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EANS-News: K+S Aktiengesellschaft
Successful first half of 2011
K+S continues growth trend in second quarter too
-------------------------------------------------------------------------------- Corporate news transmitted by euro adhoc. The issuer/originator is solely responsible for the content of this announcement. -------------------------------------------------------------------------------- Financial Figures/Balance Sheet/6-month report Kassel (euro adhoc) - Kassel, 11 August 2011 Successful first half of 2011 K+S continues growth trend in second quarter too Persistent high demand leads to rising fertilizer prices worldwide COMPO disclosed as discontinued operation due to its sale Quarterly revenues rise by 11 % to EUR 1.05 billion (Q2/2010: EUR 948.1 million) Second quarter operating earnings increase by 38 % to EUR 191.9 million (Q2/2010: EUR 138.9 million) Adjusted earnings per share from continued operations rise to EUR 0.66 (Q2/2010: EUR 0.45) Outlook 2011: - Significant increase in revenues expected to between EUR 5.00 billion and EUR 5.30 billion (2010: EUR 4.63 billion) - Operating earnings will probably rise to between EUR 0.95 billion and EUR 1.05 billion (2010: EUR 714.5 million) - Adjusted earnings per share from continued operations expected to be between EUR 3.40 and EUR 3.75 (2010: 2.34 EUR/share); taking into consideration the discontinued operations, about EUR 2.95 to EUR 3.30 (2010: EUR 2.33) The K+S Group continued its positive business development in the second quarter. It proved possible to significantly increase revenues and earnings in this period too. "Thanks to our strong fertilizer business we were able to significantly increase revenues and earnings of the K+S Group also in the second quarter compared to the previous year," says Norbert Steiner, Chairman of the Board of Executive Directors of K+S Aktiengesellschaft. "The positive development will probably continue in the second half of the year as well. We are therefore expecting significantly increasing revenues and a strong improvement in operating earnings for the year 2011 as a whole," Steiner continues. Continued positive environment in the Fertilizer business sector The second quarter of 2011 was characterised by strong demand for fertilizers. The high level of agricultural prices favoured the income prospects of the agricultural sector, so that there was a significant incentive to raise yields per hectare through the increased use of fertilizers. For potash and magnesium products, this resulted in a very high utilisation of production capacities throughout the world. This environment favoured the development of prices for potassium chloride. In Europe, during the second quarter, K+S implemented the price increase to 335 EUR/tonne for granulated potassium chloride announced in mid-March, and announced a further price increase of 10 EUR/tonne to 363 EUR/tonne in mid-June. Due to existing supply commitments, price increases in Europe currently become effective with a delay of six to eight weeks. The utilisation of nitrogen fertilizer plants was also very high in the second quarter on a global basis. While demand for complex fertilizers recovered, the pronounced drought in Europe at the start of the quarter resulted in temporary decreases in demand for straight nitrogen fertilizers. The prices for nitrogen fertilizers were at a significantly higher level compared to the previous year´s quarter. Strong stocking-up business in the Salt business sector In the Western European stocking-up business, the above-average wintry weather in the 2010/11 season led to strong demand for de-icing salt. It proved possible to raise the price level in the already concluded contracts for the winter season 2011/12 significantly. The start to the pre-stocking business came relatively early on the East Coast of the United States. In Canada too, demand for de-icing salt improved in the second quarter in comparison to the same period of the previous year. North American customers´ inventories were at a normal level in the second quarter. However, there were slight price declines in the existing tenders. The demand for food grade salt in Europe and North America proved to be in good shape in the second quarter too. In South America, the market for food grade salt stabilised. COMPO stated as a "discontinued operation" If not stated otherwise, the description of the earnings, financial and asset position relates to the continued operations of the K+S Group without COMPO. In accordance with IFRS, due to its sale, COMPO is stated as a "discontinued operation" (detailed information about the disposal can be found in the Notes to the Half-yearly Financial Report on page 34). The income statement and the cash flow statement of the previous year were restated accordingly. Second quarter revenues rise by 11 % At EUR 1,049.8 million, second-quarter revenues