K+S Aktiengesellschaft

EANS-News: K+S Aktiengesellschaft
Successful third quarter 2010 K+S Group revenues and earnings increase significantly

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Company Information/quarterly report

Kassel (euro adhoc) - Kassel, 11 November 2010

Successful third quarter 2010 K+S Group revenues and earnings increase significantly

• Third quarter revenues up 52% to almost EUR 1.1 billion • Operating earnings reach EUR 108.5 million (Q3/09: EUR 9.4 million) • Adjusted earnings per share at EUR 0.21 (Q3/09: EUR (0.01)) • Earnings forecast for 2010 raised:

-  Expected revenues: EUR 4.8 billion to EUR 5.0 billion (previously: EUR
      4.6 billion to EUR 5.0 billion; previous year: EUR 3.6 billion)
   -  Operating earnings EBIT I should increase to between EUR 630 million and
EUR 670 million (previously: EUR 550 million to EUR 600 million; previous year:
EUR 238 million)
   -  Earnings per share expected to be between EUR 1.95 and EUR 2.10
(previously: EUR 1.75 to 1.95 EUR/share; previous year: EUR 0.56/share)
 • Outlook for 2011:
   -  Revenues should increase moderately
   -  Significant increase in operating earnings and adjusted Group earnings
      after taxes expected 

The recovery in demand for fertilizers observed since the start of the year continued in the third quarter. The salt markets in Western Europe as well as North and South America also showed themselves to be in good health. At the same time, the inclusion of Morton Salt also contributed to a significant increase in K+S Group´s revenues and earnings in the third quarter of 2010.

"The development in our most important business segments Potash and Magnesium

Products and Salt in the third  quarter  was  better  than  expected.  This  has
prompted us to raise our earnings forecast for the current year,"  says  Norbert
Steiner,    Chairman    of    the    Board    of    Executive    Directors    of
K+S Aktiengesellschaft. "For 2011 too, we are confident that we will be able  to
significantly raise both operating earnings and adjusted  Group  earnings  after
taxes." 

Third quarter revenues strongly up once again At EUR 1,061.2 million, revenues for the third quarter were up EUR 363.1 million or 52% on the figure for the same period last year. The increase was attributable to volume- and consolidation-related growth and able to more than make up for price-related decreases in revenues. The Salt business segment significantly increased its revenues, in particular due to the consolidation of Morton Salt. The Nitrogen Fertilizers and Potash and Magnesium Products business segments also achieved considerable revenue growth after the demand for fertilizers increased significantly again. Revenues in the first nine months of the year also rose by 45% due to volume and consolidation effects and reached EUR 3,653.3 million. In this period, 38% of revenues were generated in the Potash and Magnesium Products business segment, followed by Salt (33%) and Nitrogen Fertilizers (27%). The acquisition of Morton Salt has contributed to the regional distribution of revenues now being very balanced between Europe and overseas: Thus, about 53% of total revenues were generated in Europe and 47% overseas.

Operating earnings more than ten times higher than last year In the third quarter of 2010, operating earnings (EBIT I) of the K+S Group reached EUR 108.5 million and thus, seen against the low basis of the previous year (Q3/09: EUR 9.4 million), improved very strongly. While the Potash and Magnesium Products and Nitrogen Fertilizers business segments improved their earnings as a result of the persistent considerably higher demand for fertilizers from the start of the year, the pleasant earnings in the Salt business segment can be attributed to a positive consolidation effect (EUR 18.3 million) and to an increased early stocking-up business for de-icing salt. In the first nine months of 2010, operating earnings of EUR 531.7 million were achieved. This exceeded the previous year´s figure (9M/09: EUR 201.5 million) by about 164 %.

Depreciation and amortisation amounted to EUR 55.7 million and were EUR 19.8 million higher in comparison to the previous year. Of this increase, EUR 20.3 million was accounted for by the consolidation of Morton Salt. This in turn includes depreciation of EUR 11.1 million on valuations made within the framework of purchase price allocation. In the first nine months, depreciation and amortisation of the K+S Group amounted to EUR 182.6 million (9M/09: EUR 106.0 million) and include depreciation on valuations of EUR 39.6 million made within the framework of purchase price allocation of Morton Salt. Against this backdrop, greater importance will be assigned to the EBITDA in the future when assessing earnings capacity, especially in the Salt business segment.

