K+S Aktiengesellschaft. Press and Analyst Conference. on 17 March in Frankfurt am Main. Speech by Dr. Ralf Bethke,

Transcription

1 Experience growth. K+S Aktiengesellschaft Press and Analyst Conference on in Frankfurt am Main Speech by Dr. Ralf Bethke, Chairman of the Board of Executive Directors The spoken word is binding

2 - 2 - Welcome K+S Group Welcome! 24 Annual Financial Statements Presentation K+S Aktiengesellschaft Frankfurt am Main Experience growth. Ladies and Gentlemen, We are delighted that you have come here today for the presentation of the K+S Group s 24 annual financial statements. Mr Steiner and I will comment on the course of business in 24 as well as on important financial data. In addition, we want to describe the key trends in our areas of business for 25. We will be glad to answer any questions you may have at the end of our comments. Incidentally, our new annual report can be found on our homepage as of today. The printed version will be available at the beginning of April.

3 - 3 - Slide 1 - Historic Highs Attained K+S Group Historic Highs Attained million % esco 62% esco Change Revenues 2, , % Earnings before interest and taxes (EBIT) % Net income % Net income per share ( ) % Dividend per share ( ) * % * proposed K+S Group 1 The K+S Group achieved historic highs for revenues and earnings in 24. Revenues rose by almost 2.6 billion and surpassed previous year's figure by about 13%. This increase in revenues was mainly due to price increases as well as to the inclusion of all of esco after the remaining 38% interest in it were acquired last year. Higher volume also helped to more than offset currency-related decreases. The Potash and Magnesium Products business segment once again posted with about 42% the highest revenues of all the K+S Group s business segments, followed by COMPO, fertiva and Salt. In Europe, we achieved revenues of just under 2 billion, which means that the region accounts for about 77% of total revenues. Being a purely European producer thus far, Europe is particularly important for us as a region, because we can leverage advantages in transport costs. Revenues generated on overseas markets rose by 17% to about 6 million. At million, EBIT was 5 million or 44% up on last year s figure. The biggest increase was achieved by the Potash and Magnesium Products business segment. In addition to the good course of business, the successes yielded by our efficiency-

4 - 4 - enhancement programmes also contributed to this. With the exception of the COMPO business segment, which particularly suffered from high ammonia costs during the year under review, all other business segments posted strong earnings increases. The Salt business segment profited from the acquisition of the 38% interest in esco. In addition to the minimum tax introduced in 24, the increase in the trade tax for esco resulting from the acquisition of the 38% interest in esco caused the income tax burden to double. Net income for the year grew by just under 4% to 14.5 million. Earnings per share, on the basis of net income, amounted to 3.31 per share, up 89 cents or 37% year-on-year. This figure has been arrived at on the basis of an average 42.5 million no par value shares. Given the higher result and a favourable outlook, the Board of Executive Directors and Supervisory Board will propose to the Annual General Meeting that the dividend be increased by 3 cents to 1.3 per share for financial year 24. Mr Steiner will go into greater detail afterwards in his financial report. Ladies and Gentlemen, Let s take a look now on the development of our markets in 24.

5 - 5 - Slide 2 - Favourable Demand on Our Markets K+S Group Favourable Demand on Our Markets Above-average increase in worldwide potash demand, especially overseas Significant increase in fertilizer prices (potash, fertiva) COMPO professional markets achieve above-average growth European salt market in relatively robust shape; very good business with products for winter road clearance K+S Group 2 Last year, demand on the global potash market again showed an above-average increase, rising by about 1% to approximately 54 million tonnes of goods (about 31.3 million tonnes K 2 O). The main reason for this was continued robust demand in Asia as well as in North America and South America, while consumption in Western Europe only grew marginally. Eastern Europe, especially those states that have been members of the EU since May 24, saw demand pick up, although it is still on a relatively low level: We see there being further potential in the region. Because of the surprisingly steep increase in demand, prices for potash fertilizers rose significantly. Despite higher capacity, potash was in short supply worldwide; CIF prices reached an all-time high, partly due to higher see freight cost making itself felt. Prices for nitrogen fertilizers also reached a very high level as a result of strong demand and an increase in the price of the important raw material ammonia. While fertiva profited from this in terms of revenues, it was unable to pass on all the additional costs to the marketplace.

