K+S expects tangible increase in 2017

• Revenues in 2016: €3.5 billion.
• Operating earnings (EBIT I) 2016: €229 million.
• Lower potash prices, production limitations at the Werra plant and a mild winter negatively affected earnings in 2016.
• Legacy: first tonne of potash still expected in 2Q17.
• Outlook: tangible increase in EBIT I in 2017.
• Medium-term target confirmed: EBITDA of approximately €1.6 billion in 2020.

“Last year, a strong salt business stood in contrast to the considerable challenges in the Potash and Magnesium Products business unit. This proved both the coherence of our two-pillar strategy and the strength of the K+S Group. Despite adverse conditions, we managed to achieve operating earnings of €229 million,” said Chairman of the K+S Executive Board Norbert Steiner during today’s press conference on the company’s financial statements.

“This year, production from our important Werra potash plant will still be impacted by the limitations outlined in the deep-well injection permit. Assuming average weather conditions for the rest of the year, the K+S Group’s operating earnings should nevertheless increase tangibly this year. From 2018 onwards, the situation at the Werra plant will improve significantly, because we will further decrease the wastewater volume by roughly 20% by commissioning the new KCF facility,” reported Steiner.

Revenues and earnings

In the 2016 fiscal year, revenues decreased by approximately 17% to €3.5 billion (2015: €4.2 billion). The decrease is mainly due to a lower average price level in the potash and magnesium products business unit and the severe production limitations at the Werra potash plant.

The operating earnings (EBIT I) of the K+S Group decreased significantly to €229 million from €782 million compared to the same period in the previous year. Savings from the ‘Fit for the Future’ programme and the strong non de-icing salt business counteracted this development. Adjusted Group earnings after taxes totalled €131 million in the 2016 fiscal year, as compared to €542 million in 2015.

The Board of Executive Directors and Supervisory Board intend to propose a dividend of €0.30 per share at the Annual General Meeting.

Legacy

In the meantime, construction work at the new Legacy potash plant in Canada has largely been finished, with the exception of the area affected by the damage in July 2016. The plant is connected to the railway network of Canadian Pacific, and the loading terminal in Vancouver Harbour is almost complete as well. The first tonne of potash is still expected to be produced at Legacy in 2Q17. K+S still assumes it will be able to achieve a production capacity of two million tonnes by the end of 2017. From the present point of view, the budget of approximately €3.1 billion planned back in 2013 will be met.

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Outlook for 2017

Revenues (2016: €3.5 billion), operating earnings EBITDA (2016: €519 million) and EBIT I (2016: €229 million) for the K+S Group are expected to increase tangibly in the 2017 fiscal year as compared to the previous year’s values. However, possible production limitations during longer low-water periods in the Werra may lead to significant deviations from this assessment.

Assuming average weather conditions for the rest of the year, significantly higher sales volumes in the Potash and Magnesium Products business unit (2016: 6.1 million t) is anticipated. The average price should increase slightly this year (2016: € 253/t).

Sales volumes in the Salt business unit should be moderately higher this year (2016: 19.4 million tonnes) and operating earnings should also increase tangibly.

Read the article online at: https://www.worldfertilizer.com/nitrogen/16032017/ks-expects-tangible-increase-in-2017/