K+S Aktiengesellschaft Roadshow Hamburg 8 June 2016 Thorsten Boeckers, Head of Investor Relations
Content A 1 2 B C K+S Unique Strategic Position Potash and Magnesium Products Salt Current Trading Outlook K+S Group 2
Investment Case K+S Group Potash and Magnesium Products Business Unit Salt Business Unit Complementary Activities Broad product portfolio Geographic reach Positioned for growth K+S Group 3
Our Products Potash and Magnesium Products Salt Industrial products 10% 6% 8% Food processing 14% Consumer Specialties 44% 16% Salt for chemical use Industrial KCl (MOP) 46% 56% De-icing in % of sales volumes, FY 2015 K+S Group 4
From Capex to Cash Capex Phase Mid-term fundamentals of the potash business remain intact Cash Phase 2020 Net debt 2.4 billion Leverage (LTM) 2.5x CapEx (2015) 1.3 billion FCF Negative EBITDA (2015) 1.1 billion Enhancing portfolio of higher yielding products Management Agenda Opening Legacy this summer production of 1 st ton end of 2016 Successful implementation of Salt 2020 Strategy Managing environmental challenges particularly in Germany Keeping cost discipline above and beyond Fit for the Future Net debt < 2.0 billion Leverage 1.0-1.5x CapEx Maintenance FCF Positive EBITDA ~ 1.6 billion K+S Group 5
Content A 1 2 B C K+S Unique Strategic Position Potash and Magnesium Products Salt Current Trading Outlook K+S Group 6
Potash and Magnesium Products Long-Term Dynamics Positive for Fertilizer Less arable land but more protein consumption per capita Jahr 1960 2010 2050 Global population development Each year additional 80m people need to be fed this equals to the population of Germany 3.0 billion 6.9 billion 9.7 billion Arable Land per capita Available arable land per capita will decrease at the same time 4.300 m 2 2.100 m 2 1.800 m 2 Protein per capita 60 g/ day 80 g/ day 130 g/ day 1) By 2050 an expanded world population will be consuming two thirds more animal protein than it does today In 2050, only roughly a quarter of a soccer field will be available to feed one person year round - 80 percent of future growth in crop production will come from yield advancements driven by balanced use of fertilizers Sources: UN, World Population Prospects, 2012 Revision, UNDP, 2013; FAOStat 2014 1) FAO 2014 - forecasts based on the expected increase in animal protein K+S Group 7
Raw Salt Potash and Magnesium Products Utilizing Entire Range of Minerals in Complex Deposits Mineral extraction K+S product offering SOP Fertilizer Health Care & Nutrition Industrial Applications Residue 63.5% Kieserite Industrial products 0.7 Health Care & Nutrition Industrial potash Kieserite 20.4% Korn-Kali Magnesia-Kainit KCL (MOP) 3.1 6.8 Specialties 3.0 Kieserite Korn-Kali KCl 16.1% MOP SOP e.g. Neuhof 2014 Basis: 2015 Sales volumes in million tons Reducing specific costs of our MOP products $$$ Extending our product offering K+S Group 8
Potash and Magnesium Products Leading Position in Europe Europe Asia South America Other regions K+S Group 9
Basis: Q1 2012 Basis: Q1 2014 Potash and Magnesium Products Our Unique Portfolio Makes Us More Robust MOP gran. Europe vs. Brazil (Source: FMB) US$/t 600 500 400 300 200 Europe (, Granular, cfr) Brazil (US$/t, Granular, cfr) 2011 2012 2013 2014 2015 2016 /t 600 500 400 300 200 K+S average selling price versus selected peers K+S K+S Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 K+S Group 10
Legacy Project Strengthening our Global Presence China India South East Asia North America Expanding our current production portfolio in Germany with a North American production site Second source supplier Securing a good asset base with competitive production costs Sales and distribution through existing distribution structures of the K+S group Exclusive outline agreement with Koch Fertilizer about supply and sales of Potash fertilizers in the US Regional growth projects in China and SEA Flexible multi-product strategy Located in the Heart of Saskatchewan s Potash-Rich Basin South America Regina Two additional potash permit areas in the Esterhazy potash region K+S Group 11
Port Vancouver Legacy plant Legacy Project On Time and Budget ~ 90% of total CapEx spent Total CapEx of CAD 4.1 billion 2013 2014 2015 2016 2017 K+S Group 12
~90 WACC Legacy Project Valuation Implied Value Per Share ( ) Terminal growth rate 0% 2% 7% ~ 21 8% ~ 11 Volume ramp-up (m metric tons)/ /costs per ton (CAD) Conservative price assumptions for Legacy based on MOP gran. Brazil Sustaining capex approximately CAD 100 million p.a. from 2018 2017 2018 2019 2020 2021 2022 2023 ~1 ~2 ~2.1 ~2.3 ~2.4 ~2.6 ~2.9 Sales volumes (m metric tons) Production costs Logistics costs Mining taxes/ royalties K+S Group 13