6 - 6 - COMPO s professional business developed satisfactorily in 24. Above-average volume growth was achieved in the Mediterranean region and in the young markets of South America. The market penetration of ENTEC, our nitrogen stabilizing special fertilizer, could also be further increased, thanks to a successful extension of the assortment. Although an increasing number of imitation products are appearing on the market, they have not been able to establish themselves so far. By contrast, 24 saw the COMPO consumer area adversely affected by a season marked by heavy rainfall as well as consumer restraint, especially in Germany, that extended across sectors. The Western European salt market was in robust shape overall. Our business consisting in the supplying of de-icing salt to winter road clearance services developed exceptionally well because of the winter weather conditions at the beginning and at the end of 24 as well as because of seasonal purchase business. Slide 3 - Strengthening Our Competitive Positions K+S Group Strengthening Our Competitive Positions Leading position in the European salt market enhanced (esco acquisition) New growth opportunities created in France (SCPA acquisition) Long-term securing of raw material supplies (esco, COMPO) Optimisation of distribution and logistics structures, e.g. - COMPO logistics platform in Spain coming on stream - new salt distribution organisation in Sweden K+S Group 3

7 - 7 - Ladies and Gentlemen, In 24, the K+S Group further consolidated its leading position as a supplier of speciality and standard fertilizers as well as of plant care and salt products. A milestone in this regard was the acquisition of all of esco with retroactive effect from 1 January 24. Herewith, we further enhanced our position as the market leader in the European salt market. By acquiring the fertilizer and granulation operations of French SCPA with retroactive effect from 1 January 24, we increased our presence among our customers in France. For K+S, this opens up new growth opportunities in Europe s most important agricultural market. esco has successfully completed the construction of two new caverns at the Harlingen site in the Netherlands to ensure a supply of raw materials over the long term. By acquiring Meiners AG, COMPO once again strengthened its supply base for the attractive potting soil business. The good transport links enjoyed by the new site at Gnarrenburg near Bremen offer important logistical advantages for serving the markets located in central Europe. We further optimised our distribution and logistics structures by means of two largerscale projects: COMPO has further improved service on the attractive Spanish market. At the end of 24, COMPO brought a new logistics platform for professional products close to Valencia on stream. COMPO is thus moving closer to its customers and opens up new growth opportunities in the entire Mediterranean region. Through esco Nordic, the Salt business segment has its own sales and distribution organization in Sweden since May 24. It is particularly active in supporting the winter road clearance service business.

8 - 8 - Slide 4 - Structures and Processes Optimised K+S Group Structures and Processes Optimised Potash: - Sylvinite extraction going into operation - Continued implementation of 1-point programme - Larger working hours flexibility / higher profit-sharing COMPO: - Optimisation and cost-cutting measures initiated fertiva: - Long-term partnership with BASF affirmed Salt: - Further rationalization in raw materials extraction Logistics: - Increased use of container shipment K+S Group 4 Internally, we have been continuously working on improving our structures and processes. In 24, measures designed to enhance our earnings capacity in a sustained manner were initiated and rapidly implemented in all business segments. The following were key projects in the Potash and Magnesium Products business segment: Sylvinite extraction at the rich section of the deposits on the Werra successfully went into operation in October 24. From this year onwards, we expect the higher capacity of 25, tonnes to result in lower production costs as well as a sustained improvement in earnings of about 2 million per year. The continued implementation of the 1-point programme, which already started in 23, has also contributed to better earnings for the potash segment. Most of the measures relating to production and administration have been successfully implemented in the meantime.

