K+S Confirms Significant Increase in Operating Earnings

Transcription

1 Kassel, K+S Confirms Significant Increase in Operating Earnings Salt business unit doubles earnings in the first nine months Robust development in the Potash and Magnesium Products business unit First nine months of 2015: EBIT I up 23% to 628 million Fit for the Future delivers expected results Legacy Project remains on schedule and within budget Outlook confirmed: Significant increase in EBIT I to million expected Attractive earnings forecast: EBITDA of ~ 1.6 billion in 2020 The K+S Group continued to grow in the first nine months of the current year. Revenues and operating earnings were up significantly compared with the same period in the previous year. The strong performance of our Salt business significantly contributed to this positive development, while our potash business has also proved robust. We therefore continue to expect a significant increase in operating earnings in 2015, says Norbert Steiner, Chairman of the Executive Board at K+S AG. Revenues in the First Nine Months up Significantly Over the Previous Year The K+S Group increased its revenues by 14% to 3.2 billion in the first nine months of Both business units profited mainly from higher average selling prices and a stronger US dollar versus the euro. At 891 million, revenues in the third quarter were up around 8% on the previous year s figure.

2 Page 2 of the press release K+S Confirms Significant Increase in Operating Earnings, Fit for the Future Delivers Expected Results K+S also continued its considerable efforts in the third quarter to make the cost and organisational structures of the entire Group more efficient. Savings projected for this period were fully achieved. Operating Earnings up 23% on Previous Year The operating earnings (EBIT I) of the K+S Group reached 628 million in the first nine months of 2015, thus exceeding the previous year s figure by around 23%. This improvement in earnings is due primarily to price increases in the Salt business unit in North America and the higher average prices in the Potash and Magnesium Products business unit compared with the same period in the previous year. Alongside this, the stronger US dollar versus the euro had a positive effect. The Salt business unit was able to nearly double its operating earnings (EBIT I) to 228 million in the first nine months. EBIT I in the Potash and Magnesium Products business unit were up by around 4% to 420 million in the first nine months. EBIT I of the K+S Group came in at 132 million in the third quarter, remaining roughly at the same level as in the previous year. Positive price and currency effects in the Salt business unit were able to more than offset declining sales volumes in the Potash and Magnesium Products business unit. Group Earnings up Significantly in Nine Month Period Adjusted Group earnings after taxes were 406 million after the first nine months of the current financial year, representing an increase of 36%. Adjusted earnings per share reached 2.12 in the same period compared with 1.56 in the previous year. Adjusted Group earnings after taxes amounted to 89 million (Q3/14: 76 million), resulting in a figure of 0.46 per share compared with 0.40 for the same quarter in the previous year.

3 Page 3 of the press release K+S Confirms Significant Increase in Operating Earnings, Investments Up as Planned The K+S Group invested a total of 905 million in the first nine months and thus roughly 24% more than in the same period in the previous year. Investments were up roughly 19% over the previous year to 350 million in third quarter of Most of the capital expenditure was in the Potash and Magnesium Products business unit. It applied mainly to the Legacy Project in Canada and to the package of measures for water protection in the Hesse-Thuringia potash district. Legacy Project Continues to Make Good Progress With regards to the construction of the new potash plant in Canada, the focus in the third quarter was on the construction of the steel structure of the factory, the installation of main components, starting work on the interior, including pipeline construction and initial electrical installations, as well as excavations for the rail link. Two further so-called pads were also commissioned for cavern development in the brine field. Pile foundations were laid and initial foundation work carried out in the port of Vancouver. K+S is still well on the way to commissioning the plant as scheduled from summer 2016 onwards thus meeting the investment budget of 4.1 billion Canadian dollars. Just under 70% of the total budget has been spent to date. Outlook for 2015: Significant Increase in EBIT I Confirmed K+S confirms its previous forecast of a significant increase in operating earnings. The Group is expecting an EBITDA of between 1.06 billion and 1.11 billion in spite of reduced availability of volumes in the Potash and Magnesium Products business unit and the current weakness in the potassium chloride market (2014: 896 million) and an EBIT I of between 780 and 830 million (2014: 641 million). K+S has trimmed the previously assumed top end of the range slightly for the two key figures (EBITDA: 1.14 billion/ EBIT I: 860 million) on account of the effects already described.

4 Page 4 of the press release K+S Confirms Significant Increase in Operating Earnings, The revenues of the K+S Group in the 2015 financial year should be significantly higher compared with the previous year (2014: 3.82 billion). At the same time, both business units should profit from a higher year-on-year average price level and positive exchange rate effects. K+S is expecting revenues of between 4.3 and 4.5 billion (previous forecast: 4.35 to 4.55 billion). Following a successful start, K+S continued with the 'Fit for the Future' programme. The sustained improvement of cost and organisational structures aims to increase the efficiency of production and administration and sales functions. Compared with the previous year, a slightly higher contribution to earnings for 2015 is expected (2014: roughly 120 million). Adjusted Group earnings after taxes will follow the trend in operating earnings and consequently also be significantly higher than in the previous year (2014: 367 million). Earnings are expected to come in at between 490 million and 540 million. Higher Dividend Likely for 2015 The earnings-related dividend policy is basically reflected in a payout ratio of 40% to 50% of adjusted Group earnings after taxes (including discontinued operations). Subject to the approval of the Annual General Meeting, the expectation of Group earnings that are significantly up on the previous year should be reflected in a correspondingly higher dividend payment for the 2015 financial year. Capital Expenditure Up as Planned The K+S Group s anticipated capital expenditure for 2015 is around 1.3 billion (2014: 1.2 billion). Expenditure connected with the Legacy Project accounts for most of this figure. A large amount of capital expenditure is still intended for the implementation of the package of measures for water protection in the Hesse-Thuringia potash district.

