EANS-News: K+S Aktiengesellschaft
Experience growth
K+S Group also on course in 3rd quarter
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Corporate news transmitted by euro adhoc. The issuer/originator is solely
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Company Information/Financial Figures/Balance Sheet/quarterly report
Kassel (euro adhoc) - Kassel, 13 November 2012
Experience growth
K+S Group also on course in 3rd quarter
- Robust business with Potash and Magnesium Products
- Early stocking-up in salt business weak overall, as expected
- Quarterly revenues up 7% to EUR 916.6 million
- Operating earnings EBIT I at EUR 156.7 million 14 % below previous year
- Adjusted earnings per share from continued operations at EUR 0.52 (Q3/11: EUR
0.62)
- Adjusted Group earnings after taxes favoured by income from divestment of
K+S Nitrogen: Increase by 35% to EUR 164.9 million
- Outlook 2012:
- Revenue expectation of a good EUR 3.9 billion at the lower end of the
previously quantified range (previously: EUR 3.9 billion to EUR 4.2
billion; 2011: EUR 4.0 billion)
- Operating earnings EBIT I of approximately EUR 820 million expected
(previously: EUR 820 million to EUR 900 million;
2011: EUR 906.2 million)
- Normalisation in salt business opens up opportunities for a slight increase
in operating earnings EBIT I in 2013
In the third quarter, the K+S Group was able to increase revenues compared to
last year's period in particular due to currency factors. The expectedly weaker
early stocking-up business with de-icing salt and a higher cost burden in the
Potash and Magnesium Products business segment meant, however, that operating
earnings of the K+S Group were down compared with the previous year.
"Despite the globally poorer framework conditions, our business with potash and
magnesium products in the third quarter was robust", says Norbert Steiner,
Chairman of the Board of Executive Directors of K+S Aktiengesellschaft. "In
this business segment, this year, we should therefore again be able to achieve
the good result of the previous year. For the K+S Group as a whole, we are
counting on operating earnings of about EUR 820 million in 2012. With
the
assumption of an again normalised winter business, in 2013, there are
opportunities for a slight increase in operating earnings", continues Steiner.
Fertilizer demand on a good level in third quarter
In the third quarter, due to the attractive price level for agricultural raw
materials demand was on a good level in the markets of relevance for K+S.
However, the continuing absence of contract conclusions by North American and
Russian producers with Chinese and Indian customers led to the capacities not
being fully utilised, particularly in North America and Russia. Against this
backdrop, the international prices for potassium chloride came under pressure
towards the end of the third quarter, but overall were moderately above those
of the same quarter of the previous year.
Decrease in early stocking-up with de-icing salt, as expected
In Western Europe, the very high level of the previous year's early stocking-up
business could not be achieved in the reporting period, due to the mild and dry
weather conditions at the beginning of the year. Nevertheless, the creation of
additional storage capacities on the customer side ensured an average early
stocking-up sales volume in the third quarter. Prices decreased slightly in the
early stocking-up season and in the tenders for the 2012/13 winter season, due
to the high supply. By contrast, the contract volumes for the upcoming season
stood at a good level.
The de-icing salt regions on the East Coast of the United States and in Canada
were also characterised by high stocks in the reporting period due to the
exceptionally mild winter at the start of the year. Most producers reacted to
this situation with cutting back in production. In the de-icing salt regions of
the United States, both in the early stocking-up business in the third quarter
and in the tenders for the winter season 2012/13 there were declines in prices
and volumes, especially in the Midwest.
K+S Nitrogen shown as a discontinued operation
The description below 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, since the half-
yearly financial report 2012, also K+S Nitrogen are stated as "discontinued
operations" in accordance with IFRS. Detailed information can be found in the
Notes to the Quarterly Financial Report Q3/12 on page 35. The income statement
and the cash flow statement were adjusted correspondingly. The balance sheet,
however, remains unchanged.
Third quarter revenues rise by 7%
At EUR 916.6 million, revenues of the K+S Group in the third quarter were up
EUR
63.1 million or 7% in comparison to the previous year. This can be attributed
to a currency- and volume-related revenue increase in the Potash and Magnesium
Products business segment and a currency-related increase in the Salt business
segment. In the first nine months, revenues of the K+S Group rose slightly by
1% to EUR 2,993.7 million despite lower revenues in the Salt business segment
in
the first quarter due to weather conditions.
