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EANS-News: K+S Aktiengesellschaft
K+S Group also on course in 3rd quarter
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The issuer/originator is solely responsible for the content of this announcement. -------------------------------------------------------------------------------- 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 firstname.lastname@example.org@k-plus-s.com / email@example.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 firstname.lastname@example.org Investor Relations: Julia Bock / Kai Kirchhoff phone: +49 561 9301-1009 / -1885 fax: +49 561 9301-2425 email@example.com / firstname.lastname@example.org end of announcement euro adhoc -------------------------------------------------------------------------------- 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: email@example.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