EBITDA also significantly up on previous year During the third quarter of 2010, earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by EUR 119.0 million to EUR 164.3 million. Morton Salt accounted for EUR 38.6 million of this. In the first nine months, EBITDA was EUR 714.4 million (9M/09: EUR 307.5 million). At EUR 135.1 million, one third of the total increase of EUR 406.9 million was contributed by Morton Salt.

Third quarter financial result affected by non-recurrent effect In the third quarter, the financial result was EUR (52.7) million after having been EUR (11.7) million in the same period of the previous year. In addition to higher interest expenses resulting from the financing of the acquisition of Morton Salt, this was principally the result of a non-cash, extraordinary interest expense (EUR 23.1 million) for provisions for mining obligations. The financial result was EUR (104.4) million in the first nine months, having been EUR (96.7) million in the same period of the previous year.

Adjusted earnings also strongly improved The adjusted earnings before income taxes reached EUR 55.8 million in the quarter under review and were therefore EUR 58.1 million higher than in the same period of the previous year. Adjusted earnings before income taxes reached EUR 427.3 million in the first nine months of the year, having been EUR 104.8 million in the same period of the previous year.

In the third quarter, it proved possible to increase adjusted Group earnings after taxes by EUR 42.5 million to EUR 40.4 million (Q3/09: EUR (2.1) million). In the first nine months, adjusted Group earnings after taxes of EUR 313.7 million (9M/09: EUR 76.1 million) were achieved.

Third quarter adjusted earnings per share at EUR 0.21 For the quarter under review, adjusted earnings per share amounted to EUR 0.21 per share and thus were significantly higher than a year ago (EUR (0.01)). This was computed on the basis of 191.40 million no-par value shares, being the average number of shares outstanding (previous year: 165.00 million no-par value shares). In the first nine months, adjusted earnings per share reached EUR 1.64 compared to EUR 0.46 in the same period of the previous year. This corresponds to an increase of EUR 1.18 to which Morton Salt contributed a total of EUR 0.10 after financing costs. Thus, Morton Salt has, since the first day of its inclusion in the K+S Group (1 October 2009) and despite all acquisition-related special and customary seasonal effects as well as taking financing costs into consideration, so far contributed positively to the operating success in every quarter.

Outlook for 2010: Earnings forecast raised In 2010, demand for fertilizers and in particular for potash fertilizers will again increase significantly due to the low stocks of straight fertilizers in the trade sector at the start of the year and due to the lower potash content of the soil following two very good harvests and the reduced application of fertilizers since autumn 2008. Agricultural consumption has increased sharply and, in the first nine months, was again approaching its normal level. Since the middle of the year, this development was boosted by significantly higher agricultural prices, which result in strongly improved earnings potential for the global agricultural sector. Against this background, now global potash sales volumes of between 52 and 53 million tonnes for 2010 as a whole are expected (previous forecast: about 50 million tonnes; 2009: 31 million tonnes).

In the Salt business sector, the fourth quarter´s de-icing salt business will be influenced decisively by wintry weather conditions in Europe and North America. The forecast is based on sales volumes at their multi-year average level in the case of both the European and North American markets. While demand for food grade and industrial salt in Europe and North America should be stable, the South American industrial salt and food grade salt market will probably grow further in line with the regional population trend. As far as salt for chemical use is concerned, demand on the part of the chemical industry primarily in Europe should continue to normalise in the context of a persistent economic recovery.

Against the backdrop of the given demand and price tendencies, revenues of the K+S Group should rise significantly in financial year 2010 against the previous year. A figure of between EUR 4.8 billion and EUR 5.0 billion seems realistic from today´s perspective (previously expected: EUR 4.6 billion to EUR 5.0 billion; previous year: EUR 3.6 billion). In particular the Salt business segment, which will grow very significantly due to the first-time inclusion of Morton Salt for the whole year, but also the Potash and Magnesium Products and Nitrogen Fertilizers business segments should experience significant revenue growth.