In the first nine 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, K+S achieved a share in
revenues of approximately 40%, followed by North America (25%), South America
(19%) and Asia (13%).
Third quarter operating earnings below those of previous year
During the third quarter of 2012, earnings before interest, taxes, depreciation
and amortisation (EBITDA) declined by 10% to EUR 213.8 million (Q3/11: EUR
237.2
million). In the first nine months, EBITDA was EUR 793.8 million.
This
corresponds to a decrease of 8% (9M/11: EUR 864.8 million).
In the third quarter of 2012, operating earnings EBIT I amounted to EUR
156.7
million and were thus EUR 25.1 million or 14% below the figure for the
same
quarter of the previous year. At EUR 57.1 million, depreciation and
amortisation
charges were slightly above the figure for the same quarter of the previous
year (Q3/11: EUR 55.4 million). In the Potash and Magnesium Products
business
segment, earnings declined moderately due to price-related increased energy
costs, currency-related higher freight costs, costs related to the Legacy
Project, a negative currency result and the effect resulting from the reduction
in stocks. In the Salt business segment, the weather-related weaker early
stocking-up business with de-icing salt led to a decline in operating earnings.
In the first nine months of 2012, the K+S Group achieved operating earnings of
EUR 625.3 million. This was down on the previous year's figure by 11% (9M/11:
EUR
698.4 million). At EUR 168.5 million, depreciation and amortisation taken
into
account in the first nine months were at about the level for the same quarter
of the previous year (9M/11: EUR 166.4 million).
Lower earnings before income taxes
Taking into account a weaker financial result due to a non-cash, extraordinary
interest expense for provisions as a result of the further lowering of the
discount factor, adjusted earnings before income taxes were, at EUR
135.0
million, EUR 32.7 million or just under 20% below the previous year's figure.
In
the first nine months, adjusted earnings before income taxes were EUR
564.3
million (9M/11: EUR 653.9 million).
Adjusted Group earnings from continued operations also lower
In the third quarter, adjusted Group earnings from continued operations fell by
EUR 19.7 million or 17% to EUR 98.9 million. In the first nine months,
adjusted
Group earnings from continued operations were, at EUR 409.2 million, EUR
66.5
million or 14 % below the figure for the same quarter of the previous year.
Adjusted earnings per share from continued operations in the third quarter at
EUR
0.52 (Q3/11: EUR 0.62)
In the quarter under review, adjusted earnings per share from continued
operations reached EUR 0.52 and were thus about 16% below the figure for the
same
period last year. This was computed on the basis of 191.40 million no-par value
shares, being the average number of shares outstanding (Q3/11: 191.40 million
no-par value shares). In the first nine months of 2012, adjusted earnings per
share from continued operations reached EUR 2.14 after having been EUR 2.49 in
the
previous year, a decrease of 14%.
Adjusted Group earnings and adjusted earnings per share increased
Adjusted Group earnings (including discontinued operations) in the third
quarter reached EUR 164.9 million (Q3/11: EUR 121.8 million). Of this, income
from
the divestment of K+S Nitrogen (after taxes) of EUR 66.0 million
were
attributable to the discontinued operations. In the first nine months, adjusted
Group earnings amounted to EUR 509.1 million (9M/11: EUR 422.9 million),
while EUR
99.9 million was attributable to the discontinued operations of K+S Nitrogen.
Adjusted earnings per share (including discontinued operations) in the quarter
under review were EUR 0.86 (Q3/11: EUR 0.64). Of this, EUR 0.34 was
attributable to
the discontinued operations. Adjusted earnings per share including discontinued
operations of the first nine months achieved EUR 2.66, after having been EUR
2.21
in the same period of the previous year, while EUR 0.52 was attributable to
the
discontinued operations.
