K+S releases 3Q19 results
Published by Nicholas Woodroof,
- Revenues: +8% to €905 million (Q3/18: €840 million).
- EBITDA increases to €81 million (Q3/18: €36 million).
- Revenues and EBITDA after nine months up 8% and 27% respectively above previous year.
- No wastewater-related production standstills in the current year.
- Adjusted free cash flow (9M) up to €204 million (9M/18: - €60 million).
- Since fall 2019 sustained weak market environment for potassium chloride.
- Parallel to the 300 000 t curtailment of potash production announced in September, further maintenance measures will reduce production by another 200 000 t .
- EBITDA now expected to increase to about € 650 million (2018: €606 million).
- Still positive free cash flow for full year 2019 expected (2018: - €206 million).
"Overall, the third quarter proved positive. Our cash flow and EBITDA have improved significantly. However, because of the sustained weakening of the potash market, we have to further curtail our production too," said Dr. Burkhard Lohr, Chairman of the Board of Executive Directors of K+S AG. "Nevertheless, EBITDA should increase moderately this year compared with the previous year and the free cash flow should be positive. We are continuing to make good progress in the implementation of our Shaping 2030 strategy".
Higher revenues in both operating units
In the Europe+ operating unit, revenues in the third quarter increased by 9% to €621 million and EBITDA reached €67 million (Q3/18: €22 million). Revenues in the Americas operating unit were also up 4%, while EBITDA was 12% lower than in the previous year.
Development in the customer segments
Higher prices, positive currency effects and increased sales volumes compared with the prior-year period resulted in a 14% year-on-year increase in sales in the Agriculture customer segment. EBITDA also significantly increased to €46 million compared with the weak prior-year quarter (Q3/18: € - 8 million) due to improved wastewater management.
In the Industry customer segment, revenues in the third quarter increased by 6% year-on-year due to higher prices and positive volume and currency effects. EBITDA of €45 million was almost at the previous year's level (Q3/18: € 47 million).
Outlook 2019: moderate increase in EBITDA expected
The import freeze for potassium chloride in China, which has continued since September 2019, has also caused other sales markets to hold back. Against this background, potash producers cut production in the second half of the year. As early as September 2019, K+S reported that potassium chloride production would be reduced by up to 300 000 t by the end of the year against the backdrop of the weak market. The effect on EBITDA was estimated at up to €80 million. Parallel to this reduction in production due to the persistently weak market environment, K+S will carry out additional maintenance measures at German sites in the fourth quarter of 2019. This will reduce potash production by an additional 200 000 t in the current year. The effect on EBITDA will be another €50 million. Nevertheless, K+S expects a slight increase in revenues for 2019. Taking these effects into account, an increase to about €650 million (2018: €606 million) is expected for EBITDA. Adjusted free cash flow should continue to improve significantly compared with the previous year and be positive again for the first time since 2013 (2018: € - 206 million).
Read the article online at: https://www.worldfertilizer.com/potash/18112019/ks-releases-3q19-results/
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