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K+S releases 2017 financial results

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World Fertilizer,

K+S has released its financial results for 2017, reporting revenues of €3.6 billion. This is compared to €3.5 billion in 2016.

The company also claims that operating earnings EBIT I increased to €271 million, up from €229 million in 2016, and EBITDA reached €577 million, up from €519 million in 2016.

The CEO of K+S AG, Burkhard Lohr, said: “Even though 2017 was a year shaped by transition, we reached our targets, laying a strong foundation for our future.”

In the statement, K+S claims that greater product availability in the Potash and Magnesium Products business unit, especially of fertilizer specialties at the Werra plant along with the first sales volumes from the new mine in Canada, had a positive impact on revenue growth in the past financial year. In contrast to this, the unfavourable exchange rate developments in both business units negatively impacted revenues. Again, the Salt business unit was the K+S Group’s top segment in terms of revenues. The positive trend in industrial salt and salt for chemical use was particularly encouraging. Revenues from de-icing salt remained at a stable level.

K+S also claims that the potash mine in Bethune, Canada, that commenced operation in May last year is already having a positive impact. In fact, the company claims that approximately 500 000 t of potash was produced by the end of the financial year.

Lohr said: “With Bethune we now have potash operations on two continents. The plant will complement our German production network and reduce average production costs in the medium-term. This provides us with very positive long-term perspectives.

“Bethune will make the Group much more competitive internationally.”

In the statement, K+S also notes that further resources will be secured with the kainite crystallisation and flotation (KCF) facility put into operation at the Hattorf site at the beginning of 2018. At the same time, the Werra plant’s wastewater will reportedly be decreased by approximately 20% per year. With an investment volume of €180 million, the KCF facility constitutes the K+S Group’s largest individual project to date for water protection.

In addition to this, K+S claims that legal disputes have been resolved by the agreements reached with nature conservation organiaation BUND and the municipality of Gerstungen on the deep-well injection and buffer storage of Gerstunger Mulde.

Lohr added: “We are increasingly focusing on dialogue with all groups of stakeholders.

“After all, appropriate resolution of environmental issues and a clear commitment to sustainability are essential for K+S.”

For the 2018 financial year, the company estimates that revenues will be tangibly higher and EBITDA significantly higher than the figures for the previous year. The rise in production volumes in Bethune will provide a boost for the Potash and Magnesium Products business unit. Production at the Werra plant will also increase again due to the absence of wastewater-related production outages, which will likewise improve earnings. K+S claims that the salt business unit anticipates a tangible increase in EBITDA on the strength of rising sales volumes and a further improvement in profitability.

Lohr added: “We expect to see a significant improvement in free cash flow in 2018.”

K+S presented its ‘Shaping 2030’ strategy in Autumn last year. This includes the clear focus on the four customer segments of agriculture, industry, consumers, and communities.

Lohr said: “Based on our expertise in the mining and processing of minerals, we will make use of the opportunities provided by customers’ specific needs and harness global megatrends.”

K+S claims that this will create attractive growth options for the existing business, as well as new areas of business, for example liquid fertilization. Initial projects from the K+S InnovationLab, including the aquaponic containers unveiled in March, are currently already in the test phase.

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