Outlook for 2012 specified
In October, North American and Russian producers announced further production
cuts, due to the continuing absence of contract conclusions with Chinese and
Indian customers, in order to adjust supply to the reduced demand in these
markets. While demand should continue to be at a good level on the markets
relevant for K+S due to the attractive price level for agricultural raw
materials, price negotiations in these regions will become increasingly
difficult as a result of continuing absence of contract conclusions with China
and India being of relevance for the global price level. On the basis of the
described developments, a global potash sales volume of about 54 million tonnes
for 2012 as a whole is to be assumed (previously: about 56 million tonnes;
2011: 60.2 million tonnes). This includes approximately 3 million tonnes of
potash specialities and products with lower potash content.
As a result of the exceptionally mild weather conditions at the start of the
year, the demand for de-icing salt both in Europe and North America should
decline accordingly in 2012 compared to the above-average year 2011. In the
food grade salt area, the demand in the sales markets relevant to K+S should
remain largely stable and decline somewhat in the industrial salt area,
particularly in North America. While sales volumes of salt for chemical use
should decrease moderately due to the economic slowdown in Europe, the demand
from the chemical industry for salt for chemical use in South America should
remain stable and increase slightly in North America.
In 2012, revenues should reach a good EUR 3.9 billion
In the Half-yearly Financial Report H1/12, revenues of the K+S Group of between
EUR 3.9 billion and EUR 4.2 billion were forecast (previous year: EUR 4.00
billion).
This estimate was based on a US dollar annual average exchange rate of 1.26
USD/EUR. Due to the most recent weakening of the US dollar, for the remaining
months, an average US dollar exchange rate of 1.29 USD/EUR is now assumed. This
corresponds to an average annual rate of 1.28 USD/EUR. Consequently and against
the backdrop of the above-mentioned changed conditions in the Potash and
Magnesium Products business segment, revenues should now roughly reach a value
at the lower end of the range, i.e. a good EUR 3.9 billion.
Operating earnings EBIT I of approximately EUR 820 million expected (2011: EUR
906.2 million)
Previously, for the EBITDA of the K+S Group in 2012, a figure of between
EUR
1,050 million and EUR 1,130 million (previous year: EUR 1,146.1 million)
and
operating earnings EBIT I of between EUR 820 million and EUR 900 million
(previous
year: EUR 906.2 million) were expected. The reasons discussed in relation to
the
revenue expectation lead to also assume figures at the lower end of the range,
i.e. of about EUR 1,050 million for EBITDA and about EUR 820 million for
operating
earnings EBIT I. In the Potash and Magnesium Products business segment, stable
operating earnings can be expected (previously: slight rise). Compared with
last year, which had benefited from above-average sales volumes of de-icing
salt, operating earnings of the Salt business segment will probably decrease
strongly.
Group earnings 2012 additionally burdened
For the adjusted Group earnings after taxes of the continued operations, a
value of between EUR 540 million and EUR 600 million for 2012 was
previously
assumed (previous year: EUR 625.6 million). Due to the further burden in
the
financial result due to non-cash, extraordinary interest expense for provisions
for mining obligations, from today's perspective, the lower value of the range
cannot quite be achieved, i.e. a value of about EUR 530 million is to
be
expected. This would correspond to adjusted earnings per share of the continued
operations of about EUR 2.75 (previously: EUR 2.85 to EUR 3.15; 2011: EUR 3.27).
Taking
into consideration the discontinued operations including the higher than
initially expected income arising from the divestment of K+S Nitrogen, adjusted
Group earnings after taxes of approximately EUR 630 million are to be
assumed,
which should thus lie at the lower end of the previous range of between EUR
630
million and EUR 690 million (previous year: EUR 581.8 million). This
would
correspond to adjusted earnings per share of about EUR 3.30 (previously: 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, technical forecast policy, which maintains the currently
achieved potash price level unchanged for the remaining months of 2012;
- a sales volume of 6.9 million tonnes (2011: 6.9 million tonnes) in the
Potash and Magnesium Products business segment;
- a crystallised salt sales volume of 18 to 19 million tonnes (2011: 22.7
million tonnes), of which a good 9 million tonnes of de-icing salt (2011:
13.3 million tonnes). For the fourth quarter, a somewhat reduced de-icing
salt business compared to normal is assumed. The reason for this, despite
the assumption of a normal winter, is relatively high stocks at the
customers;
- a significantly (previously: tangibly) weaker financial result in
particular due to non-cash, extraordinary interest expense for provisions
for mining obligations resulting from the lowering of the average weighted
discount factor;
- a slightly higher adjusted Group tax ratio of 27% to 28% (2011: 25.7%).