were up EUR 101.7 million or 11 % on the figure for the same period last year. This increase is attributable to price and volume factors. The Potash and Magnesium Products and Nitrogen Fertilizers business segments achieved tangible and significant revenue increases respectively, after the prices for fertilizers increased in comparison to the same quarter last year. The Salt business segment managed to increase its revenues slightly due to volume factors. Revenues in the first six months of the year rose in particular due to price factors by 14 % and reached EUR 2,676.7 million. In the first six months of the year, 40 % of revenues were generated in the Potash and Magnesium Products business segment, followed by Salt (36 %) and Nitrogen Fertilizers (21 %). The regional distribution of Group revenues continues to be very balanced. Thus, about 49 % of total revenues were generated in Europe and 51 % overseas. Operating earnings have risen strongly During the second quarter of 2011, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 25 % to EUR 247.5 million. In the first six months, EBITDA achieved EUR 672.4 million, an increase of 29 % (H1/10: EUR 520.8 million). In the second quarter of 2011, operating earnings EBIT I reached EUR 191.9 million and were able to increase by EUR 53.0 million or 38 % in comparison to the same quarter of the previous year. At EUR 55.6 million, depreciation and amortisation taken into account in EBIT I decreased by EUR 3.7 million compared to the previous year´s figure, which had been adversely affected by special depreciation. The Potash and Magnesium Products business segment was able to strongly improve its result year on year. The significantly higher potash price level was the decisive factor here. In the Nitrogen Fertilizers business segment, rising prices could more than make up for higher input costs. Against this backdrop, earnings rose by 5 %. The Salt business segment achieved a lower result than in the previous year, which, however, had been favoured by non-recurrent effects in the area of provisions of EUR 16.2 million. In the first six months of 2011, total operating earnings of EUR 560.3 million were achieved. This exceeded the previous year´s figure (H1/10: EUR 398.5 million) by 41 %. At EUR 112.1 million, the depreciation taken into account in the first half of the year was EUR 10.2 million below the figure for the previous year, which had been adversely affected by special effects. Adjusted earnings before income taxes improve strongly The adjusted earnings before income taxes amounted to EUR 176.6 million in the second quarter. It proved possible to increase them by EUR 58.1 million or 49 % in comparison to the same period of the previous year. In the first six months, adjusted earnings before income taxes amounted to EUR 529.8 million (H1/10: EUR 348.8 million). Adjusted Group earnings from continued operations increase strongly It proved possible to increase adjusted Group earnings from continued operations by EUR 40.9 million or 48 % to EUR 126.8 million during the second quarter. In the first half of the year, they increased in comparison to the corresponding period of the previous year by EUR 132.0 million or 51 % to EUR 388.4 million. Adjusted earnings per share from continued operations in the second quarter at EUR 0.66 (Q2/10: EUR 0.45) per share For the quarter under review, adjusted earnings per share from continued operations amounted to EUR 0.66 and were thus about 47 % higher than the figure for a year ago of EUR 0.45. They were computed on the basis of 191.32 million no- par value shares, being the average number of shares outstanding (Q2/10: 191.33 million no-par value shares). In the first half of 2011, adjusted earnings per share from continued operations reached EUR 2.03, an increase of 52% after having been EUR 1.34 in the previous year. Sale of COMPO adversely affects adjusted Group earnings in second quarter Adjusted Group earnings (including discontinued operations) in the second quarter reached EUR 29.2 million (Q2/10: EUR 97.5 million). The discontinued business operations of COMPO, included in this, accounted for EUR (97.6) million which consist of the impairment loss as at 30 June 2011 of EUR 104.0 million and the net result of COMPO of EUR 6.4 million. In the first half of the year, adjusted Group earnings amounted to EUR 301.1 million (H1/10: EUR 273.3 million), while EUR (87.3) million were attributable to the discontinued operations. For the quarter under review, adjusted earnings per share (including discontinued operations) amounted to EUR 0.15 and were thus lower than the figure of EUR 0.51 a year ago. The discontinued operations of COMPO accounted for EUR (0.51). Adjusted earnings per share (including discontinued operations) of the first half of the year achieved EUR 1.57 (H1/10: EUR 1.43), while EUR (0.46) were attributable to the discontinued operations of COMPO (detailed