K+S Group reported second-quarter EBITDA of €24.3 million, down from the year-ago €706.4 million, missing analysts’ average estimate of €100.4 million (Bloomberg Consensus). Revenue also missed estimates and was 45% lower year-over-year, at €825.8 million against €1.51 billion the previous year and the average estimate of €864.6 million.
K+S cited declining prices as the main impact on the Agriculture customer segment results, as well as sales volumes that were 11% lower year-over-year, at 1.67 million mt versus 1.87 million mt in second-quarter 2022. It said inflation-related additions to provisions for mining obligations amounting to around €18 million also had a negative impact on EBITDA.
The company confirmed its full-year EBITDA guidance of €600-€800 million that it revised downward in late July, largely due to potassium chloride price effects in the second quarter, particularly in the Brazilian market (GM July 28, p. 26). K+S is also maintaining the revised adjusted free cash flow at €300-€450 million for FY2023.
However, K+S noted the long-awaited bottoming out of the market in Brazil at the end of the second quarter. “We assume that the positive signals for the course of the second half of 2023 will prevail,” said K+S Chairman Burkhard Lohr.
Lohr reiterated that at the upper end of the EBITDA guidance, K+S expects prices to continue to rise for the rest of the year. In addition, he said the company will be able to sell roughly 2 million mt of product per quarter.
Regarding the mid-range of the guidance, K+S sees lower volumes and prices still rising, but not as strongly as in the upper-range assumptions. The lower end of the range would mean that prices come down again. Lohr said he believes this is less probable, “though not a zero probability.”
Second-quarter revenues in the Agriculture customer segment fell 55% year-over-year, to €557 million from €1.24 billion. The company mainly cited price factors for the downturn, as well as declining sales volumes as customers adopted a wait-and-see attitude in some sales regions.
K+S Agriculture Customer Segment
| 2Q-2023 | 2Q-2022 | 1H-2023 | 1H-2022 | |
| Revenues (€Million) | 557.0 | 1,244.2 | 1,418.3 | 2,188.3 |
| Potassium Chloride | 348.0 | 849.2 | 893.6 | 1,474.5 |
| Fertilizer Specialties | 208.9 | 395.0 | 524.7 | 713.8 |
| Sales Volumes (Million mt) | 1.67 | 1.87 | 3.40 | 3.66 |
| Potassium Chloride | 1.11 | 1.18 | 2.21 | 2.29 |
| Fertilizer Specialties | 0.56 | 0.69 | 1.19 | 1.37 |
| Revenues | ||||
| Europe (€ million) | 231.9 | 543.0 | 572.0 | 892.9 |
| Overseas ($ million) | 353.9 | 746.5 | 913.2 | 1,413.0 |
| Sales Volumes (Million mt) | 1.67 | 1.87 | 3.40 | 3.66 |
| Europe | 0.59 | 0.84 | 1.21 | 1.60 |
| Overseas | 1.08 | 1.03 | 2.19 | 2.06 |
| Average Price (€/mt) | 333.5 | 663.9 | 417.6 | 597.0 |
| Europe (€/mt) | 390.5 | 648.4 | 471.1 | 556.4 |
| Overseas ($/mt | 328.9 | 727.2 | 416.5 | 685.6 |
Lohr said K+S has not seen any impact of the Vancouver port strike on its Bethune, Sask., operations. However, he conceded that while the strike is over, there is a remaining risk “because there are miles of railcars waiting to be unloaded at Vancouver,” which could have an impact if this takes longer than expected.
Lohr added that K+S has the flexibility to ship volumes from Germany, and the company is already shipping volumes from Zielitz (in Germany) via Hamburg to Brazil.
In the Industry+ customer segment, revenues were up slightly at €268.7 million versus €265.7 million in last year’s second quarter. Second-quarter sales volumes declined 5% year-over-year, to 1.39 million mt from 1.46 million mt. K+S said it has already fixed 80% of its gas consumption for 2024 on a price level below €40 per megawatt.
The company said lower sales volumes for industrial applications and significantly lower prices for chemical products containing potash were offset by significant price increases, especially for salt products.
For the first-half of 2023, K+S posted a 61% decline in EBITDA, to €478.1 million on sales of €2.02 billion, down from the year-ago €1.23 billion and €2.72 billion, respectively. Six-month revenues were down 26% year-over-year. Half-year revenues in the Agriculture customer segment fell 35%, to 1.42 billion from €2.19 billion, while Industry+ revenues increased 12%, to €599.4 million from €533.9 million.