K+S Group increases revenues in the first half of 2013
August 13, 2013 (Source: K+S AG) — Highlights:
- Good sales volumes for potash and magnesium products
- Salt business significantly above last year
- Revenues of the first half year increase by 4% to € 2,154.8 million
- Operating earnings EBIT I at € 440.5 million (H1/12: € 466.4 million)
- Adjusted earnings per share from continued operations reach € 1.55 (H1/12: € 1.61)
- Legacy Project advanced according to plan
- Outlook: As announced on 6 August, K+S, in the light of recent developments on the potash market and following the principle of prudence, will no longer maintain its forecast for 2013.
The K+S Group increased its revenues for the first six months of financial year 2013 by 4% to about € 2.15 billion. “The first half of the year was successful for us overall,” says Norbert Steiner, chairman of the Board of Executive Directors of K+S Aktiengesellschaft. “That’s true for both pillars of our business – for our fertilizers as well as for our salt business.”
The revenue growth posted by the K+S Group for the first half of the year was based on high sales volumes in both the Potash and Magnesium Products and Salt business units in the first quarter of 2013. At € 874.5 million, second quarter revenues were down 12% on the robust figure of a year ago.
In the first six months, the revenues generated by the Potash and Magnesium Products business unit reached € 1.17 billion (-6%). Compared with the exceptionally high sales volumes for the same quarter a year ago, sales volumes for the Potash and Magnesium Products business unit normalised in the second quarter of 2013, with prices significantly lower than a year ago. The revenues generated by fertilizer specialities increased from April to June 2013 as a result of volume factors.
In the Salt business unit, revenues for the first half of the year increased significantly, rising by 21% to € 899.7 million. In the second quarter, the business unit achieved revenues on about the same level as a year ago, because a partially higher price level could almost offset negative currency effects.
First half-year operating earnings EBIT I at € 440.5 million
For the first six months of 2013, the K+S Group achieved operating earnings of € 440.5 million. This represented a decrease of about 6% on the figure of a year ago. In the second quarter of 2013, at € 162.6 million, operating earnings EBIT I were down € 56.1 million or 26% on the high figure for the previous year’s quarter. In the Potash and Magnesium Products business unit, lower prices as well as lower sales volumes resulted in declining earnings compared with the robust quarter of a year ago. The earnings decrease in the Salt business unit was particularly attributable to an expense connected with the planned sale of a transport and supply ship in the amount of € 3.2 million as well as to catch-up effects related to maintenance activities. At € 64.4 million, the K+S Group’s depreciation and amortisation for the second quarter taken into account in EBIT I were up on the figure for the same period a year ago (Q2/12: € 56.0 million) as a result of higher capital expenditure for the package of measures for water protection.
Adjusted Group earnings from continued operations down slightly on a year ago
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Adjusted Group earnings from continued operations for the first half of 2013 fell by 4% or € 12.7 million to € 296.1 million. This key figure fell by 25% or € 34.6 million to € 105.9 million in the second quarter (Q2/12: € 140.5 million). Adjusted earnings per share from continued operations for the first half of the year reached € 1.55 (H1/12: € 1.61), with the second quarter accounting for € 0.56, compared with € 0.73 in the previous year’s period.
K+S Group capital expenditure for the first six months totalled € 302.1 million. In the second quarter, capital expenditure came to € 191.3 million and was therefore more than twice as high as in the same quarter a year ago (Q2/12: € 77.7 million). The majority of the capital expenditure was accounted for by the Potash and Magnesium Products business unit. In this business unit, the increase is mainly attributable to the capital expenditure related to the package of measures for water protection in the Hesse-Thuringia potash district and to the construction of the potash plant in Canada (Legacy Project), mainly for infrastructure, water supply, drilling and engineering works in the latter case. The Legacy Project proceeded as scheduled.
As a result of the announcement made by Russian Uralkali that it would exit the BPC sales organisation operated jointly with Belarusian Belaruskali and related statements on the part of Uralkali concerning the expansion of output, significant uncertainty about the future volume- and price development in the market for potash fertilizer has occurred. Against this backdrop, K+S announced on 6 August 2013 that, following the principle of prudence, it will no longer adhere to its forecast for 2013 to slightly increase the operating earnings EBIT I compared to 2012 (€ 804.1 million). It is probable that the expected increase in earnings of the Salt business unit will not be sufficient to compensate for the decrease in earnings of the Potash- and Magnesium Products business unit.
K+S will continuously monitor the competitive environment include findings into business policies and prepare for potential changes.
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 can be found 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>