Outlook 2013: Farmers' earnings prospects continue to be attractive
For 2013, a tangible increase in global potash sales volumes is to be expected.
The estimate is based primarily on a price level for agricultural raw materials
which is continuously attractive for the earnings prospects of the agricultural
sector, and on the expectation of a significant increase in demand in China and
India after the buying restraint in 2012. Against this background, worldwide
capacities should once again be well utilised.
In the Salt business segment, in 2013, both for the North American and European
markets for de-icing salt, sales volumes are expected to be on their multi-year
average level. After the below-average demand in 2012 both in Europe and North
America as a result of the exceptionally mild weather conditions at the start
of the year, the de-icing salt sales volumes should increase again accordingly.
However, prices for the tenders for the winter season 2012/13 are, overall
slightly below the level of the last season with regional differences.
Opportunities for a slight increase in operating earnings in 2013
For 2013, revenues of the K+S Group are expected to increase slightly compared
with 2012. The Salt business segment should achieve tangibly higher revenues.
In the Potash and Magnesium Products business segment, against the backdrop of
the continuing absence of contract conclusions by North American and Russian
producers with Chinese and Indian customers leads to an overall cautious
assessment. A sales volume at approximately the previous year's level (2012e:
6.9 million tonnes) and a slightly lower average price level is therefore
assumed. As a consequence, revenues for the Potash and Magnesium Products
business segment should decrease slightly compared with 2012.
As far as EBITDA and operating earnings EBIT I of the K+S Group are concerned,
from today's perspective, there are opportunities for the coming year to
increase the figures slightly in comparison with 2012. In the Potash and
Magnesium Products business segment, slightly weaker operating earnings EBIT I
are assumed. In the Salt business segment, on the basis of an again normal
winter business that follows the long-term average of de-icing salt volumes,
strongly increasing earnings in comparison to the probably below-average figure
in 2012 should be anticipated. As regards adjusted Group earnings after taxes
of the continued operations of the K+S Group, assuming a tangible improvement
in the financial result, a moderate increase would even be possible. Our
outlook for the coming year is based on a number of factors including the
following:
- consistently attractive agricultural prices;
- a sales volume at about the same level as the previous year (2012e: 6.9
million tonnes) and, compared with 2012, slightly lower average prices in
the Potash and Magnesium Products business segment. It should be taken
into consideration that the assumption of an average exchange rate of 1.30
USD/EUR in 2013, which underlies the forecast, in particular in months
with high overseas volumes, compares with a stronger US dollar in 2012;
- in comparison to the lower than average sales volume of the previous year
(2012e: 18 - 19 million tonnes) significantly higher average sales volumes
of crystallised salt of about 22 million tonnes (of which de-icing salt: a
good 12 million tonnes, 2012e: a good 9 million tonnes);
- a tangibly improved financial result after 2012 was adversely impacted by
a non-cash, extraordinary interest expense for provisions for mining
obligations resulting from the lowering of the average weighted discount
factor;
- a stable adjusted Group tax rate of 27% to 28%.
Future dividend policy
We pursue 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, on the basis of the described
earnings expectations, there is still a chance for a higher dividend (previous
year: EUR 1.30), since the income 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.
In 2013, Group earnings will then no longer benefit from the effects of the
divestment of K+S Nitrogen.
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 (Q3/2012), a video message by Norbert Steiner,
Chairman of the Board of Executive Directors of K+S Aktiengesellschaft, about
the third quarter of 2012 and up-to-date press photos are available under
http://www.k-plus-s.com/2012q3en.
We are offering a conference call for analysts in English today at 3 p.m. (CET)
Norbert Steiner, Chairman of the Board of Executive Directors, and Dr. Burkhard
Lohr, member 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/2012q3en) or by phone under +49-69-71044-
5598. The conference is being recorded and will then 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:
Press:
Michael Wudonig, CFA
Phone: +49 561 9301-1262
Fax: +49 561 9301-1666
michael.wudonig@k-plus-s.com
Investor Relations:
Julia Bock / 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 9301-1460
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