Agriculture is continuing to display restraint with respect to the purchase and use of fertilizers, especially in Europe. Even if there is no sign yet of the normalisation of demand, fundamental trends, for example, the rising global population, changes in dietary patterns in emerging market countries as well as the increasing importance of renewable raw materials remain intact. These facts speak in favour of fertilizer consumption to rise again over the medium and long term," says Norbert Steiner, chairman of the Board of Executive Directors of K+S Aktiengesellschaft.
Salt Business Segment Primarily because of strains in public finances, the early procurement of de- icing salt in Western Europe - despite low inventories on the customer side due to the severe and prolonged winter weather conditions at the beginning of the year - went only at normal level. On the other hand, the early procurement business in North America began very promisingly.
Q2 revenues down significantly year on year Revenues for the second quarter fell by 38% to EUR 738.7 million primarily due to volume factors. Positive price and currency effects could not offset this. The decline was mainly attributable to revenue decreases in the Potash and Magnesium Products and Nitrogen Fertilizers business segments. Revenues for the first half of the year fell by 24% to EUR 1,814.4 million.
In the first half of the year, just under 60% of Group revenues were generated in Europe, with about 40%, the Potash and Magnesium Products business segment accounting for the largest share of revenues, followed by Nitrogen Fertilizers as well as Salt.
Q2 operating earnings reach EUR 18.1 million EBIT I for the second quarter reached EUR 18.1 million, compared with EUR 326.4 million a year ago. Earnings fell sharply in the fertilizer business above all. In the Nitrogen Fertilizers business segment, negative non-recurrent effects resulting from additional payments in respect of 2008 input costs made to the key European supplier had an impact of about EUR 19 million. EBIT I for the first half of the year amounted to EUR 192.1 million and was down 65% on the figure for the same period last year.
Non-recurrent effect due to hedging of Morton Salt's purchase price In order to hedge the Morton Salt purchase price, which will be payable in US dollars, hedging transactions were concluded in April 2009 on the basis of the US dollar exchange rate applicable at that time. Owing to the weaker US dollar as of 30 June 2009, the market value of these futures transactions still outstanding declined and reduced the financial result by a non-cash effect of EUR 69.5 million. Consequently, at just under EUR (76.6) million, the financial result for the second quarter was down significantly on the same period last year (Q2/08: EUR (11.9) million).
Including this extraordinary effect, adjusted earnings before taxes for the second quarter amounted to EUR (58.5) million (Q2/08: EUR 314.5 million). For the first half of the year, it amounted to EUR 107.1 million, which corresponds to a decrease of 80%.
Adjusted Group earnings after taxes for the second quarter amounted to EUR (44.3) million (Q2/08: EUR 231.1 million) including the described extraordinary effect. For the first half of the year, the figure was EUR 78.2 million (down 80% on the same period last year).
The financial result also caused adjusted earnings per share for the quarter under review to decline to EUR (0.27) (Q2/08: EUR 1.40). For the first half of the year, this figure was EUR 0.47, compared with EUR 2.39 for the same period last year.
Difficult market environment expected in the second half of the year too As already stated in the ad hoc press release of June 17, 2009, K+S no longer expects a normalisation of demand for fertilizers in the second half of the year. For 2009 as a whole, the Company expects the volume of sales for the Potash and Magnesium Products business segment to decline to about 4.0 million tonnes of goods (2008: 7.0 million tonnes) as well as moderately declining average prices against the previous year. Even if the agreements concluded by potash exporters with India in the middle of July at USD 460 per tonne of potassium chloride were below industry expectations, it sets an important point of orientation for the world markets and might contribute to dissipating the purchasing restraint still existing on the part of customers.
Given the current extremely difficult and uncertain industry situation in the fertilizer sector, K+S will depart from its customary approach of publishing quantitative ranges for revenues and earnings for the year as a whole in the half-year financial report. K+S will provide a qualitative description of these figures for the time being.
K+S Group revenues for financial year 2009 should fall significantly in relation to the previous year. The significantly higher level of revenues expected for the Salt business segment will not be able to offset the negative development of revenues in the fertilizer sector.
