K+S Group, Kassel, has raised the outlook for expected EBITDA for the 2022 financial year to €2.3-€2.6 billion (between approximately ($2.5-$2.8 billion at current exchange rates), up from the previous outlook for FY22 of between €1.6-€1.9 billion. It is K+S’ second upgrade to its FY22 guidance.
The company attributed the increased guidance mainly to a further rise in average prices in the Agriculture customer segment, which, it said, will “significantly outweigh” expected cost increases, particularly in energy, logistics, and materials.
This EBITDA forecast tangibly exceeds current market expectations, the company said, noting the Vara 2022 EBITDA consensus as of April 6, 2020, was €2.16 billion.
K+S said the expected EBITDA increase assumes unrestricted production during the rest of 2022, and possible interruptions in production caused by potential disruptions to energy supply – i.e., a gas shortage situation – to the company’s German sites are not taken into account.
Germany relies on Russia for a sizeable volume of its natural gas supplies. In 2020, the country relied on Russian gas for about 46 percent of its natural gas requirements, according to the International Energy Agency.
FY21 EBITDA came in at €969 million, a 262 increase on the previous year (GM March 11, p. 25). The FY21 result included a one-off gain of €219 million from the completion in December of the REKS waste management joint venture transaction (GM Dec. 31, 2021).
K+S also has raised its adjusted free cash flow (FCF) expectations for full-year 2022 to €1.0-€1.2 billion, assuming capital expenditures of “a good €400 million.” This compares to the company’s previous FCF outlook of around €600-€800 million, and to the Vara consensus as of April 6, 2022, of €949 million.
K+S noted that a one-off effect of around €230 million is to be deducted from this operating cash flow forecast following the repayment of factoring in first-quarter 2022, as well as the purchase of CO2 certificates.
Following the disclosure on April 13, K+S’ shares rose to their highest since Sept. 2015, surging 8.8 percent to €35.26 per share on the profit outlook. On April 14, K+S shares touched a high of €35.49.
The company will release its first-quarter 2022 financial results, including its full outlook for FY22, on May 11.