EANS-News: K+S Aktiengesellschaft Considerable rise in third quarter revenues
and earnings Prospects for fertilizer and salt businesses continue to be
favourable
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Corporate news transmitted by euro adhoc. The issuer/originator is solely
responsible for the content of this announcement.
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Financial Figures/Balance Sheet/quarterly report/9-month report
Kassel (euro adhoc) - Kassel, 10 November 2011
Considerable rise in third quarter revenues and earnings
Prospects for fertilizer and salt businesses continue to be favourable
Globally high demand for fertilizers in last quarter
Quarterly revenues rise by 17% to EUR 1.17 billion
Operating earnings EBIT I improve almost 70% to EUR 198.5 million
Adjusted earnings per share from continued operations reach EUR 0.69
(Q3/2010:
EUR 0.25)
More detailed outlook for 2011:
- Significant increase in revenues to between EUR 5.00 billion and EUR 5.25
billion expected (previously: EUR 5.00 billion to EUR 5.3 billion; 2010:
EUR
4.63 billion)
- Operating earnings EBIT I should increase to between EUR 0.95 billion and
EUR 1.00 billion (previously: EUR 0.95 billion to EUR 1.05 billion; 2010:
EUR
0.71 billion)
- Adjusted earnings per share from continued operations expected to be
between EUR 3.40 and EUR 3.60 (previously: between EUR 3.40 and EUR 3.75;
2010:
EUR 2.34 / share)
In the third quarter of the current year too, the K+S Group was able to
considerably increase revenues and earnings in comparison with the same period
of the previous year. Globally high demand for fertilizers and the accompanying
significantly higher potash price level played a decisive role in this
development.
"Due to the attractive demand and price trends in the course of the first nine
months, we continue to assume that our earnings will rise strongly this year,"
says Norbert Steiner, Chairman of the Board of Executive Directors of K+S
Aktiengesellschaft.
"The currently omnipresent uncertainty regarding the future economic
development of the global economy has prompted us to be somewhat more cautious
in respect of our estimate for 2012. With an expected stable development of
revenues, from today´s perspective, we see good opportunities for the coming
year to carry forward the high level of earnings of 2011," Steiner continues.
Strong demand for fertilizers and significantly higher potash price level
The third 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 needs-based 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 the third quarter, the nitrogen fertilizer plants were also well utilised
worldwide, and demand for complex and straight nitrogen fertilizers as well as
ammonium sulphate stood at a high level. Prices for nitrogen fertilizers rose
significantly in comparison to the same quarter of last year, after significant
price increases were also recorded for raw materials.
Continued high demand for de-icing salt
In the Western European pre-stocking business, the above-average wintry weather
conditions in the 2010/11 season led to continued high demand for de-icing salt
in the third quarter. The price level has risen tangibly for the winter season
2011/12. However, as a result of lower freight rates for salt imports, moderate
price declines occurred in the local tenders on the East Coast of the United
States. In the other de-icing salt regions of the United States important for
K+S and in Canada too, the demand for de-icing salt improved in the third
quarter in comparison to the previous year. Prices are stable in the Midwest
region, while a slight price increase is to be observed in Canada.
Third quarter revenues rise by 17%
At EUR 1,174.0 million, third-quarter revenues were up EUR 173.5 million or 17%
on
the figure for the same period last year. The Potash and Magnesium Products and
Nitrogen Fertilizers business segments achieved significant revenue increases
due to higher prices. Revenues of the Salt business segment were stable at a
high level. In the first nine months, revenues of the K+S Group rose in
particular due to price factors by 15% and reached about EUR 3.9 billion.
In the first nine months, 41% of revenues were generated in the Potash and
Magnesium Products business segment, followed by Salt (33%) and Nitrogen
Fertilizers (23%). The regional distribution of Group revenues continues to be
balanced. Thus, about 51% of total revenues were generated in Europe and 49%
overseas.
Operating earnings strongly up in the third quarter too
During the third quarter of 2011, earnings before interest, taxes, depreciation
and amortisation (EBITDA) rose by 49% to EUR 254.5 million (Q3/2010: EUR
170.8
million). In the first nine months, EBITDA achieved EUR 926.9 million,
an
increase of 34% (9M/2010: EUR 691.6 million).
In the third quarter of 2011, the K+S Group generated operating earnings EBIT I
of EUR 198.5 million and was able to increase this by EUR 81.1 million or 69%
in
comparison to the same quarter of the previous year. 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 more than made up for
higher input costs. Against this backdrop, the result rose significantly here
too. By contrast, the Salt business segment achieved a lower result than in the
previous year. The decline can particularly be attributed to weather-related
production losses on the Bahamas, higher costs for demurrage charges and
negative currency effects. In the first nine months of 2011, the K+S Group
achieved operating earnings of EUR 758.8 million. This exceeded the
previous
year´s figure (9M/2010: EUR 515.9 million) by 47%.