Content A 1 2 B C K+S Unique Strategic Position Potash and Magnesium Products Salt Current Trading Outlook K+S Group 14
Salt Long-Term Dynamics in Salt Demand Demand driven by Product category Winter weather conditions De-Icing Infrastructure development Consumer Increasing standard of living Population growth Food processing Economic growth and industrialisation Industrial Urbanization Chemical Low single-digit demand growth p.a. to 2018 1 1 Source: Roskill K+S Group 15
Salt Inevitable for life De-Icing Consumer Food processing Industrial Chemical Main Applications: Winter road maintenance services Commercial users Private households Main Applications: Table salt Dishwasher care Water softening Pool chlorination Body care Main Applications: Food processing industry Baking industry Condiment and preservative agent Main Applications: Water treatment Drilling fluids Animal feed Infusion, dialysis solutions Pharmaceuticals Preserving of fish Dyeing works Leather treatment Main Applications: Chemical industry Chlor-Alkali processes ( PVC) Polycarbonates, MDI (Isocyanat) ( plastics, synthetic resin) Synthetic Soda Ash ( glass) K+S Group 16
Salt Unrivalled Global Production Network Evaluating several opportunities that will enable K+S to grow in Asia Competitive edge: Unrivalled global production network More than 30 assets on 3 continents allow close proximity to customers in a business that is highly freight-cost sensitive Ensuring close proximity to customers Broad range of products due to variety of production methods Best in class supply chain assets and competence Industry best cost production in Chile K+S Group 17
Salt Diverse Regional and Product Portfolio Salt for chemical use Normalized Revenue Distribution Food processing Industrial Consumer K+S Group 18
Presence in Attractive De-Icing Markets Eastern Canada Scandinavia Great Lakes US East Coast Central Europe Indicative regional strength of winter 2010 2011 2012 2013 2014 2015 Europe North America K+S Group 19
Salt Salt 2020 Strategy On Track Priority areas GROWTH Market share growth New segments New regions EFFICIENCY Fit for the Future Business and technical processes Supply chain and distribution network improvements Expected EBIT development CULTURE Safety first! Remove silo thinking Transparency/trust High performance and engaged workforce 211 62 118 Salt 2020 Launched 173 266 250+ Normalized Equals more than 400 million EBITDA 2011 2012 2013 2014 2015 2020e Actual results K+S Group 20
Salt Expansion into Asia-Pacific: Project Launch in Australia Component of Salt 2020 strategy Initial focus on obtaining necessary permits CapEx estimate of around 225 million Estimated production capacity of 3.5 million tons p.a. Main customers in the chemical industry in Asia Possible production start in 2022 We want this project to give a boost to our planned expansion into the Asian markets. We see big potential there, and want to sustainably participate in the expected growth there in the future. The purchase of the licenses is the foundation to achieve this. Mark Roberts, CEO Salt K+S Group 21
Content A 1 2 B C K+S Unique Strategic Position Potash and Magnesium Products Salt Current Trading Outlook K+S Group 22
P&L million FY/14 Q1/15 Q2/15 Q3/15 Q4/15 FY/15 Q1/16 Revenues 3,822 1,377 914 891 993 4,175 1,096 EBIT I 641 317 179 132 154 782 218 t/o insurance gain 36 0 0 0 0 0 0 EBIT I w/o insur. gain 605 317 179 132 154 782 218 Margin 16% 23% 20% 15% 16% 19% 20% Financial result -126-40 -14-7 +27-34 -13 EBT, adjusted 515 276 166 125 181 748 205 Tax rate, adjusted 29% 28% 28% 29% 25% 28% 28% Net income, adjusted 367 198 119 89 136 542 148 EPS, adjusted 1.92 1.04 0.62 0.46 0.71 2.83 0.77 The adjusted key figures only include operating forecast hedges of the respective reporting period in EBIT I. In addition, related effects on deferred and cash taxes are also excluded. K+S Group 23
Cost Discipline Will Remain High million 30 >150 >180 2013 2014 2015 2016 on track Fit for the Future on track More than 2/3 of total aspirations achieved Measures implemented will continue beyond 2016 with full effects until 2018 Further top-down measures beyond Fit for the Future initiated Effects coming through in 2017 and 2018 K+S Group 24