information about the disposal of COMPO can be found in the Notes to the Half-yearly Financial Report on page 34). Outlook 2011: Significant rise in revenues and strong rise in earnings anticipated After the normalisation of demand for fertilizer in 2010, a further increase in demand in the current year is expected. Although the prices of some agricultural products decreased in June from having been very high, they remain at a level, which should favour the income prospects of the agricultural sector and thus offer an incentive to increase the yield per hectare through a higher use of fertilizers. Therefore, unchanged global potash sales volumes of about 58 to 60 million tonnes in 2011 as a whole (2010: 58.3 million tonnes) can be assumed. Correspondingly, a globally high level of utilisation of production capacities is to be expected also during the further course of the year. For nitrogen fertilizers too, a high demand for the remainder of the year is assumed, which should lead to a good utilisation of the nitrogen fertilizer plants worldwide. The average prices of nitrogen fertilizers should be at a significantly higher level year on year. However, higher raw material costs for ammonia, phosphate and potash will probably counteract this. After the close of the first quarter, the further de-icing salt business in 2011 will be influenced decisively by wintry weather conditions in Europe and North America in the fourth quarter. In this respect, it can be assumed that sales volumes will be on their multi-year average level in the case of both the European and North American markets. While demand for food grade and industrial salt in Europe and North America should be stable, the South American industrial and food grade salt market will probably grow further in line with the regional population trend. Demand on the part of the chemical industry for salt for chemical use should develop positively in light of the forecast economic growth. The following forecasts relate to the expected organic revenue and earnings development of the continued operations. The figures for the previous year were restated correspondingly. Only in the case of the adjusted Group earnings and the adjusted earnings per share the activities of COMPO classified as discontinued operations are taken into consideration. Following the estimates in the outlook of the Financial Report 2010 and against the backdrop of the positive demand and price trends emerging during the course of the first half of 2011, revenues of the K+S Group should rise significantly in financial year 2011 against the previous year. A figure of between EUR 5.00 billion and EUR 5.30 billion seems realistic from today´s perspective (previous year: EUR 4.63 billion). While in the Potash and Magnesium Products business segment a significant increase in revenues and in the Nitrogen Fertilizers business segment (without COMPO) also a strong one are assumed, in the Salt business segment stable revenues at a high level are expected. The revenue forecast assumes an average US dollar exchange rate of 1.42 USD/EUR (2010: 1.33 USD/EUR). Operating earnings likely to rise strongly In financial year 2011, earnings before interest, taxes, depreciation and amortisation (EBITDA) and operating earnings EBIT I should increase strongly in comparison to the figures for the previous year. The EBITDA of the K+S Group will probably reach EUR 1.15 billion to EUR 1.30 billion (previous year: EUR 953.0 million) and operating earnings EBIT I between EUR 0.95 billion and EUR 1.05 billion (previous year: EUR 714.5 million). This is primarily due to probably strong growth in earnings in the Potash and Magnesium Products business segment as well as a strong improvement in operating earnings in the Nitrogen Fertilizers business segment. However, operating earnings of the Salt business segment will probably decline moderately. On the basis of the average US dollar estimate for 2011 of 1.42 USD/EUR (previously: 1.40 USD/EUR) and the hedging instruments used, this does not result in a material currency-related effect on earnings. The forecasts are based on the following assumptions: continued attractive agricultural prices; in comparison to the previous year, significantly higher average prices and stable sales volumes in the Potash and Magnesium Products business segment (expected sales volume: 7.0 million tonnes); sales volume of about 23 million tonnes (previously: 22 to 23 million tonnes) of crystallised salt in the Salt business segment, of which about 14 million tonnes should be accounted for by de-icing salt (previously: 13 to 14 million tonnes). For the fourth quarter, this, as customary, assumes the average of multi-year de-icing salt sales volumes; significantly rising energy costs in 2011 on the basis of an oil price level of about 105 US$ (Brent, previously: 120 US$ per barrel). Strongly improved Group earnings after taxes expected The adjusted