For financial year 2010, operating earnings EBIT I of the K+S Group should increase significantly in comparison to the figure for the previous year. This is attributable to the earnings increase in the Potash and Magnesium Products business segment, the turnaround in earnings in the Nitrogen Fertilizers business segment and the already described consolidation effect in the Salt business segment. The forecast for operating earnings EBIT I for the K+S Group

this  year  has  been  raised  to  between  EUR  630  million  and
EUR 670 million (previously: EUR 550 million to EUR 600 million; previous  year:
 EUR 238.0  million). The forecast is based on the following assumptions:

     • Stable average prices in the Potash and Magnesium Products business
       segment in the fourth quarter
     • Sales volumes in the Potash and Magnesium Products business segment of
       6.7 to 6.9 million tonnes (previous forecast: 6.5 to 7.0 million tonnes)
     • Sales volumes in the Salt business segment of about 22 million tonnes
       (previous forecast: 21 to 22 million tonnes), of which about 13 million
       tonnes (previous forecast: 12 to 13 million tonnes) should be accounted
       for by de-icing salt. For the fourth quarter, this, as customary,
       assumes normal de-icing salt sales volumes at their multi-year average
       level
     • An average US dollar exchange rate of 1.33 USD/EUR for 2010 as a whole
       (previous forecast: 1.31 USD/EUR) and 1.37 USD/EUR for the fourth
       quarter and as of 31 December 2010
     • Stable energy prices in the fourth quarter on the basis of the energy
       agreement clauses relevant for K+S 

Assuming expected depreciation of about EUR 250 million for 2010 including depreciation of just under EUR 55 million on valuations at Morton Salt within the framework of purchase price allocation, EBITDA of between EUR 880 million and EUR 920 million is expected this year (previously: EUR 800 million to EUR 850 million; previous year: EUR 411.8 million).

Adjusted Group earnings after taxes should also be significantly higher in 2010, in line with the development of operating earnings. Here a figure between EUR 375 million and EUR 405 million (previously: EUR 330 million to EUR 370 million; previous year: EUR 93.6 million) is expected. This would correspond to adjusted earnings per share of about EUR 1.95 to EUR 2.10/share (previously: EUR 1.75 to EUR 1.95/share; previous year: EUR 0.56/share). The projection is based not only on the assumptions described for revenues and operating earnings, but also on the following facts expected from today's perspective:

• A somewhat weaker financial result in comparison to the previous year
       due to non-recurrent effects
     • A domestic Group tax rate to be applied in accordance with IFRSs of
       28.0% and an overall adjusted Group tax ratio derived from this of 26%
       to 27% (2009: 23.7%) 

Significantly higher earnings also expected for 2011 As a result of an expected further increase in global demand for potash fertilizers, it is now reasonable to assume global potash sales volumes in 2011 of between 55 and 60 million tonnes (previous forecast: 53 to 57 million

tonnes). The  higher  estimate  is  primarily  based  on  a  probably  not  only
temporary  positive  price  trend  for  agricultural  raw  materials   and   the
resultantly more attractive earnings prospects of the agricultural sector.  This
should provide sufficient incentive to increase yields per hectare  through  the
increased use of fertilizers. In the case of straight nitrogen  fertilizers  and
complex fertilizers too, the positive trend in demand  should  continue  in  the
coming year. 

Assuming average weather conditions, demand for de-icing salt in Europe should decline to a normal level again at the start of 2011 and increase correspondingly again in North America. While the consumption of food grade and industrial salt in Europe and North America should be stable in 2011 too, the South American industrial and food grade salt market should grow further in line with the regional population trend. Demand on the part of the chemical industry for salt for chemical use should again increase moderately in light of the emerging economic recovery.

In financial year 2011, revenues of the K+S Group should therefore increase moderately overall and it is likely that operating earnings will increase significantly. This and an improved financial result should also cause a significant increase in adjusted Group earnings after taxes. This estimate is based on the following assumptions:

• Continued attractive agricultural prices
     • Higher average prices and moderate increases in sales volumes (expected
       sales volume: just over 7 million tonnes) in the Potash and Magnesium
       Products business segment
     • Average sales volumes of crystallised salt of about 21 million tonnes,
       somewhat lower in comparison to the previous year
     • A US dollar exchange rate of 1.40 USD/EUR
     • Stable energy prices on the basis of the energy agreement clauses
       relevant for K+S
     • A stable adjusted Group tax ratio of 26% to 27% 

Experience growth The K+S Group 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 15,000 people. The K+S share - the only commodities stock on the German DAX index - is listed on all German stock exchanges (ISIN: DE0007162000, symbol: SDF). For additional information on K+S please visit www.k-plus-s.com.

