Following the Principle of Prudence, K+S Will No Longer Maintain Its Forecast For 2013
August 6, 2013 (Source: K+S Aktiengesellschaft) — The announcement made by Russian Uralkali that it is leaving the BPC sales organisation operated jointly with Belarusian BPC and that it will expand its own potash production while accepting price reductions wiped off more than 15 billion euros in stock market capitalisation within a few days and created considerable uncertainty about future volume and price trends on the market for potash fertilizers. Against this backdrop, K+S takes a cautious stance and decided today that it will no longer maintain its forecast for 2013 that a slight increase in operating earnings will be possible.
Last week, Uralkali triggered speculation about price declines on the global potash market. No company is immune to that, including K+S. What should not be overlooked, however, is that K+S possesses particular strengths. “In contrast to our competitors, who are focussed exclusively on potash, we have a robust second pillar to our operations with our global salt business, which follows different market conditions” says Norbert Steiner, chairman of the Board of Executive Directors of K+S Aktiengesellschaft. In addition, K+S offers its customers a product range that is not available from any other potash producer. “That makes us more robust in the event that competition intensifies,” says Steiner.
K+S product portfolio is unique
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On the basis of a special mineral composition in the German deposits, which are the only ones in the world that contain magnesium and sulphur in addition to potassium, K+S can offer its customer a unique product range. These products are used, for example, for crops that have a greater need for magnesium and sulphur or which are sensitive to the chloride components of standard potash fertilizers. With these products, K+S is only affected to a limited extent in the event of any possible intensification of volume competition in the case of standard products. Moreover, K+S has strong market positions in industrial products and high-purity salts.
Reliable supplier for customers worldwide
K+S is active in potash and magnesium products and in the salt business at more than 80 locations across the world. On the European potash market, K+S, from its base in Germany, enjoys close proximity to its customers . For decades now, customers worldwide know that they can rely on K+S as an independent supplier. This creates trust and ensures security of supply.
Growth in capacity necessary
There is no substitute for potash and it is urgently needed for sustainable and efficient farming. Each year, the global population increases by about 80 million people while, at the same time, the farmland available per capita is declining. The global potash demand with constantly rising dietary expectations cannot, however, be served solely with the capacity currently installed. To develop new raw material deposits, K+S is currently building a new potash plant in Canada. “Our Legacy Project is on course. We will not call into question this important undertaking in response to mere speculation,” says Steiner.
Continued growth remains a company goal
Irrespective of the possible impact of the Uralkali announcements, further revenue and earnings growth remains the long-term goal of K+S “We are a company that operates in a solid manner,” says Steiner. “We have a strong balance sheet, an independent position on the market and stable customer relationships.” Phases of market disruption are something that we are familiar with and know how to deal with.” K+S will continously monitor the competitive environment inculde findings into business policies and prepare for potential changes. In this regard, particular attention will be accorded improving cost efficiency in all parts of the Company.
K+S is one of the world’s leading suppliers of standard and speciality fertilizers. In the salt business, K+S is the world’s leading producer with sites in Europe as well as North and South America. K+S offers a comprehensive range of goods and services for agriculture, industry, and private consumers, which provides growth opportunities in virtually every sphere of daily life. The K+S Group employs more than 14,000 people worldwide. The K+S share – the commodities stock on the German DAX index – is listed on all German stock exchanges (ISIN: DE000KSAG888, symbol: SDF). More information about K+S at www.k-plus-s.com.
Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>