9 - 9 - Since September 24, we have introduced greater flexibility on working hours in the potash area at the same time giving employees a realistic chance of achieving a greater incentive-based share of profits. This was an important step towards enhancing our international competitiveness. In COMPO too, we initiated a series of projects aimed at optimisation and costcutting. The focus is on measures which mainly strengthen consumer activities in Germany and France, for example, the harmonizing of packaging, the redefining of sales areas as well as greater flexibility on working hours. In the case of fertiva, we signed a long-term partnership declaration with BASF in June 24. Both parties have affirmed their intention of continuing their strategic partnership in the fertilizer business beyond 214. The distribution of earnings between K+S and BASF was restructured retroactively as of 1 January 24. K+S can now participate in the success of fertiva to a greater extent without changing its risk position. In the Salt business segment, we have pushed forward further rationalization measures in the extraction of raw materials. Thus, new technologies were introduced underground at the Borth salt plant, resulting in improved performance and consequently, in cost savings. Here, we benefited from the experience at other plants within the K+S Group. In the logistics field, we have increased use of containers to counteract the effects of steep increases in the cost of sea freight for bulk fertilizers; this mainly applies to the supplying of Asian markets. In 24, almost 36, containers were dispatched for the K+S Group; the freight cost advantage was considerable. Now, I would like to outline the individual business segments:

10 - 1 - Slide 5 - Potash and Magnesium Products Business Segment 24 Business Trends / 25 Outlook Potash and Magnesium Products Business Segment 24 Business Trends / 25 Outlook million 1, , ,5 +7% 1, % 59.5 Volume growth for speciality and standard fertilizers Significant price increases Efficiency enhancement taking effect 25 Outlook: Again higher revenues in relation to good preceding year Increase in EBIT Revenues EBIT K+S Group 5 The Potash and Magnesium Products business segment posted revenues of 1,73 million for financial year 24, which represents an increase of about 7% compared with 23. Volume increases for speciality and standard fertilizers as well as significant price increases, especially overseas, more than made up for currencyrelated revenue decreases resulting from a lower US dollar. EBIT reached 59.5 million and thus surpassed last year's figure by 88%. This strong increase was due to a very good trend in demand as well as to the numerous steps that we have taken to enhance efficiency. For 25, we expect the potash business mainly due to the high demand to achieve a further increase in revenues as long as there is no significant deterioration in global economic conditions. Despite rising energy and freight costs, earnings should from there increase once again as a result of the price increases for the first half of 25 provided that the US dollar exchange rate does not require any significant follow-up hedging to maintain the levels at which exchange rates are

11 hedged. The new sylvinite capacity as well as greater progress in implementing costcutting measures should bolster earnings growth. Slide 6 - COMPO Business Segment 24 Business Trends / 25 Outlook COMPO Business Segment 24 Business Trends / 25 Outlook million 6 +7% 3 High demand for ENTEC and speciality mineral fertilizers % 21.7 Moderate consumer business 3 15 Higher acquisition costs for raw material ammonia Outlook: 1 5 Revenues and earnings improve Revenues EBIT K+S Group 6 The COMPO business segment saw revenues for the year improve by 7% to 526 million. The increase is attributable to the good trend in the professional business, especially to the further high demand for ENTEC and speciality mineral fertilizers. At 21.7 million, COMPO business segment EBIT was 15% down on last year. The main reason for this was the moderate pace of the consumer business in Germany as a result of wet, cold weather and substantial consumer restraint. In addition, higher acquisition costs for the raw material ammonia served to reduce earnings. The additional costs could not be offset by price increases in the professional business alone. For 25, we envisage a slight increase in revenues over 24. Both the consumer and the professional areas should contribute to this. In the consumer segment, we

12 expect a slight increase in the large markets of Europe following an economicially disappointing 24. Revenue growth in the professional area should mainly come from stabilised fertilizers and speciality mineral fertilizers. We estimate that the price of ammonia will be lower this year and that should be another reason why EBIT should increase again. The efficiency-enhancement measures already introduced should also provide support in this regard. Slide 7 - fertiva Business Segment 24 Business Trends / 25 Outlook fertiva Business Segment 24 Business Trends / 25 Outlook million % +56% Significant price increases in all product groups Earnings-related larger focus on European markets (freight costs, US dollar) Modified earnings arrangement with BASF Revenues EBIT 25 Outlook: Revenues and EBIT on similar level to 24 K+S Group 7 fertiva s business benefited from good overall demand for nitrogen fertilizers. However, as a result of the sharp rise of the price of ammonia, prices of nitrogen fertilizers reached a very high level in financial year 24. In all product groups, we were able to implement price increases that were in part significant, but only reflected the higher costs of raw materials. The 8% rise in fertiva revenues for 24 to 514 million was solely due to price factors.

