EANS-News: K+S Aktiengesellschaft
Robust fertilizer business
K+S Group confirms outlook for 2012
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quarterly report/Company Information/K+S Aktiengesellschaft
Kassel (euro adhoc) - Kassel, 9 May 2012
Robust fertilizer business
K+S Group confirms outlook for 2012
- Best first quarter for potash and magnesium products
- As expected, de-icing salt business significantly below high figures for
previous year due to weather conditions
- At EUR 1.44 billion, quarterly revenues 12 % below previous year
- Operating earnings EBIT I reach EUR 281.1 million in the first quarter
(Q1/11:
EUR 368.4 million)
- Adjusted earnings per share at EUR 1.01 (Q1/11: EUR 1.37)
- Outlook for fiscal year 2012 unchanged: stable revenues and moderate decline
in operating earnings expected
While the fertilizer business started well in 2012, the de-icing salt business
was exceptionally weak due to weather conditions. As expected, this led to the
K+S Group not being able to achieve the high figures of the previous year for
revenues and earnings in the first quarter of 2012.
"Despite challenging framework conditions at the start of the year, our potash
fertilizer business achieved a very good result", says Norbert Steiner,
Chairman of the Board of Executive Directors of K+S Aktiengesellschaft on the
occasion of the Company's Annual General Meeting in Kassel. "We were thus able
to significantly mitigate the sharp decline for de-icing salts which was
entirely due to weather conditions. After the demand for fertilizers started to
recover at the end of the first quarter and should further continue during the
course of the year, we still see good prospects and are holding to the
forecasts for 2012 as a whole. This year too, we should earn a high premium on
our cost of capital", Steiner continues.
Rising fertilizer demand at the end of the first quarter
In the wake of the European sovereign debt crisis, the trade sector was more
cautious in its early stocking-up of fertilizers at the end of 2011 and the
beginning of 2012. Moreover, winterkill damage resulting from very dry and cold
weather led to a postponement of the European spring season. However,
throughout the first quarter, the price level for agricultural raw materials
continued to offer attractive income prospects for farmers and therefore an
incentive to increase yields per hectare also through the optimal use of
fertilizers. Against this background, at the end of the first quarter, there
was an upturn in demand for potash fertilizers, especially after the
contractual negotiations with China for the first half of 2012 were concluded
with unchanged terms in mid-March. The global market price level for potassium
chloride was tangibly higher in the first quarter of 2012 than in the same
quarter of the previous year. In comparison to the average of the fourth
quarter of 2011, prices moderately decreased in some regions; however, since
the conclusion of the contracts in China, international potash prices tend to
get stronger again.
For nitrogen fertilizers too, in Europe, the first two months of the year were
marked by a certain buying restraint, until demand recovered towards the end of
the first quarter. The prices for nitrogen fertilizers were moderately higher
than the average for the same quarter of the previous year, but they decreased
slightly compared to the average for the fourth quarter of 2011 as a result of
lower input costs for ammonia.
Unusually weak demand for de-icing salt
As a result of the very mild and partly dry weather conditions at the beginning
of the year, the demand for de-icing salt in Western Europe was unusually weak,
particularly compared to the above-average first quarter of 2011, but also
compared to the long-term average sales volume. In the first quarter of 2012,
the price level was slightly higher than in the same quarter of the previous
year and was relatively stable compared to the average for the fourth quarter
of 2011.
On the US East Coast, too, the demand for de-icing salt was very weak due to
the unusually mild winter, and it was below average in the de-icing salt
regions of Canada. Most producers responded to high inventories by cutting back
production. A slight reduction in price was noted particularly on the US East
Coast and in other de-icing salt regions of the USA.
First-quarter revenues below figure for previous year due to weather conditions
Revenues in the first quarter amounted to EUR 1,438.1 million, a decrease of
EUR
188.8 million or 12 % relative to the figure for the previous year. This
decrease is attributable exclusively to lower revenues in the Salt business
segment due to weather conditions. Revenues in the Potash and Magnesium
Products business segment were slightly above the figure for the previous year,
revenues in the Nitrogen Fertilizers business segment increased by
approximately 10 %. In the first three months of the year, 40 % of revenues
were generated in the Potash and Magnesium Products business segment, followed
by Salt (32 %) and Nitrogen Fertilizers (25 %). In Europe, K+S generated a
share in revenues of approximately 50 %, followed by North America (25 %),
South America (12 %) and Asia (11 %).
Operating earnings below previous year due to salt business
In the first quarter of 2012, earnings before interest, taxes, depreciation and
amortisation (EBITDA) fell by 21 % to EUR 337.0 million (Q1/11: EUR 424.9
million).
In the first quarter of 2012, operating earnings EBIT I reached
EUR 281.1 million
and were thus EUR 87.3 million (24 %) lower than in the same quarter of
the
previous year. The Potash and Magnesium Products business segment was able to
further improve its earnings and achieved its best first-quarter earnings yet.
By contrast, in the Nitrogen Fertilizers business segment, earnings were
slightly lower than the peak figure of the previous year. As a result of the
weak de-icing salt business, operating earnings of the Salt business segment
decreased very sharply relative to the extraordinarily good result for the same
quarter of the previous year.
Adjusted earnings before and after taxes correspondingly lower
In the first quarter, adjusted earnings before income taxes reached EUR
266.1
million and were, in line with the development of operating earnings, EUR
87.1
million or 25 % below the figure for the previous year. Adjusted Group earnings
decreased in the first quarter by EUR 68.2 million or 26 % to EUR 193.4 million.
Adjusted earnings per share in the first quarter at EUR 1.01 (Q1/11: EUR 1.37)
Adjusted earnings per share in the quarter under review amounted to EUR 1.01
and
were thus approximately 26 % lower than the figure for the previous year of
EUR
1.37. They were computed on the basis of 191.40 million no-par value shares,
being the average number of shares outstanding (Q1/11: 191.20 million no-par
value shares).