Adjusted earnings before income taxes improve strongly
The adjusted earnings before income taxes reached EUR 184.6 million in
the
quarter under review. It proved possible to increase this by EUR 118.9 million
or
181% in comparison to the same period of the previous year. In addition to the
good development of operating earnings, this also benefited from a
significantly improved financial result. In the first nine months, the K+S
Group achieved adjusted earnings before income taxes of EUR 714.4
million
(9M/2010: EUR 414.5 million). Details of the adjustment can be found on pages
9
and 10 of the Quarterly Financial Report Q3/2011.
Adjusted Group earnings also increase strongly
It proved possible to increase adjusted Group earnings from continued
operations by EUR 83.2 million or 171% to EUR 131.9 million during the
third
quarter. In the first nine months, adjusted Group earnings from continued
operations of EUR 520.3 million were achieved. This corresponds to an increase
of
EUR 215.2 million or 71% in comparison to the same period of the previous year.
Adjusted earnings per share from continued operations in the third quarter at
EUR
0.69 (Q3/2010: EUR 0.25) per share
For the quarter under review, adjusted earnings per share from continued
operations amounted to EUR 0.69 and were thus about 176% above the
previous
year´s figure of EUR 0.25. As in the same quarter last year, it was computed
on
the basis of 191.40 million no-par value shares, being the average number of
shares outstanding. In the first nine months of 2011, adjusted earnings per
share from continued operations reached EUR 2.72, an increase of 71% after
having
been EUR 1.59 in the same period of the previous year.
More detailed outlook for 2011 as a whole
After the normalisation of demand for fertilizers in 2010, an increase in
demand in the current year is to be expected. Although the prices of some
agricultural products decreased in the course of the year after having been
very high, they nevertheless 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 needs-based use of fertilizers. However,
uncertainties currently exist on the trading side, which, with the financial
crisis 2008/9 still on people´s minds, is rather cautiously attempting to
manage its early stocking-up for the end of the year. But, on the other hand,
the trading sector tries to avoid not having enough products in stock for the
coming application season, while cereal prices remain attractive. Taking all
this into consideration, 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 also to be expected during the remaining months of the year.
In the case of nitrogen fertilizers too, high demand will probably be observed
for the rest of 2011. The average prices of nitrogen fertilizers should be at a
significantly higher level year on year. However, considerably higher raw
material costs, especially for ammonia, will counteract this.
In the last weeks of 2011, the de-icing salt business will be influenced
decisively by wintry weather conditions in Europe and North America. 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 industrial salt should remain stable in Europe and South
America, in the case of water softening products, a certain degree of
reluctance to purchase due to the muted economic situation in the United States
can be assumed. Demand for food grade salt in Europe and North America should
also be stable. The South American market for food grade salt should, however,
further grow in line with the population development there. The demand of the
chemical industry for salts for chemical use should continue to develop stably
in Europe as well as in North and South America.
K+S Group revenues likely to rise significantly in 2011
Following up the estimates in the outlook of the Financial Report 2010 and
against the backdrop of the better-than-expected demand and price trends during
the first nine months of 2011, revenues of the K+S Group are likely to rise
significantly in financial year 2011 against the previous year. A figure of
between EUR 5.00 billion and EUR 5.25 billion (previously: EUR 5.0 billion to
EUR 5.3
billion; previous year: EUR 4.63 billion) seems realistic from
today´s
perspective. While in the Potash and Magnesium Products business segment, we
are assuming a significant increase in revenues and in the Nitrogen Fertilizers
business segment (without COMPO) a strong one, in the Salt business segment we
expect a stable revenue trend at the high level of the previous year. The
revenue forecast assumes an average US dollar exchange rate of 1.40 USD/EUR
(previously: 1.42 USD/EUR; 2010: 1.33 USD/EUR).
Operating earnings likely to rise strongly in 2011
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. For the EBITDA of the K+S
Group, a figure of EUR 1.15 billion to EUR 1.25 billion (previously: EUR 1.15
billion
to EUR 1.30 billion; previous year: EUR 953.0 million) and operating earnings
EBIT
I of between EUR 0.95 billion and EUR 1.00 billion (previously: EUR 0.95 billion
to EUR
1.05 billion; previous year: EUR 0.71 billion) is thus likely to be
achieved.
This can be attributed to the strongly rising earnings in the Potash and
Magnesium Products and Nitrogen Fertilizers business segments. However, the
operating earnings of the Salt business segment will probably decline
moderately. On the basis of the average US dollar estimate of 1.40 USD/EUR for
2011 (previously: 1.42 USD/EUR; previous year: 1.33 USD/EUR) and the hedging
instruments used, there is a significantly positive currency effect, which more
than makes up for the currency-related revenue losses. The forecast is 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: about 7 million tonnes);
sales volumes of a good 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. For the fourth quarter, this, as
customary, assumes the average of multi-year de-icing salt sales
volumes.