Note to editors The Quarterly Financial Report Q3/2010, an interview with Norbert Steiner - chairman of the Board of Executive Directors of K+S Aktiengesellschaft - about the course of business and up-to-date press photos relating to the K+S Group are available under www.k-plus-s.com/2010q3en.

We are offering a conference call for analysts in English today at 3 p.m. Norbert Steiner, chairman of the Board of Executive Directors, as well as Joachim Felker and Jan Peter Nonnenkamp, members of the Board of Executive Directors, will participate in the conference call. Shareholders, investors, representatives of the press and all other interested parties are invited to follow the conference via a live webcast (www.k-plus-s.com) or by phone (+49-69- 71044-5598). The conference will be recorded and also be available as a podcast.

Contact:

Press: Michael Wudonig

phone: +49 561 9301-1262
fax: +49 561 9301-1666
michael.wudonig@k-plus-s.com 

Investor Relations: Christian Herrmann phone: +49 561 9301-1460 fax: +49 561 9301-2425 christian.herrmann@k-plus-s.com

Forward-looking statements

This press release contains facts 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 take any obligation to update the statements contained in this press release.

|K+S Group at a Glance                |   |           | |            | |
|
|Q3/2010                                | |           | |            | |
|
|        |                              | |           | |            | |
|
|All figures in accordance with IFRSs   | |Q3         | |Q3          | |
|
|        |                              | |July -     | |July - Sept.| |
|
|        |                              | |Sept.      | |            | |
|
|        |                              | |2010       | |2009        | |Change
|
|        |                              | |EUR million  | |EUR million   | |in %
   |
|        |                              | |           | |            | |
|
|Revenues                               | |1,061.2    | |698.1       | |+52.0
|
|        |                              | |           | |            | |
|
|        |Potash and Magnesium Products | |417.8      | |340.8       | |+22.6
|
|        |Nitrogen Fertilizers          | |306.1      | |204.5       | |+49.7
|
|        |Salt                          | |305.2      | |121.7       | |+150.8
|
|        |Complementary Business        | |31.8       | |30.9        | |+2.9
|
|        |Segments                      | |           | |            | |
|
|        |Reconciliation                | |0.3        | |0.2         | |-
|
|        |                              | |           | |            | |
|
|Operating earnings (EBIT I)            | |108.5      | |9.4         |
|+1,054.3|
|        |                              | |           | |            | |
|
|        |Potash and Magnesium Products | |79.4       | |54.0        | |+47.0
|
|        |Nitrogen Fertilizers          | |2.6        | |(47.3)      | |-
|
|        |Salt                          | |31.8       | |13.5        | |135.6
|
|        |Complementary Business        | |4.3        | |4.3         | |-
|
|        |Segments                      | |           | |            | |
|
|        |Reconciliation                | |(9.6)      | |(15.1)      | |-
|
|        |                              | |           | |            | |
|
|Earnings after operating                     |158.9  | |17.4        | |+813.2
|
|hedges (EBIT II)                             |       | |            | |
|
|        |                               | |           | |            | |
|
|Financial result                        | |(52.7)     | |(11.7)      | |(350.4)
|
|                                        | |           | |            | |
|
|Earnings before income taxes            | |106.2      | |5.7         |
|+1,763.2|
|        |                               | |           | |            | |
|
|Earnings before income taxes, adjusted1)   | |55.8   | |(2.3)       | |-
|
|        |                               | |           | |            | |
|
|Group earnings after taxes              | |76.8       | |3.7         |
|+1,975.7|
|        |                               | |           | |            | |
|
|Group earnings after taxes, adjusted1)       | |40.4 | |(2.1)       | |-
|
|        |                               | |           | |            | |
|
|Earnings per share, adjusted (EUR)1)        |0.21       | |(0.01)      | |-
  |
|        |                                 | |         | |            | |
|
|Capital expenditure2)                     | |45.5     | |43.5        | |+4.6
|
|                                          | |         | |            | |
|
|        |                                 | |         | |            | |
|
|
|
|1)  The adjusted figures only contain the earnings actually realised on
|
|operating forecast hedges for the respective reporting period. The changes in
