EANS-News: K+S Aktiengesellschaft
Very successful second quarter 2012:
K+S Group significantly boosts revenues and earnings
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quarterly report/6-month report/K+S Aktiengesellschaft
Kassel (euro adhoc) - Kassel, 14 August 2012
Very successful second quarter 2012
K+S Group significantly boosts revenues and earnings
- Very good business performance for potash and magnesium products
- As expected, weak early stocking-up in salt business
- Quarterly revenues up 21 % to EUR 996.5 million
- Operating earnings EBIT I reach EUR 219.8 million (+ 21 %)
- Adjusted earnings per share from continued operations increase by 17.5 % to
EUR 0.74
- Outlook for financial year 2012 confirmed:
- Stable revenues between EUR 3.9 billion and EUR 4.2 billion expected
(2011:
EUR 4.0 billion)
- Operating earnings EBIT I should reach between EUR 820 million and EUR
900
million (2011: EUR 906.2 million)
- Adjusted earnings per share from continued operations expected to be
between EUR 2.85 and EUR 3.15 (2011: EUR 3.77/share)
In the Potash and Magnesium Products business segment of the K+S Group, a
strong overseas business and good early stocking-up in Europe at the end of the
reporting period have led to significant rates of increase for revenues and
earnings in the second quarter, in comparison to the same period of the
previous year.
"The current demand development for potash and magnesium products in the
markets relevant to us should therefore continue in the coming months and
should cause this business segment to show even slightly rising operating
earnings", says Norbert Steiner, Chairman of the Board of Executive Directors
of K+S Aktiengesellschaft. "Against this backdrop we should therefore remain
able to significantly mitigate the weather-related strong decline of the
operating earnings in our Salt business segment on the Group level this year
and are confirming our forecasts for 2012 as a whole", Steiner continues.
Positive development of potash fertilizer demand in the second quarter
After there was still cautious early stocking-up of fertilizers at the start of
the year, the demand for potash and magnesium products developed positively
during the second quarter of 2012. The relatively high price level for
agricultural raw materials offered attractive income prospects for farmers and
therefore an incentive to increase yields per hectare also through the optimal
use of fertilizers. After the production cuts by North American and Russian
producers at the start of the year, global capacities were again almost
completely utilised in the course of the second quarter. Moreover, after the
conclusion of the potash supply contracts with China at unchanged terms at the
end of the first quarter, international prices for potassium chloride tended to
be firmer and, in the second quarter of 2012, were tangibly above the level of
the previous year's quarter.
As expected, early stocking-up in salt sector weak
As a result of the very mild and partly dry weather conditions in Western
Europe at the start of the year, stocks on both the producer and customer sides
are well filled. Consequently, in comparison to the same period of the previous
year, a price decline in the early stocking-up business of the second quarter
of 2012 was observed. While prices for the tenders for the winter season
2012/13 decreased, overall volumes in the contracts concluded to date stood at
a relatively good level.
The de-icing salt regions on the East Coast of the United States and in Canada
were also characterised by relatively high stocks due to the exceptionally mild
winter at the start of the year. Most producers reacted to this situation with
cutting back production. In the de-icing salt regions of the United States,
both in the early stocking-up business in the second quarter and in the tenders
for the winter season 2012/13, there were declines in prices and volumes,
particularly in the Midwest.
K+S Nitrogen stated as discontinued operation due to its sale
The description of the earnings, financial and asset position relates, if not
stated otherwise, to the continued operations of the K+S Group. Since the
reporting on the second quarter of 2011, the COMPO business and, with the Half-
yearly Financial Report H1/12, also K+S Nitrogen are stated as a "discontinued
operation" in accordance with IFRS. Detailed information can be found in the
Notes to the Half-yearly Financial Report on page 33. The income statement and
the cash flow statement were adjusted accordingly. The balance sheet stayed
unchanged.
Second quarter revenues rise by 21 %
At EUR 996.5 million, second quarter revenues were up EUR 174.8 million or 21 %
in
comparison to the previous year. This can be attributed in particular to a
volume-related increase in the Potash and Magnesium Products business segment.
Revenues in the Salt business segment were slightly up on the figure for the
previous year due to currency effects. In the first half of the year, revenues
of the K+S Group fell slightly by 2 % to EUR 2,077.1 million against
the
background of lower revenues in the Salt business segment in the first quarter
due to weather conditions.