5 Page 5 of the press release K+S Confirms Significant Increase in Operating Earnings, Earnings Forecast for 2020 also Confirmed In spite of the current dip in the potash market, the medium-term growth trends remain intact. Based on this assumption, a gradual increase in EBITDA to around 1.6 billion (2014: 896 million) and average annual growth of at least 10% are expected by About K+S K+S is an international raw materials company. We have been mining and processing mineral raw materials for more than 125 years. The products we produce from these raw materials are used worldwide in agriculture, food and road safety and are important elements in numerous industrial processes. The nutrients potash and salt will accompany a major future trend: A constantly growing global population is becoming increasingly prosperous and striving for a more modern standard of living, which results in an increasing consumption of mineral raw materials. We satisfy the consequent growth in demand from production sites in Europe, North America and South America as well as through a global distribution network. K+S is the world s largest salt producer and one of the top potash providers worldwide. With more than 14,000 employees, K+S generated revenues of approx. 3.8 billion and EBIT of 641 million in the 2014 financial year. K+S is the raw material stock on the German DAX index. Visit to find out more about K+S. Information for Editors The Quarterly Financial Report and Facts and Figures for Q3/15 are available at A conference call will be held in English with Dr Burkhard Lohr, CFO of K+S Aktiengesellschaft, on at 10 am. Investors, analysts and press representatives as well as interested parties from the general public are invited to follow the conference via a live webcast or by phone on The conference is being recorded and will be made available as a podcast.

6 Page 6 of the press release K+S Confirms Significant Increase in Operating Earnings, A Capital Markets Day is being held on Thursday, 12 November 2015, starting at 10 am. The Chairman of the Executive Board at K+S Aktiengesellschaft Norbert Steiner, Chief Financial Officer Dr. Burkhard Lohr, members of the Executive Board Andreas Radmacher and Mark Roberts, and the CEO and President of K+S Potash Canada, Ulrich Lamp, will be in attendance. Investors, analysts and press representatives as well as interested parties from the general public are invited to follow the event via a live webcast The conference will be held in English, is being recorded and will be made available as a podcast. Contact Person: Press: Investor Relations: Michael Wudonig Thorsten Boeckers Phone: Phone: michael.wudonig@k-plus-s.com thorsten.boeckers@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 incorrect or should certain risks such as those referred to in the Risk Report materialise, actual developments and results may deviate from current expectations. The Company assumes no obligation to update the statements contained in this press release, save for the making of such disclosures as required by law.

7 Page 7 of the press release K+S Confirms Significant Increase in Operating Earnings, Overview of K+S Group Q3 Q3 Q Jul-Sept Jul-Sept Difference All figures in accordance with IFRS million million in % Revenues Potash and Magnesium Products Salt Complementary Activities Earnings before interest, taxes, depreciation and amortisation (EBITDA) Operating earnings (EBIT I) Potash and Magnesium Products Salt Complementary Activities Group earnings from continued operations, adjusted 1) Earnings per share from continued operations, adjusted ( ) 1) Capital expenditure (capex) 2) Adjusted free cash flow ) The adjusted key figures include the result from operating forecast hedges in the respective reporting period, which eliminates effects from fluctuations in the market value of the hedges as well as effects from the exchange rate hedging of future capital expenditure in Canadian dollars (Legacy Project). Related effects on deferred and cash taxes are also eliminated; tax rate in Q3/15: 28.6% (Q3/14: 28.6%). 2) Capital expenditure in or depreciation and amortisation affecting net income on property, plant and equipment, intangible assets, investment properties and financial assets.

8 Page 8 of the press release K+S Confirms Significant Increase in Operating Earnings, Overview of K+S Group 9M 9M January September 2015 Jan Sept Jan Sept Difference All figures in accordance with IFRS million million in % Revenues 3, , Potash and Magnesium Products 1, , Salt 1, , Complementary Activities Earnings before interest, taxes, depreciation and amortisation (EBITDA) Operating earnings (EBIT I) Potash and Magnesium Products Salt Complementary Activities Group earnings from continued operations, adjusted 1) Earnings per share from continued operations, adjusted ( ) 1) Capital expenditure (capex) 2) Adjusted free cash flow > 100 Employees as of 30 September 3) 14,378 14, ) The adjusted key figures include the result from operating forecast hedges in the respective reporting period, which eliminates effects from fluctuations in the market value of the hedges as well as effects from the exchange rate hedging of future capital expenditure in Canadian dollars (Legacy Project). Related effects on deferred and cash taxes are also eliminated; tax rate in Q3/15: 28.6% (Q3/14: 28.6%). 2) Capital expenditure in or depreciation and amortisation affecting net income on property, plant and equipment, intangible assets, investment properties and financial assets. 3) FTE: Full-time equivalents; part-time positions are weighted in accordance with their respective share of working hours.