Group earnings after taxes will probably improve strongly in 2011
The adjusted Group earnings after taxes of the continued operations should also
increase strongly in 2011 in line with the development of operating earnings
and reach a value of between EUR 650 million and EUR 690 million (previously:
EUR 650
million to EUR 720 million; previous year: EUR 447.8 million). This
would
correspond to adjusted earnings per share of the continued operations of about
EUR 3.40 to EUR 3.60 (previously: 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 of
EUR
550 million to EUR 590 million (previously: EUR 560 million to EUR 630
million;
previous year: EUR 445.3 million) are to be assumed. This would correspond
to
adjusted earnings per share of about EUR 2.90 to EUR 3.10 per share
(previously: EUR
2.95 to EUR 3.30; previous year: EUR 2.33). This estimate 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 27% (previously: 26% to 27%; 2010: 26.2%).
Forecast for 2012: Continued high global potash sales volumes expected
For 2012, the K+S Group expects global potash sales volumes of at least 60
million tonnes (2011: 58 to 60 million tonnes expected). The estimate is based
primarily on a continued level of prices for agricultural raw materials which
is attractive for the earnings prospects of the agricultural sector.
The positive development of demand should continue in 2012 in the case of
straight nitrogen fertilizers and complex fertilizers too.
In this respect, for 2012, sales volumes are expected to be on their multi-year
average level in the case of both the European and North American markets for
de-icing salt. After an above-average demand in Europe and on the East Coast of
the United States in the first quarter of 2011, the sales volumes of de-icing
salt should correspondingly decrease to a normal level again in the first
quarter of 2012. The consumption of food grade salt and industrial salt in
Europe as well as North and South America will probably be stable in 2012. The
demand of the chemical industry for salt for chemical use should rise
moderately.
Stable revenue development and high earnings level likely
The currently omnipresent uncertainty regarding the future economic development
of the global economy has prompted K+S to be more cautious in respect of its
estimate for 2012 and thereby to take the lower visibility into account.
Revenues for 2012 should develop stably in comparison to the high figure for
the previous year. While in the Potash and Magnesium Products business segment
a tangible increase in revenues can be assumed, in the Nitrogen Fertilizers
business segment a stable development of revenues and in the Salt business
segment moderately lower revenues will probably be seen. As for the costs of
the K+S Group, moderately rising personnel and significantly rising energy
costs are confronted with stable material costs, depreciation and amortisation
as well as tangibly declining freight costs. In total, a largely stable cost
level can therefore be expected. As far as operating earnings EBIT I of the K+S
Group and adjusted Group earnings after taxes are concerned, from today's
perspective, there are good opportunities for the coming year to keep them at
their respective high levels of 2011.
In the Potash and Magnesium Products business segment, a slightly improving
earnings development and in the Nitrogen Fertilizers business segment a largely
stable one should be observed. On the other hand, the operating earnings of the
Salt business segment will probably decline significantly on the basis of a
normal winter business that follows the long-term average of historical de-
icing salt volumes. This estimate for the coming year is based on a number of
factors including the following:
continued attractive agricultural prices;
tangibly higher average prices and an expected sales volume of about 7
million tonnes in the Potash and Magnesium Products business segment;
at about 22 million tonnes on average and in comparison to the record
sales volumes of the previous year tangibly lower sales volumes of
crystallised salt (of which de-icing salt: a good 12 million tonnes);
a US dollar exchange rate of 1.40 USD/EUR and a negative currency result;
a largely unchanged financial result;
a slightly higher adjusted Group tax ratio of 27% to 28%.
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 (Q3/2011), the K+S Q3/2011 Facts & Figures
(English), a video webcast by Norbert Steiner, Chairman of the Board of
Executive Directors of K+S Aktiengesellschaft, about the third quarter of 2011
and up-to-date press photos relating to the K+S Group are available under
http://www.k-plus-s.com/2011q3en.
We are offering a conference call for investors and 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/2011q3en) or by phone under +49-69-71044-5598. The conference will be
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.
|K+S Group at a Glance | |Q3 | |Q3 | |
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|Q3/2011 | |July - | |July - | |
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| | |Sep | |Sep | |
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| | | |20| |20|
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|Earnings before income taxes, adjusted1) | |184.6 | |65.7 | |+181.0
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|K+S Group at a Glance | |9M | |9M | |
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|Jan - Sep/2011 | |Jan - Sep| |Jan - Sep| |
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| | | |11| |10|
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|Earnings before income taxes, adjusted1) | |714.4 | |414.5 | |+72.4
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|Employees as of 30 September (number) | |14,433 | |14,197 | |+1.7
|
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Further inquiry note:
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
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
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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: official dealing/prime standard: Frankfurt, regulated dealing:
Stuttgart, München, official dealing: Berlin, Hamburg, Hannover
language: English