Outlook unchanged: Revenues stable, moderate decline in operating earnings
In the financial year 2012, revenues of the K+S Group should remain stable in
comparison to the previous year. While in the Potash and Magnesium Products
business segment, on the basis of the currently achieved potash price level, a
moderately, and in the Nitrogen Fertilizers business segment, a slightly
increasing development of revenues can be assumed, in the Salt business segment
tangibly (previously: moderately) lower revenues are expected. The revenue
forecast assumes an average US dollar exchange rate of 1.33 USD/EUR
(previously: 1.32 USD/EUR); 2011: 1.39 USD/EUR).
In the financial year 2012, operating earnings EBIT I of the K+S Group should
decrease moderately in comparison to last year's figure. In the Potash and
Magnesium Products business segment, it is assumed that operating earnings
could again approach those of the good earnings achieved last year. The
Nitrogen Fertilizers business segment should be able to achieve earnings at the
level of the previous year. In comparison to last year, which benefited from
above-average volumes of de-icing salt, operating earnings of the Salt business
segment will probably decline strongly.
Moderately declining Group earnings expected
The adjusted Group earnings after taxes should also decline moderately in 2012
in line with the development of operating earnings. This estimate is based not
only on the effects described for revenues and operating earnings, but also on:
- the expectation of consistently attractive agricultural prices,
- the customary, purely technical forecast policy, which maintains the
currently achieved potash price level unchanged for the remainder of 2012,
- a sales volume in the Potash and Magnesium Products business segment at
about the same level as in the previous year (2011: 6.9 million tonnes),
- a sales volume of crystallised salt of less than 19 million tonnes
(previously: a good 19 million tonnes; 2011: 22.7 million tonnes), of
which less than 10 million tonnes de-icing salt (previously: about 10
million tonnes; 2011: 13.3 million tonnes). For the fourth quarter, this,
as usual, assumes the average of multi-year de-icing salt sales volumes.
- a largely unchanged financial result,
- a slightly higher adjusted Group tax ratio of 27 % to 28 % (2011: 26.1
%).
-
This outlook still includes the Nitrogen business segment, since the sale of
K+S Nitrogen was announced after the outlook was set up on 2 May 2012. However,
the sale of K+S Nitrogen does not change the outlook statement: stable revenues
and moderately decreasing operating earnings can still be expected for the year
2012 compared to the pro-forma adjusted year 2011.
Experience growth
The K+S Group is one of the world's leading suppliers of standard and
speciality fertilizers. In the salt business, K+S is the world's leading
producer with sites in Europe as well as North and South America. K+S offers a
comprehensive range of goods and services for agriculture, industry, and
private consumers which provides growth opportunities in virtually every sphere
of daily life. The K+S Group employs more than 14,000 people. The K+S share -
the commodities stock on the German DAX index - is listed on all German stock
exchanges (ISIN: DE000KSAG888, symbol: SDF). More information about K+S can be
found at www.k-plus-s.com.
Note to editors
The Quarterly Financial Report and the K+S Q1/12 Facts & Figures are available
at www.k-plus-s.com/2012q1en on our website.
Today's Annual General Meeting of K+S Aktiengesellschaft will be transmitted
live on the Internet at www.k-plus-s.com/agm starting from 10 a.m. until the
end of the speech by the chairman of the Board of Executive Directors. The
speech and presentation will be available there for download starting from
10:00 a.m., as will a video summary of the speech by the chairman of the Board
of Executive Directors starting from about 2 p.m.
Current image material relating to the K+S Group can be downloaded from our
website. Photos of today's Annual General Meeting are also available on the
Internet at www.k-plus-s.com/agm starting from about 11 a.m.
A conference call in English will take place on 10 May 2012 at 3 p.m. Norbert
Steiner, chairman of the Board of Executive Directors and Joachim Felker,
member of the Board of Executive Directors, will participate in it.
Representatives of the press, shareholders, investors and all other interested
parties are invited to follow the conference via a live webcast at www.k-plus-
s.com/2012q1en or by phone under +49-69-71044-5598. The conference is being
recorded and will also be available as a podcast.
Your contact persons:
Press:
Michael Wudonig, CFA
Phone: +49 561 9301-1262
Fax: +49 561 9301-1666
michael.wudonig@k-plus-s.com
Investor Relations:
Christian Herrmann, CFA
Phone: +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 or risks arise - examples of which are mentioned in the risk report
- actual developments and events may deviate from current expectations. Outside
statutory disclosure provisions, the Company does not take any obligation to
update the statements contained in this press release.
Further inquiry note:
Press:
Michael Wudonig, CFA
Phone: +49 561 9301-1262
Fax: +49 561 9301-1666
michael.wudonig@k-plus-s.com
Investor Relations:
Christian Herrmann, CFA
Phone: +49 561 9301-1460
Fax: +49 561 9301-2425
christian.herrmann@k-plus-s.com
end of announcement euro adhoc
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company: K+S Aktiengesellschaft
Bertha-von-Suttner-Straße 7
D-34131 Kassel
phone: +49 (0)561 9301-1460
FAX: +49 (0)561 9301-2425
mail: christian.herrmann@k-plus-s.com
WWW: http://www.k-plus-s.com
sector: Chemicals
ISIN: DE000KSAG888
indexes: DAX, Midcap Market Index, CDAX, Classic All Share, HDAX, Prime All
Share
stockmarkets: regulated dealing: Hannover, Berlin, München, Hamburg, Düsseldorf,
Stuttgart, regulated dealing/prime standard: Frankfurt
language: English
Original content of: K+S Aktiengesellschaft, transmitted by news aktuell