Cash Flow and Balance Sheet million FY/14 Q1/15 H1/15 9M/15 FY/15 Q1/16 Operating cash flow 707 301 433 630 669 294 - Investing cash flow (pre sale/ purchase of securities) -1,013-203 -532-894 -1,305-243 Adjusted free cash flow -306 98-93 -264-636 50 CapEx 1,153 200 555 905 1,279 280 Net debt (-) -1,626-1,602-2,019-2,224-2,400-2,367 t/o Net financial debt (-) -591-440 -811-1,005-1,364-1,315 Net debt/ EBITDA 1.8 1.6 2.0 2.1 2.3 2.5 Equity ratio 51% 52% 52% 51% 52% 52% K+S Group 25
Potash and Magnesium Products million FY/14 Q1/15 Q2/15 Q3/15 Q4/15 FY/15 Q1/16 Revenues 1,884 608 501 471 511 2,091 461 EBIT I 489 183 144 92 127 546 102 t/o insurance gain 34 0 0 0 0 0 0 EBIT I w/o insurance gain 455 183 144 93 127 546 102 Margin 24% 30% 29% 20% 25% 26% 22% t/o Legacy OpEx -37-13 -20-15 -20-68 -19 Avg. selling price ( /t) 274 314 310 310 292 307 272 Sales volumes (million tons) 6.87 1.94 1.61 1.52 1.75 6.82 1.69 FY/14 Q1/15 Q2/15 Q3/15 Q4/15 FY/15 Q1/16 Costs per ton (1,2,3) 208 212 209 239 208 217 201 (1) (Revenues EBIT) / Sales volumes (2) Excl. anticipated insurance payment (3) Excluding OpEx Legacy K+S Group 26
Salt million FY/14 Q1/15 Q2/15 Q3/15 Q4/15 FY/15 Q1/16 Revenues 1,779 727 374 382 442 1,925 595 EBIT I 173 142 43 43 39 266 123 Margin 10% 20% 11% 11% 9% 14% 21% Sales volumes (million tons) 23.6 9.1 3.6 3.8 4.7 21.1 7.1 De-icing 14.4 6.9 1.2 1.5 2.3 11.9 4.9 Non de-icing 9.2 2.2 2.4 2.3 2.4 9.2 2.2 Average selling prices ( ) De-icing 53 65 65 62 67 65 64 Non de-icing 104 119 120 124 118 120 122 K+S Group 27
Content A 1 2 B C K+S Unique Strategic Position Potash and Magnesium Products Salt Current Trading Outlook K+S Group 28
Guidance FY 2016: EBIT I Bridge million Assumptions (highlights) 782 Prices for MOP in overseas markets continue to stabilize. However, significantly lower average selling price expected in potash for FY 2016 Main effects: Potash volumes and prices Salt de-icing volumes Main effects: OpEx Legacy Higher D&A Incremental savings Impact of limited deep-well injection may be felt more in upcoming dry spring and summer season Mild winter may lead to lower de-icing sales volumes Actual 2015 Volume-/ price Other effects Fit for the Future FX 2016e We stick to our forecast of significantly lower operating results K+S Group 29
Dividend Increase of 28% for 2015 50% 45% 40% 35% 30% 25% 20% Target payout ratio of 40-50% 10% 8% 6% 4% Earnings-based dividend policy Payout ratio of 40 50% of adjusted net profit Dividend 2015: 1.15 per share (2014: 0.90 per share) 15% 10% 2% 5% 0% 2011 2012 2013 2014 2015 Payout ratio (lhs) Dividend yield (rhs) 2) 1) 0% 1) Based on year-end share prices K+S Group 30
IR Contact Details K+S Aktiengesellschaft Bertha-von-Suttner-Str. 7 34131 Kassel (Germany) E-Mail: investor-relations@k-plus-s.com Homepage: www.k-plus-s.com IR-website: www.k-plus-s.com/en/ir Thorsten Boeckers Head of Investor Relations Phone: +49 561 / 9301-1460 Fax: +49 561 / 9301-2425 thorsten.boeckers@k-plus-s.com Andrea Rach Investor Relations Assistant Phone: +49 561 / 9301-1100 Fax: +49 561 / 9301-2425 andrea.rach@k-plus-s.com Patrick Kofler Senior Investor Relations Manager Phone.: +49 561 / 9301-1885 Fax: +49 561 / 9301-2425 patrick.kofler@k-plus-s.com Matthias Jelden Investor Relations Manager Phone.: +49 561 / 9301-2204 Fax: +49 561 / 9301-2425 matthias.jelden@k-plus-s.com Martin Heistermann Investor Relations Manager Phone.: +49 561 / 9301-1403 Fax: +49 561 / 9301-2425 martin.heistermann@k-plus-s.com K+S Group 31
Forward-Looking Statements This presentation 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 should certain risks such as those referred to in the Risk Report of the Annual Report materialize, actual developments and events may deviate from current expectations. The Company assumes no obligation to update the statements, save for the making of such disclosures as are required by the provisions of statute. K+S Group 32
K+S Share WKN: KSAG88 ISIN: DE000KSAG888 Ticker-Symbols: Bloomberg SDF / Reuters SDFG K+S ADR CUSIP: 48265W108 ADR Ticker-Symbol: Bloomberg: KPLUY / Reuters: KPLUY.PK K+S Bond 06/2022 WKN: A1P GZ8 ISIN: DE000A1PGZ82 K+S Bond 12/2018 WKN: A1Y CR4 ISIN: XS0997941199 K+S Bond 12/2021 WKN: A1Y CR5 ISIN: XS0997941355 K+S Aktiengesellschaft Bertha-von-Suttner-Straße 7 34131 Kassel Germany Internet: www.k-plus-s.com Investor Relations phone: +49 (0)561 / 9301-1100 fax: +49 (0)561 / 9301-2425 email: investor-relations@k-plus-s.com Financial Calendar 2016: 11 Aug: Q2/16 10 Nov: Q3/16 K+S Group 34