Germany’s K+S Group reported an 89% drop in EBITDA for the third quarter, to €72.2 million (approximately $78.4 million at current exchange rates) from the year-ago €633.3 million. Analysts said the decline was not as much as expected, however, with the result beating the average analyst estimate of €55.8 million (Bloomberg Consensus).
Third-quarter revenues were down 40% year-over-year, to €880.9 million from €1.47 billion, also beating the average analyst estimate of €840.7 million. K+S cited higher volumes in the Agriculture customer segment and a recovery in potash prices in Brazil as driving the third-quarter EBITDA result, and is upbeat for the near term.
“Overall, the third quarter was a solid quarter that performed somewhat better than initially expected,” said Burkhard Lohr, K+S CEO and Chairman of the Board. “We saw a significant increase in demand, and this enabled a significant volume increase in our agriculture customer segment, and finally resulted in the expected price recovery in the important overseas market of Brazil.”
K+S
said it expects to meet its previously guided annual EBITDA forecast for
full-year 2023 of between €600-€800 million (2022: €2.4 billion). The company
lowered its EBITDA guidance in late July, largely due to potassium chloride
prices in the second quarter, particularly in the Brazilian market (GM July 28, p. 26). Full-year adjusted
free cash flow is still expected to range between €300-€450 million (2022: €932
million).
However, K+S’s adjusted group earnings after tax swung to a €24.3 million loss
in the third quarter versus a positive €378.7 million in the same prior-year
period. Adjusted earnings per share were a negative €0.13 compared with the
previous year’s €1.98.
The Agriculture segment posted a 47% fall in third-quarter revenues, to €620.7 million from €1.16 billion, which the company attributed primarily to lower prices. Total sales volumes for the segment were up 20% year-over-year, to 1.87 million mt from 1.56 million mt. Third-quarter potassium chloride sales volumes grew 26%, to 1.19 million mt, while fertilizer specialties sales volumes were up 11%, to 0.68 million mt.
Sales volumes for Europe increased 56% for the quarter, to 0.86 million mt from the year-ago 0.55 million mt, while Overseas volumes were flat year-over-year at 1.01 million mt. K+S said it continues to expect sales volumes for all products in the Agriculture segment to range from 7.0-7.4 million mt in full-year 2023, compared with 7.11 million mt in 2022.
In the Industry+ segment, third-quarter revenues were down 15%, to €260.1 million from the year-ago €307.1 million. K+S said higher sales prices could not fully offset lower average prices for products containing potash, as well as an 8% decline in segment sales volumes, to 1.55 million mt from 1.68 million. De-icing salt sales volumes alone were down 9%, to 0.44 million mt from 0.48 million mt.
For the first nine months, K+S reported a 71% decline in EBITDA, to €550.2 million on revenues of €2.899 billion, down from last year’s €1.86 billion and €4.19 billion, respectively. Revenues fell 31% year-over-year.
Nine-month Agriculture segment revenues fell 39%, to €2.04 billion from €3.35 billion, while Industry+ customer segment revenues were up 2%, to €859.6 million from €841.2 million.
Nine-month group adjusted earnings after tax fell 86% year-over-year, to €153.1 million from €1.13 billion. Adjusted earnings per share for the period were €0.81 compared with the previous year’s €5.89.
When asked about the company’s full-year EBITDA forecast, Lohr noted some potential “risks ahead,” including a threatened strike from the German train drivers’ union GDL. A K+S spokesperson confirmed that the strike risk has been factored into the company’s full-year sales volumes projection for the Agriculture customer segment.
“The GDL already did a warning strike on Nov. 15, and if they do not reach an agreement with Deutsche Bahn AG, there could be further strikes this month or next, which could affect the transportation of our potash and salt products from our sites to the ports,” Lohr said.
Under a new distribution policy, K+S aims to return 30-50% of the adjusted free cash flow generated annually to shareholders, by dividend, which can be combined with a share buyback, if applicable. Regarding the 2023 share buyback program, the company noted that 56% of the planned €200 million had already been bought back as of Sept. 30.
K+S Agriculture Customer Segment
| 3Q-2023 | 3Q-2022 | % change | 9M-2023 | 9M-2022 | % change | |
| Revenues (€ million) | 620.7 | 1,162.8 | (47) | 2,039.0 | 3,351.0 | (39) |
| Potassium Chloride | 382.5 | 779.5 | (51) | 1,276.1 | 2,254.0 | (43) |
| Fertilizer Specialties | 238.2 | 383.3 | (38) | 762.9 | 1,097.0 | (31) |
| Sales Volumes Million mt | 1.87 | 1.56 | +20 | 5.27 | 5.22 | +1 |
| Potassium Chloride | 1.19 | 0.95 | +26 | 3.40 | 3.23 | +5 |
| Fertilizer Specialties | 0.68 | 0.61 | +11 | 1.87 | 1.99 | (6) |
| Revenues (€ million) | 620.7 | 1,162.8 | (47) | 2,039.0 | 3,351.0 | (39) |
| Europe (€ million) | 300.1 | 372.0 | (19) | 872.0 | 1,264.9 | (31) |
| Overseas ($ million) | 349.0 | 796.3 | (56) | 1,262.2 | 2,209.2 | (43) |
| Sales Volumes Million mt | 1.87 | 1.56 | +20 | 5.27 | 5.22 | +1 |
| Europe | 0.86 | 0.55 | +56 | 2.07 | 2.15 | (4) |
| Overseas | 1.01 | 1.01 | 0 | 3.20 | 3.07 | +4 |
| Average Price (€/mt) | 331.4 | 744.5 | 386.9 | 641.0 | ||
| Europe (€/mt) | 349.2 | 675.9 | 420.6 | 586.9 | ||
| Overseas ($/mt) | 344.3 | 787.3 | 394.9 | 719.1 |