|
|the market value of operating forecast hedges still outstanding, however, are
|
|not taken into account. Any resulting effects on deferred and cash taxes are
|
|also eliminated; tax rate 2010: 28.0% (2009: 27.9%).
|
|
|
|2)  Cash-effective investments in or depreciation on property, plant and
|
|equipment, intangible assets.
|
|K+S Group at a Glance                |   |           | |            | |
|
|January to September 2010              | |           | |            | |
|
|        |                               | |           | |            | |
|
|All figures in accordance with IFRSs|   | |Jan. -     | |Jan. - Sept.| |
|
|                                    |   | |Sept.      | |            | |
|
|        |                               | |2010       | |2009        | |Change
|
|        |                               | |EUR million  | |EUR million   | |in
%    |
|        |                               | |           | |            | |
|
|Revenues                                | |3,653.3    | |2,512.5     | |+45.4
|
|        |                               | |           | |            | |
|
|        |Potash and Magnesium Products  | |1,379.7    | |1,061.1     | |+30.0
|
|        |Nitrogen Fertilizers           | |979.0      | |804.0       | |+21.8
|
|        |Salt                           | |1,196.9    | |559.3       | |+114.0
|
|        |Complementary Business Segments| |97.2       | |87.6        | |+11.0
|
|        |Reconciliation                 | |0.5        | |0.5         | |-
|
|        |                               | |           | |            | |
|
|Operating earnings (EBIT I)             | |531.7      | |201.5       | |+163.9
|
|        |                               | |           | |            | |
|
|        |Potash and Magnesium Products  | |349.2      | |204.8       | |+70.5
|
|        |Nitrogen Fertilizers           | |43.1       | |(65.8)      | |-
|
|        |Salt                           | |161.5      | |93.1        | |+73.5
|
|        |Complementary Business Segments| |16.9       | |9.5         | |+77.9
|
|        |Reconciliation                 | |(39.0)     | |(40.1)      | |-
|
|        |                               | |           | |            | |
|
|Earnings after operating hedges (EBIT II)    |547.9  | |208.0       | |+163.4
|
|        |                               | |           | |            | |
|
|Financial result                        | |(104.4)    | |(96.7)      | |(8.0)
|
|                                        | |           | |            | |
|
|Earnings before income taxes            | |443.5      | |111.3       | |+298.5
|
|        |                               | |           | |            | |
|
|Earnings before income taxes, adjusted1)   | |427.3  | |104.8       | |+307.7
|
|        |                               | |           | |            | |
|
|Group earnings after taxes              | |325.4      | |80.8        | |+302.7
|
|        |                               | |           | |            | |
|
|Group earnings after taxes, adjusted1)       | |313.7| |76.1        | |+312.2
|
|        |                               | |           | |            | |
|
|Earnings per share, adjusted (EUR)1)        |1.64       | |0.46        |
|+256.5  |
|        |                                 | |         | |            | |
|
|Capital expenditure2)                     | |107.2    | |114.1       | |(6.0)
|
|                                          | |         | |            | |
|
|Employees as of 30 Sept. (number)         | |15,255   | |12,378      | |+23.2
|
|        |of which trainees (number)       | |645      | |648         | |(0.5)
|
|
|
|
|
|1)  The adjusted figures only contain the earnings actually realised on
||operating forecast hedges for the respective reporting period. The changes in
 |
|the market value of operating forecast hedges still outstanding, however, are
|
|not taken into account. Any resulting effects on deferred and cash taxes are
|
|also eliminated; tax rate 2010: 28.0% (2009: 27.9%).
|
|
|
|2)  Cash-effective investments in or depreciation on property, plant and
|
|equipment, intangible assets.
| 
end of announcement                               euro adhoc
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Further inquiry note:

Press:
Michael Wudonig
phone: +49 561 9301-1262
fax: +49 561 9301-1666
michael.wudonig@k-plus-s.com

Investor Relations:
Christian Herrmann
phone: +49 561 9301-1460
fax: +49 561 9301-2425
christian.herrmann@k-plus-s.com

Branche: Chemicals
ISIN: DE0007162000
WKN: 716200
Index: DAX, Midcap Market Index, CDAX, Classic All Share, HDAX,
Prime All Share
Börsen: Frankfurt / regulated dealing/prime standard
Berlin / regulated dealing
Hamburg / regulated dealing
Stuttgart / regulated dealing
Düsseldorf / regulated dealing
Hannover / regulated dealing
München / regulated dealing

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