EDITOR: | March 14th, 2013

K+S Group Expects Slight Increase in Revenues and Earnings

| March 14, 2013 | No Comments
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March 14, 2013 (Source:K + S Potash) — “Overall, 2012 was a successful year for the K+S Group. Our Potash and Magnesium Products business unit achieved its second best result ever”, states Norbert Steiner, Chairman of the Board of Executive Directors of K+S
Aktiengesellschaft, at the Company’s annual results press conference. “For
2012, we will propose to the Annual General Meeting a 10 cent higher
dividend of € 1.40 per share”, continues Steiner.

2012 revenues almost at the level of the previous year

At € 3.9 billion, revenues for financial year 2012 were almost on the same level as the previous year (€ 4.0 billion). Negative volume effects could almost be offset by positive currency and price effects. The Potash and Magnesium Products business unit achieved revenue growth mainly due to higher average prices as well as the positive development of exchange rates. At 6.95 million tonnes of goods, the sales volume remained stable in comparison to 2011. Salt business unit revenues fell tangibly, especially as a result of mild and dry weather conditions, after having benefited from an above-average winter in the previous year.

As expected, operating earnings down on previous year

The key performance indicator of the K+S Group, operating earnings EBIT I, fell in 2012 by around 11 % to € 808.5 million (2011: € 906.2 million) and was thus very close to the most recently submitted forecast of about € 820 million. The forecast figure would have been achieved without the expense of € 10.7 million arising from the disposal of three vessels as part of the fleet-renewal-programme of the Chilean shipping company Empremar. At 20.5 %, the EBIT margin was again at a very high level (2011: 22.7 %).

The Potash and Magnesium Products business unit was able to increase its operating earnings mainly as a result of higher average prices across the overall product range. These were able to more than compensate cost increases. With an EBIT I of € 773.9 million (+4.7 % against the previous year), the business unit achieved the second best annual result since 2008. Due to the weaker de-icing business and the higher proportion of fixed costs customary in the mining industry, the earnings of the Salt business unit decreased strongly to € 62.4 million (2011: € 211.4 million). Cost savings were able to mitigate this decrease to some extent.

Lower adjusted Group earnings

Adjusted Group earnings from continued operations fell by € 84.8 million or 14 % to € 540.8 million (2011: € 625.6 million) and thus mainly followed the development of operating earnings. This resulted in adjusted earnings per share from continued operations for the year under review of € 2.83, corresponding to a decrease of 13 % (2011: € 3.27).

Positive effect from divestment of the Nitrogen business

Due to the effect of the divestment of the nitrogen fertilizer segment, adjusted Group earnings including discontinued operations rose to € 639.7 million (2011: € 581.8 million). These discontinued operations accounted for € 98.9 million. (Detailed information about the divestment of the Nitrogen business can be found in the Financial Report 2012 in the Notes to the consolidated financial statements on page 168).

Higher dividend proposal intended for 2012

The adjusted earnings per share of the K+S Group including discontinued operations, which serve as the basis for the dividend payment, increased to € 3.34 due to the effect of this divestment of the Nitrogen business, after having been € 3.04 in the previous year. This places the Board of Executive Directors and the Supervisory Board in the position to propose to the Annual General Meeting an increase of the dividend for 2012 by 10 cents to € 1.40 per share. This corresponds to a payout ratio of 42 %.

Fourth quarter 2012: Lower revenues and decreased earnings

The absence of contracts of North American and Russian potash producers to be concluded with Chinese and Indian customers led to price pressure for international quotations for potassium chloride from the end of the third quarter of 2012 also in the markets relevant for K+S. On 31 December 2012, the North American export organization Canpotex then announced that it had concluded a new potash supply contract with China for the first half of 2013.

In the fourth quarter, the wintry weather conditions that set in at the end of November in Western Europe led to an overall average start to the winter season 2012/13. In the United States and in Canada, the winter that began late in December was, however, not sufficient for the multi-year average sales volumes to be achieved overall in the fourth quarter.

At € 941.6 million, the revenues of the K+S Group in the fourth quarter of 2012 were about 8 % below the figure for the previous year of € 1,021.5 million. At € 183.2 million, operating earnings EBIT I remained about 12 % below the level of the previous year. In the fourth quarter, adjusted Group earnings from continued operations fell by around 12 % to € 131.6 million (Q4/2011: € 149.9 million).

K+S Group with attractive prospects

K+S Chairman of the Board of Executive Directors Norbert Steiner anticipates a positive business development for 2013: “In the Salt business unit, we expect a tangible recovery for sales volumes, if only because of the wintry weather conditions at the start of this year. In the Potash and Magnesium Products business unit, given the important agreements concluded with China and India, we expect the sales volumes to be at the high level of the previous year once again, albeit at a lower average price level. All in all, we expect the K+S Group to achieve a slight increase in revenues and operating earnings. For 2014, we also see opportunities for a slight increase in revenues and earnings in comparison to 2013”, Steiner continues. (For further details about the outlook in the Financial Report 2012, see page 139.)

Experience growth

K+S is one of the world’s leading suppliers of standard and specialty fertilizers. In the salt sector, 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).

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Forward-looking statements

This press release contains information 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 risks arise – examples of which are mentioned in the Risk Report – actual developments and events may deviate from current expectations. Outside statutory disclosure provisions, the Company does not assume any obligation to update the statements contained in this press release.


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