Group earnings after taxes of the continued operations should also increase strongly in 2011 following the development of operating earnings and reach a figure of between EUR 650 million and EUR 720 million (previous year: EUR 447.8 million). This would correspond to adjusted earnings per share for the continued operations of about EUR 3.40 to EUR 3.75 (previous year: EUR 2.34). Taking into consideration the discontinued operations including the expected book loss arising from the disposal of COMPO, adjusted Group earnings after taxes are expected to reach EUR 560 million to EUR 630 million (previous year: EUR 445.3 million), which is the relevant basis for the dividend payout. This would correspond to adjusted earnings per share of about EUR 2.95 to EUR 3.30 (previous year: EUR 2.33). This projection is based not only on the effects described for revenues and operating earnings, but also on the following circumstances expected from today's perspective: a significantly better financial result, after this had been negatively impacted by special effects in 2010; a domestic Group tax rate of 28.3% and an adjusted Group tax ratio of about 26% to 27% (2010: 26.2%). 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. K+S - 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 (H1/2011), a video webcast by Norbert Steiner, Chairman of the Board of Executive Directors of K+S Aktiengesellschaft, about the second quarter of 2011 and up-to-date press photos relating to the K+S Group are available under http://www.k-plus-s.com/2011h1en. We are offering a conference call for analysts in English today at 3 p.m. Norbert Steiner, chairman of the Board of Executive Directors, as well as Joachim Felker and Jan Peter Nonnenkamp, 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/2011h1en) or by phone under +49-69-71044-5598. The conference will be recorded and also be available as a podcast. Press: Michael Wudonig, CFA phone: +49 561 9301-1262 fax: +49 561 9301-1666 firstname.lastname@example.org Investor Relations: Christian Herrmann, CFA phone: +49 561 9301-1460 fax: +49 561 9301-2425 email@example.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 obligations to update the statements contained in this press release. |K+S Group at a Glance | |Q2 | |Q2 | | | |Q2/2011 | |Apr - Jun| |Apr - Jun| | | | | | |20| |20| | | | | |11| |10| | | | | | | | | | | |Po| |50| |46| | | |ta| |2.| |8.| | | |sh| |4 | |9 | | | |an| | | | | | | |d | | | | | | | |Ma| | | | | | | |gn| | | | | | | |es| | | | | | | |iu| | | | | | | |m | | | | | | | |Pr| | | | | | | |od| | | | | | | |uc| | | | | | | |ts| | | | | | | | | | | | | | | |Po| |18| |11| | | |ta| |4.| |9.| | | |sh| |4 | |2 | | | |an| | | | | | | |d | | | | | | | |Ma| | | | | | | |gn| | | | | | | |es| | | | | | | |iu| | | | | | | |m | | | | | | | |Pr| | | | | | | |od| | | | | | | |uc| | | | | | | |ts| | | | | | | | | | | | | | |Earnings before income taxes, adjusted1) | |176.6 | |118.5 | |+49.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |K+S Group at a Glance | |H1 | |H1 | | | |H1/2011 | |Jan - Jun| |Jan - Jun| | | | | | |20| |20| | | | | |11| |10| | | | | | | | | | | |Po| |1,| |97| | | |ta| |08| |3.| | | |sh| |0.| |6 | | | |an| |4 | | | | | |d | | | | | | | |Ma| | | | | | | |gn| | | | | | | |es| | | | | | | |iu| | | | | | | |m | | | | | | | |Pr| | | | | | | |od| | | | | | | |uc| | | | | | | |ts| | | | | | | | | | | | | | | |Po| |38| |26| | | |ta| |6.| |9.| | | |sh| |8 | |8 | | | |an| | | | | | | |d | | | | | | | |Ma| | | | | | | |gn| | | | | | | |es| | | | | | | |iu| | | | | | | |m | | | | | | | |Pr| | | | | | | |od| | | | | | | |uc| | | | | | | |ts| | | | | | | | | | | | | | |Earnings before income taxes, adjusted1) | |529.8 | |348.8 | |+51.9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |Employees as of 30 June (number) | |14,279 | |14,021 | |+1.8 | | | Further inquiry note: Your contact persons: Press: Michael Wudonig, CFA phone: +49 561 9301-1262 fax: +49 561 9301-1666 firstname.lastname@example.org Investor Relations: Christian Herrmann, CFA phone: +49 561 9301-1460 fax: +49 561 9301-2425 email@example.com K+S Aktiengesellschaft Communications P.O. Box 10 20 29, 34111 Kassel, Germany Bertha-von-Suttner-Str. 7, 34131 Kassel www.k-plus-s.com __________________________________________________________ Chairman of the Supervisory Board: Dr. Ralf Bethke Board of Executive Directors: Norbert Steiner (Chairman), Joachim Felker, Gerd Grimmig, Dr. Thomas Nöcker, Jan Peter Nonnenkamp Registered Office: Kassel Commercial Register: Kassel HRB 2669 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: firstname.lastname@example.org WWW: http://www.k-plus-s.com sector: Chemicals ISIN: DE0007162000 indexes: DAX, Midcap Market Index, CDAX, Classic All Share, HDAX, Prime All Share stockmarkets: regulated dealing/prime standard: Frankfurt, regulated dealing: Berlin, Hamburg, Stuttgart, Düsseldorf, Hannover, München language: English