In the first six months of the year, 60 % of revenues were generated in the
Potash and Magnesium Products business segment, followed by Salt (36 %) and the
Complementary Business Segments (4 %). In Europe, we generated a share in
revenues of approximately 40 %, followed by North America (26 %), South America
(19 %) and Asia (13 %).
Operating earnings in the second quarter above last year's figures
During the second quarter of 2012, earnings before interest, taxes,
depreciation and amortisation (EBITDA) rose by 16 % to EUR 275.8 million
(Q2/11:
EUR 237.0 million). In the first half of the year, EBITDA reached EUR
580.0
million, representing a decrease of 8 % (H1/11: EUR 627.6 million).
In the second quarter of 2012, operating earnings EBIT I reached
EUR 219.8 million and thus increased by EUR 37.9 million or 21 % in comparison
to
the same quarter of the previous year. At EUR 56.0 million, depreciation
and
amortisation taken into account in EBIT I were at about the level of the same
quarter of the previous year (Q2/11: EUR 55.1 million). The Potash and
Magnesium
Products business segment managed to significantly improve its earnings in
particular thanks to higher overseas volumes, while the earnings of the Salt
business segment decreased against the backdrop of a weaker early stocking-up
business for de-icing salt. In the first half of 2012, the K+S Group achieved
operating earnings of EUR 468.6 million. This was 9 % below the previous
year's
figure (H1/11: EUR 516.6 million). At EUR 111.4 million, depreciation
and
amortisation taken into account in EBIT I in the first half of the year were at
the level of the same quarter of the previous year (H1/11: EUR 111.0 million).
Adjusted earnings before income taxes improve significantly
Taking into account a weaker financial result due to non-cash, extraordinary
interest expenses for provisions resulting from the lowering of the discount
factor, adjusted earnings before income taxes for the period under review
reached EUR 195.6 million and were thus EUR 28.8 million or 17 % higher than a
year
ago. In the first six months, adjusted earnings before income taxes were
EUR
429.3 million (H1/11: EUR 486.2 million).
Adjusted Group earnings from continued operations up by 17%
In the second quarter, adjusted Group earnings from continued operations rose
by EUR 20.7 million or 17 % to EUR 141.2 million. Adjusted Group earnings
from
continued operations of the first six months decreased in comparison to the
corresponding period of the previous year by EUR 46.8 million or 13 % to EUR
310.3
million.
Adjusted earnings per share from continued operations in the second quarter at
EUR 0.74 (Q2/11: EUR 0.63)
In the quarter under review, adjusted earnings per share from continued
operations reached EUR 0.74 and were thus about 18 % above the figure for
the
same period last year of EUR 0.63. This was computed on the basis of
191.40
million no-par value shares, being the average number of shares outstanding
(Q2/11: 191.32 million no-par value shares). In the first six months of 2012,
adjusted earnings per share from continued operations reached EUR 1.62,
a
decrease of 13 % after having been EUR 1.87 in the previous year.
Adjusted earnings per share reach EUR 0.79 (Q2/11: EUR 0.15)
Adjusted Group earnings (including discontinued operations) in the second
quarter reached EUR 150.8 million (Q2/11: EUR 29.2 million). Of this, EUR 9.6
million
was attributable to the discontinued operations of K+S Nitrogen. In the first
six months, adjusted Group earnings amounted to EUR 344.2 million (H1/11: EUR
301.1
million), while EUR 33.9 million was attributable to the discontinued
operations.
Adjusted earnings per share (including discontinued operations) in the quarter
under review reached EUR 0.79 (Q2/11: EUR 0.15). Of this, EUR 0.05 was
attributable
to the discontinued operations. Adjusted earnings per share including
discontinued operations of the first six months achieved EUR 1.80 after
having
been EUR 1.57 in the same period of the previous year, while EUR 0.18
was
attributable to the discontinued operations.
Outlook 2012: Revenues expected between EUR 3.9 billion and EUR 4.2 billion
While in the Potash and Magnesium Products business segment, on the basis of
the currently achieved potash price level, a moderately increasing revenue
development can be assumed, in the Salt business segment, tangibly lower
revenues are expected. Revenues of the K+S Group should reach a value of
between EUR 3.9 billion and EUR 4.2 billion in financial year 2012 (previous
year:
EUR 4.0 billion). The revenue forecast assumes an average US dollar exchange
rate
of 1.22 USD/EUR for the remaining months. This corresponds to an average annual
rate of 1.26 USD/EUR (previous average annual rate: 1.33 USD/EUR; 2011: 1.39
USD/EUR).
