K+S Group posted a 13% fall in EBITDA to €453.8 million (approximately $497.9 million at current exchange rates) for the first quarter ended March 31, 2023, down from €524.1 million the previous year. However, the result came in 7% above the average analyst estimate of €430.1 million (Bloomberg Consensus).
Adjusted group earnings after tax for the quarter declined 26% to €232.4 million, resulting in an adjusted earnings per share of €1.21, versus €312.7 million, and Revenues dipped nearly 2% to €1.19 billion versus the prior-year €1.21billion.
K+S said higher revenues in the Industry+ customer segment could not fully offset a near 9% decline of revenues in the Agriculture customer segment. It added that earnings were also impacted by higher costs and higher inflation rates in the valuation of mining provisions amounting to around €12 million.
“Overall, we have made a good start into the new year,” said K+S Chairman Burkhard Lohr. “Against the background of the exceptional year 2022, the global potash business has taken much longer in recent months to establish a new price orientation. We now expect overseas potash prices to recover moderately in the second half of 2023.”
K+S has cut its EBITDA guidance for full-year 2023 to range between €1.15 billion and €1.35 billion, down from the previous €1.3 billion to €1.5 billion guidance issued in March at the release of its fourth-quarter and FY2022 earnings (GM March 17, p. 24) and versus a FY2022 EBITDA of €2.4 billion. The revised guidance includes negative valuation effects from mining provisions in “the mid double-digit euro range,” the company said.
The adjusted outlook now implies postponement of a moderate increase of overseas potash prices compared with the current level into the second half of the year, the company said.
“We expect potash demand to pick up in the second half of this year, and this is base for our outlook,” Lohr told analysts at a company earnings call on May 9.
K+S shares fell as much as 6.1% after the company cut its EBITDA guidance for the full year, a move that analysts suggested would cause consensus estimates to be revised downwards, Bloomberg reported.
Baader’s Markus Mayer, as cited by Bloomberg, believes K+S’ guidance cut would suggest a need for an approximately 8% downward revision to consensus, and said “the cut may not come as a surprise after peers reported their latest trading update,” adding that it should nevertheless weigh on the May 9 price.
In terms to individual customer segments, K+S’ Agriculture customer segment posted a near 9% year-over-year fall in revenues, to €861.4 million in the first quarter of this year, down from €944.1 million. The company cited lower selling prices and lower sales volumes due to delayed deliveries due to “still strained logistics” and a continued wait-and-see attitude on the part of customers.
The segment’s overall sales volumes were down 3% from a year earlier, to 1.73 million mt versus 1.79 million mt.
Of that total, potassium chloride sales volumes dipped 0.5% year-over-year to 1.10 million mt from 1.11 million mt, while fertilizer specialties sales volumes saw a bigger decline – down by 9%, to 0.63 million mt from the first quarter 2022’s 0.69 million mt.
Volumes sold in Europe were down by 18% year-over-year, to 0.62 million mt from 0.76 million mt. But Overseas sales volumes in the first quarter of 2023 increased by 8% compared with the same year-earlier quarter, to 1.11 million mt, up from 1.03 million mt.
K+S Segment Revenues, Sales Volumes, Prices
| 1Q-2023 | 1Q-2022 | % change | |
| Revenues € million | 861.4 | 944.1 | (9) |
| Potassium chloride | 545.6 | 625.3 | (13) |
| Fertilizer specialties | 315.8 | 318.8 | (1) |
| Sales volumes million mt | 1.73 | 1.79 | (3) |
| Potassium chloride | 1.10 | 1.11 | (0.5) |
| Fertilizer specialties | 0.63 | 0.69 | (9) |
| Revenues | |||
| Europe (€ million) | 340.1 | 349.9 | (3) |
| Overseas $ million) | 559.3 | 666.5 | (16) |
| Sales volumes million mt | 1.73 | 1.79 | (3) |
| Europe | 0.62 | 0.76 | (18) |
| Overseas | 1.11 | 1.03 | +8 |
| Average price (€/mt) | 498.9 | 527.0 | |
| Europe (€/mt) | 548.3 | 462.1 | |
| Overseas ($/mt | 505.6 | 644.3 |
K+S reported its Industry+ customer segment saw a 23% year-over-year increase in revenues in the first quarter of the year, to €330.6 million, up from €268.2 million, boosted by higher average prices for potash-containing products as well as the company’s salt products.
The company said while higher prices for industrial products and de-icing salts in particular caused the increase in revenues, higher volumes for pharmaceutical, chemical, and consumer products also had a positive impact.
Overall sales volumes for the segment dipped 2% to 1.79 million mt year-over-year, down from 1.83 million mt, while de-icing salt sales volumes fell 3% to 0.59 million mt from the year-ago 0.61 million mt.
Looking to the remainder of 2023, K+S said it now expects an average price in the Agriculture customer segment for the year as a whole that should be “tangibly lower” than the figure for the first quarter of 2023 (Q1 2023: €499/mt previous forecast, which is more than 20% below the full-year 2022 figure of €628/mt).
It said this assumes a moderate recovery in overseas potassium chloride prices for the second half of 2023 compared with current levels. For fertilizer specialties, the company also expects a declining price level on average for the year.
The company expects sales volume of all products in the Agriculture customer segment to range between 7.2 and 7.4 million mt in FY2023, particularly due to the easing of logistical bottlenecks, it said. It assumes an improvement in sales volumes in the second half of 2023
This latest guidance compares with its previous forecast of 7.3 to 7.5 million mt of sales volumes for FY2023. Sales volumes in FY2022 were 7.11 million mt.
For the de-icing salt business, K+S continues to expect sales volumes of about 2 million mt in the FY2023 financial year versus a previous forecast of “a good 2 million mt.” FY 2022 sales volumes were 2.1 million tons.