Costs at Group level should fall appreciably in 2009 in comparison with the previous year. K+S expects that short-time working will more than offset the additional costs arising from the latest collective agreement pay increase. The costs of energy, materials and freight are also expected to fall.
EBIT I operating earnings for financial year 2009 will fall sharply in relation to the record result of a year ago. This is primarily due to the already described decreasing level of revenues in the Potash and Magnesium Products business segment. Even a stronger US dollar exchange rate compared with last year and higher earnings from Salt will only be able to check this trend to a limited degree.
The adjusted Group earnings after taxes should therefore also be down very sharply for financial year 2009 in line with the development of operating earnings.
Experience growth The K+S Group is one of the world's leading suppliers of speciality and standard fertilizers, plant care as well as salt products. With its products and brands, K+S offers its customers a range of needs-based goods and services which provides growth opportunities in virtually every sphere of daily life. The K+S Group employs more than 12,000 people and achieved revenues of just under EUR 5.0 billion in 2008. K+S is quoted on all German stock exchanges (ISIN: DE0007162000, symbol: SDF) and listed on the DAX® share index.
Note to editors: You can download this press release as well as the H1/09 financial report from our website www.k-plus-s.com.
Conference Call with Analysts On the occasion of the publication of the figures for the second quarter of 2009, on 13 August 2009, Norbert Steiner, chairman of the Board of Executive Directors, Jan Peter Nonnenkamp, CFO, and Joachim Felker, member of the Board of Executive Directors of K+S Aktiengesellschaft, will answer questions from analysts during a conference call held in English. From 3:00 p.m., you can follow this conference call live on the Internet at www.k-plus-s.com or by telephone by dialling +49.40.37707.9033; PIN 3524527#.
Your contact persons: Presse:
Michael Wudonig Telefon: +49 561 9301-1262 Fax: +49 561 9301-1666 michael.wudonig@k-plus-s.com Investor Relations: Christian Herrmann
Telefon: +49 561 9301-1460 Fax: +49 561 9301-2425 christian.herrmann@k-plus-s.com
Forward-looking statements
This press release contains facts and forecasts that relate to the future development of the K+S Group and its companies. The forecasts are estimates that we have made on the basis of all the information available to us at this moment in time. Should the assumptions underlying these forecasts prove not to be correct, actual events may deviate from those expected at the present time.
|K+S Group at a Glance | | | | | | | |2nd Quarter 2009 | | | | | | | | | | |Q2 | |Q2 | | | |All figures in accordance with | |April - | |April - | | | |IFRSs | |June | |June | | | | | | |2009 | |2008 | |Change | | | | |EUR million | |EUR million| |in % | | | | | | | | | | |Revenues | |738.7 | |1,184.5 | |(37.6) | | | | | | | | | | | |Potash and Magnesium Products | |354.3 | |612.8 | |(42.2) | | |Nitrogen Fertilizers | |257.4 | |433.8 | |(40.7) | | |Salt | |99.3 | |108.0 | |(8.1) | | |Complementary Business Segments| |27.6 | |29.6 | |(6.8) | | |Reconciliation | |0.1 | |0.3 | |- | | | | | | | | | | |Operating earnings (EBIT I) | |18.1 | |326.4 | |(94.5) | | | | | | | | | | | |Potash and Magnesium Products | |53.8 | |291.4 | |(81.5) | | |Nitrogen Fertilizers | |(26.6) | |44.0 | |- | | |Salt | |(0.6) | |(4.2) | |85.7 | | |Complementary Business Segments| |3.2 | |7.1 | |(54.9) | | |Reconciliation | |(11.7) | |(11.9) | |- | | | | | | | | | | |Earnings after operating hedging |37.7 | |319.6 | |(88.2) | |transactions (EBIT II) | | | | | | | | | | | | | | | | |Financial result | |(76.6) | |(11.9) | |- | | | | | | | | | | |Earnings