13 Some overseas regions became less interesting for fertiva in 24 as a result of higher freight costs as well as the weak US dollar, and that is why we have increased our focus on European markets. fertiva EBIT rose by 3.7 million to a satisfying 1.3 million. This increase is attributable to the modified earnings arrangement with BASF. For 25, we expect fertiva revenues and earnings to be of a similar size as in 24. Slide 8 - Salt Business Segment 24 Business Trends / 25 Outlook Salt Business Segment 24 Business Trends / 25 Outlook million % +93% Inclusion of all of esco Very good de-icing salt business Slight volume and price increases in other segments Outlook: With very good start, groundwork laid for good 25 * 62% esco * * Revenues EBIT Revenues and EBIT could approximate previous year's excellent levels K+S Group 8 In the Salt business segment, revenues for 24 reached 358 million and were thus 74% up on the previous year's level. While only 62% of esco was consolidated in 23, this increased to 1% from 24 onwards. Most of the growth in revenue can be attributed to this consolidation effect otherwise the increase in revenues would have amounted to 8%. The increase mainly stemmed from the very good de-icing

14 salt business. We were able to gain slight volume and price increases in other product segments. We achieved EBIT of 52.4 million, which represents an increase of 93% year-onyear. This high increase was mainly due to the consolidation effect; In addition, further synergies as well as the absence of the IT integration costs that were still being incurred in 23 had a favourable effect. We expect the market trend to remain unchanged in 25. Having started the year very well in de-icing salt as a result of weather conditions, esco has already laid the groundwork for another very good year 25. Revenues and EBIT could be in the region of last year's excellent level. Slide 9 - Waste Management and Recycling Business Segment 24 Business Trends / 25 Outlook Waste Management and Recycling Business Segment 24 Business Trends / 25 Outlook million % Revenues % EBIT Volume increases from special projects in waste disposal Underground re-utilisation also sees good volume business Stable price levels (disposal and re-utilisation) 25 Outlook: Slight decline in revenues and EBIT compared with high 24 levels K+S Group 9

15 saw the Waste Management and Recycling business segment profit from volume increases, especially as a result of two special waste disposal projects. In addition, underground re-utilisation volume also increased. The higher volume caused revenues to rise by 8% to 59 million. The EBIT generated for 24 almost doubled to 8.1 million. The reasons for this strong increase were an increase in volume in the case of underground disposal as well as waste re-utilisation. Price levels in 24 remained stable both for underground disposal and re-utilisation. We expect revenues for 25 to be down slightly on the preceding year, which benefited from special projects involving the clean-up of pre-existing environmental contamination. No similar projects have been scheduled thus far. We want to at least partially compensate for this drop in volume by stepping up our marketing activities elsewhere in Europe. In line with the trend in revenues, we expect a slight decline in EBIT for 25.

16 Slide 1 - Services and Trading Business Segment 24 Business Trends / 25 Outlook Services and Trading Business Segment 24 Business Trends / 25 Outlook million % +27% Lower handling services for third parties (essentially grain) Non-existence of IT services for esco (full consolidation) Increase in internal logistics services and more container business 25 Outlook: Revenues EBIT Revenues and EBIT on preceding year's good levels K+S Group 1 For the year under review, the Services and Trading business segment posted revenues of 52 million, down 9% on the previous year. The revenues only comprise services rendered to third parties, while revenues generated internally and deriving from services provided to K+S Group companies are not included in this figure. The decrease in sales to third parties is attributable to a lower volume of grain handling as well as the non-existence of IT integration services for esco. The latter were still reported as sales to third parties in 23 for the 38% interest held in esco by Solvay. By contrast, those services rendered for the K+S Group and not included in the consolidated revenues increased slightly. The trend in earnings was clearly positive: At 21.6 million, EBIT exceeded with 27% last year's figure. This was mainly due to the greater contribution to earnings that came from internal logistics services. In addition to higher handling volume for the potash business in general, increased business involving the forwarding of goods by container generated additional contributions to earnings.