Operating earnings EBIT I should reach between EUR 820 million and EUR 900
million
EBITDA of the K+S Group should reach a figure of EUR 1,050 million to EUR
1,130
million (previous year: EUR 1,146.0 million) and operating earnings EBIT
I
between EUR 820 million and EUR 900 million (previous year: EUR 906.2
million). In
the Potash and Magnesium Products business segment, slightly rising operating
earnings are to be expected (previously: stable). In comparison to last year,
which had benefited from above-average volumes of de-icing salt, the operating
earnings of the Salt business segment will probably decline strongly.
Group earnings should be in line with the development of operating earnings
Adjusted Group earnings after taxes from continued operations should be in line
with the development of operating earnings and reach a value of between EUR
540
million and EUR 600 million in 2012 (previous year: EUR 625.6 million). This
would
correspond to adjusted earnings per share from continued operations of about
EUR
2.85 to EUR 3.15 (previous year: EUR 3.27). Taking into consideration
the
discontinued operations including the expected accounting profit arising from
the divestment of K+S Nitrogen, adjusted Group earnings after taxes of EUR
630
million to EUR 690 million are to be assumed (previously: EUR 581.8 million).
This
would correspond to adjusted earnings per share of about EUR 3.30 to EUR
3.60
(previous year: EUR 3.04). 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 remaining months of
2012;
- a sales volume in the Potash and Magnesium Products business segment at about
the same level as the previous year (2011: 6.9 million tonnes);
- a sales volume of crystallised salt of 18 to 19 million tonnes (previously:
less than 19; 2011: 22.7 million tonnes), of which a good 9 million tonnes
was de-icing salt (previously: less than 10; 2011: 13.3 million tonnes). For
the fourth quarter, this, as customary, assumes the average of multi-year de-
icing salt sales volumes;
- a tangibly weaker financial result (previously: stable) particularly due to
non-cash, extraordinary interest expenses for provisions for mining
obligations resulting from the lowering of the discount factor;
- a slightly higher adjusted Group tax ratio of 27% to 28% (2011: 25.7%).
Future dividend policy
K+S is pursuing an essentially earnings-based dividend policy. According to
this, a dividend payout ratio of between 40 % and 50 % of adjusted Group
earnings after taxes (including discontinued operations) forms the basis for
the amount of future dividend recommendations to be determined by the Board of
Executive Directors and the Supervisory Board. For 2012, there are, on the
basis of the described earnings expectations, opportunities for a higher
dividend (previous year: EUR 1.30), since the accounting profit from
the
divestment of K+S Nitrogen and the cessation of the adverse effects from the
divestment of the COMPO business should have a positive impact on Group
earnings.
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 Half-yearly Financial Report (H1/2012), a video message by Norbert Steiner,
Chairman of the Board of Executive Directors of K+S Aktiengesellschaft, about
the second quarter of 2012 and up-to-date press photos relating to the K+S
Group are available under http://www.k-plus-s.com/2012h1en.
We are offering a conference call for analysts in English today at 3 p.m.
Norbert Steiner, Chairman of the Board of Executive Directors, Joachim Felker
and Dr. Burkhard Lohr, both Members of the Board of Executive Directors, will
participate in the conference call. Shareholders, investors, representatives of
the press and all other interested parties are invited to follow the conference
via a live webcast at (http://www.k-plus-s.com/2012h1en) 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: Investor Relations:
Michael Wudonig, CFA Julia Bock, CFA / Kai Kirchhoff
Phone: +49 561 9301 1262 Phone: +49 561 9301 1009 / 1885
Fax: +49 561 9301 1666 Fax: +49 561 9301 2425
michael.wudonig@k-plus-s.com julia.bock@k-plus-s.com /
kai.kirchhoff@k-plus-s.com
Forward-looking statements
This press release contains facts and forecasts that relate to the future
develoment 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 develoments 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:
Michael Wudonig, CFA
Phone: +49 561 9301-1262
Fax: +49 561 9301-1666
michael.wudonig@k-plus-s.com
Juli Bock, CFA / Kai Kirchhoff
Phone: +49 561 9301-1009 / 1885
Fax: +49 561 9301-2425
julia.bock@k-plus-s.com
kai.kirchhoff@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 9301-1100
FAX: +49 (0)561 9301-2425
mail: investor-relations@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