before income taxes | |(38.9) | |307.7 | |- | | | | | | | | | | |Earnings before income taxes, | |(58.5) | |314.5 | |- | |adjusted1) | | | | | | | | | | | | | | | | |Group earnings after taxes | |(30.2) | |226.2 | |- | | | | | | | | | | |Group earnings after taxes, adjusted1) | |(44.3| |231.1 | |- | | | |) | | | | | | | | | | | | | | |Earnings per share, adjusted (EUR)1), |(0.27) | |1.40 | |- | |2) | | | | | | | | | | | | | | | |Capital expenditure3) | |41.5 | |60.5 | |(31.4) | | | | | | | | | | | | | |1) The adjusted figures only contain the result from hedging already | |realised during the current period. By contrast, changes in the market | |value of derivatives still outstanding are not taken into account. The | |effects on deferred and/or cash taxes are also eliminated. Q2/09 tax | |rate: 27.9% (Q2/08: 27.7%). | |2) Adjusted to the share split in the ratio 1:4 (entered in the | |Commercial Register: 24 June 2008; technical execution: 21 July 2008). | |3) For or in connection with intangible assets as well as property, plant| |and equipment. | | | | | | | | | | | | | | | | | | | | | | | | | |K+S Group at a Glance | | | | | | | |1st Half year 2009 | | | | | | | | | | |H1 | |H1 | | | |All figures in accordance with | |Jan. - June| |Jan. - | | | |IFRSs | | | |June | | | | | | |2009 | |2008 | |Change | | | | |EUR million | |EUR million| |in % | | | | | | | | | | |Revenues | |1,814.4 | |2,397.5 | |(24.3) | | | | | | | | | | | |Potash and Magnesium Products | |720.3 | |1.135.3 | |(36.6) | | |Nitrogen Fertilizers | |599.5 | |922.2 | |(35.0) | | |Salt | |437.6 | |278.3 | |+57.2 | | |Complementary Business Segments| |56.7 | |61.3 | |(7.5) | | |Reconciliation | |0.3 | |0.4 | |- | | | | | | | | | | |Operating earnings (EBIT I) | |192.1 | |552.7 | |(65.2) | | | | | | | | | | | |Potash and Magnesium Products | |150.8 | |462.3 | |(67.4) | | |Nitrogen Fertilizers | |(18.5) | |86.6 | |- | | |Salt | |79.6 | |10.5 | |+658.1 | | |Complementary Business Segments| |5.2 | |14.2 | |(63.4) | | |Reconciliation | |(25.0) | |(20.9) | |- | | | | | | | | | | |Earnings after operating hedging |190.6 | |438.2 | |(56.5) | |transactions (EBIT II) | | | | | | | | | | | | | | | | |Financial result | |(85.0) | |(14.2) | |- | | | | | | | | | | |Earnings before income taxes | |105.6 | |424.0 | |(75.1) | | | | | | | | | | |Earnings before income taxes, | |107.1 | |538.5 | |(80.1) | |adjusted1) | | | | | | | | | | | | | | | | |Group earnings after taxes | |77.1 | |311.0 | |(75.2) | | | | | | | | | | |Group earnings after taxes, adjusted1) | |78.2 | |393.7 | |(80.1) | | | | | | | | | | |Earnings per share, adjusted (EUR)1), |0.47 | |2.39 | |(80.1) | |2) | | | | | | | | | | | | | | | |Capital expenditure3) | |70.6 | |84.7 | |(16.6) | | | | | | | | | |Employees as of 30 June (number) | |12,233 | |12,145 | |+0.7 | | of which trainees (number) | |483 | |452 | |+6.9 | | | | | |1) The adjusted figures only contain the result from hedging already | |realised during the current period. By contrast, changes in the market | |value of derivatives still outstanding are not taken into account. The | |effects on deferred and/or cash taxes are also eliminated. Q2/09 tax | |rate: 27.9% (Q2/08: 27.7%). | |2) Adjusted to the share split in the ratio 1:4 (entered in the | |Commercial Register: 24 June 2008; technical execution: 21 July 2008). | |3) For or in connection with intangible assets as well as property, plant| |and equipment. |
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Further inquiry note:
Your contact persons:
Presse:
Michael Wudonig
Telefon: +49 561 9301-1262
Fax: +49 561 9301-1666
michael.wudonig@k-plus-s.com
Investor Relations:
Christian Herrmann
Telefon: +49 561 9301-1460
Fax: +49 561 9301-2425
christian.herrmann@k-plus-s.com
Branche: Chemicals
ISIN: DE0007162000
WKN: 716200
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