17 We expect the course of business to remain stable for the Services and Trading business segment in 25. Revenues and earnings should once again attain the good levels of 24. Slide 11 - Employees Trainee Ratio on Very High Level Once Again K+S Group Trainee Ratio on Very High Level Once Again Dec Dec. K+S Group Total * Trainees Trainee ratio 1, % 1, % * core workforce + trainees + temporary employees, adjusted for part-time work; 24: 1% esco; 23: 62% esco K+S Group 11 Ladies and Gentlemen, I would now like to take a look at the K+S Group s people. As of 31 December 24, the K+S Group employed 1,988 people worldwide. This are 434 employees more than at the corresponding date last year. The increase is attributable to the inclusion of all of esco as well as the acquisition of Meiners AG. At K+S, we train about 6 young people in 22 occupations. At 5.3%, our trainee ratio is on a very high level once again.

18 Slide 12 - Investing in Growth Projects K+S Group Investing in Growth Projects million Key projects in 24: 1% esco 62% esco Development of new potash deposit (Sylvinite project) Frisia brine field expansion COMPO logistics platform in Spain K+S Group 12 Let's now turn to capital expenditure. With 125 million, we invested somewhat less in 24 than in the previous year. In addition to a large number of smaller projects connected with maintenance and securing production, the following were the main investment projects aimed at providing support for our growth. the development of the new potash deposit (Sylvinite project), the expansion of the Frisia brine field in the Salt business segment and the completion of the new COMPO logistics platform in Spain.

19 Slide 13 - K+S Share Gains Significantly K+S Aktiengesellschaft K+S Share Gains Significantly Index: 3 December 23 = K+S +12% Jan. Apr. Jul. Oct. MDAX DAX Jan. +29% +11% Apr. Source: Bloomberg; Beginning of March 25 K+S Group 13 The K+S share has significantly outperformed the DAX and the MDAX since the end of January 24. The very good K+S quarterly results boosted this trend. Positive analyst studies about K+S as well as a general improvement in the image enjoyed by and assessment of the international raw materials and fertilizer industry on the capital market encouraged the satisfying trend. In December 24, the K+S share reached a price of this represented an increase of about 8% on the beginning of the year. As you all know, this trend has continued into the current year.

20 - 2 - Slide 14 - Outlook for 25 Remains Favourable K+S Group Outlook for 25 Remains Favourable Good trends in development on almost all of our markets Continuous improvements in our production processes / structures Intensified search for further acquisitions and cooperation arrangements Further increase in revenues and EBIT in 25 K+S Group 14 Ladies and Gentlemen, What is our assessment of how the K+S Group will develop in 25? As a result of the good trends in development on almost all of our markets, we are very confident that we will be able to continue to pursue our growth course successfully as long as there is no profound deterioration in global economic conditions, which also applies to the US dollar. In addition, we will have to wait and see what new rules the EU will develop to protect against unfair competition with potash products from Russia and Belarus on EU markets. We are confident that we will also have adequate protection against unfair competition in the future. By means of continuous improvements to our production process and structures, we will further enhance our international competitiveness.

21 We will step up the search for further acquisitions and cooperation arrangements. However, we will not lose sight of our basic goals, which characterize our business model: The realization of further synergies for the K+S Group, both on markets and internally, in order to achieve cost improvements in all our business segments. We see there being continued opportunities for healthy growth and attractive results. In this respect, our financial strength gives us opportunities to act that we will use prudently. Given current conditions, we assume that business will continue to develop positively in 25 and that we will achieve further increases in both revenues and EBIT. Thank for your attention. Mr Steiner will now comment on key financial data for 24.