K+S Group reported an EBITDA of €633.3 million (approximately $636.2 million at current exchange rates) for the third quarter ended Sept. 30, 2022, versus €120.7 million for the same prior-year quarter, missing analysts’ average estimates of €723.2 million (BloombergConsensus).
Revenue increased 97% year-over-year, reaching €1.47 billion, also missing analysts’ average estimates of €1.5 billion.
Third-quarter adjusted earnings after tax amounted to €378.7 million, down from €1.28 billion the previous year.
K+S said excluding the €1.42 billion non-cash reversal of impairment losses on non-current assets and the associated effects on deferred taxes, adjusted earnings in third-quarter 2021 would have been €-3.8 million (€-0.02 per share).
The company reported the non-cash reversal of impairment losses was based on “a significantly more optimistic long-term expectation for the potash business and the associated price trend,” and consequently, the non-cash impairment loss of third-quarter 2020 was fully reversed (GM Nov.12, 2021).
For third-quarter 2022, K+S’ Agriculture Customer segment saw a significant jump in revenues, to €1.16 billion, up from the year-ago €529.1 million. But the segment’s sales volumes were 11% down year-over-year at 1.56 million mt versus 1.76 million mt, pointing toward accelerating demand destruction, wrote Citi analyst Mubasher Chaudhry in a note Bloomberg reported.
Third-quarter potash sales volumes were down 13%, to 0.95 million mt from the year-ago 1.09 million mt, while fertilizer specialties sales volumes fell 8% to 0.61 million mt from 0.67 million mt, K+S reported.
While potash prices have softened, they remain “historically high,” suggesting “a strong, but sequentially lower fourth quarter result,” wrote Chaudhry. He believes with nutrients still expensive, farmers are likely to prioritize nitrogen over potash and phosphates.
Assuming uninterrupted production – that is, no gas shortages – at its Germany sites, K+S sees sales volumes of all products in its Agriculture customer segment to be around 7.2 million mt in full-year 2022, lower than its previous forecast of around 7.5 million mt with a gas levy or shortage scenario. Agriculture segment sales volumes in FY2021 were 7.62 million mt.
K+S expects that, as a result of lower export volumes from Russia and Belarus, the record world potash sales volume of about 77 million mt (including about 5 million mt of potassium sulfate and potash grades with lower mineral contents) experienced in the two previous years cannot be achieved in 2022 and will be significantly lower, in particular due to reasons of availability.
The demand side, K+S said, is furthermore currently characterized by “a wait-and-see attitude,” as there is no imminent main potash application season in the last few months of the year in the sales regions important for the company.
The company’s Industry+ Customer segment posted a 41% rise in third-quarter revenues to €307.1 million, up from the year-earlier €217.2 million, but total sales volumes declined by 3% to 1.68 million mt from 1.73 million mt the previous year.
Sale volumes of de-icing salt were down 27% on the year, at 0.48 million mt from 0.65 million mt, with the company citing “above average” early-fills in the third quarter of 2021 due to the prevailing weather conditions.
But revenues from products for chemical, industrial, and pharmaceutical applications increased “significantly,” due in particular to higher prices for products containing potash, the company reported.
For the nine-months, K+S posted a jump in EBITDA to €1.86 billion on revenues of €4.19 billion, up from €358.1 million and €2.14 billion, respectively, the previous year. Nine-month revenues increased by 95%.
K+S now sees full-year 2022 EBITDA at €2.4 billion, and the outlook now excludes a gas levy or gas shortage in the fourth quarter. Its previous full-year EBITDA outlook of €2.3-€2.6 billion included a gas levy or gas shortage scenario.
The company said as far as is known at the present time, it will not make use of measures arising from the German Federal Government’s defensive shield, or gas price cap, and therefore the full ability to pay dividends would be maintained.
Agriculture Customer Segment Sales Volumes and Prices
| 3Q-2022 | 3Q-2021 | % change | 9M-2022 | 9M-2021 | % change | |
| Sales volumes (million mt) | 1.56 | 1.76 | (11) | 5.23 | 5.67 | (8) |
| Potassium chloride | 0.95 | 1.09 | (13) | 3.23 | 3.54 | (9) |
| Fertilizer specialties | 0.61 | 0.67 | (8) | 1.99 | 2.12 | (6) |
| Sales volumes (million mt) | ||||||
| Europe | 0.55 | 0.69 | (20) | 2.16 | 2.43 | (11) |
| Overseas | 1.01 | 1.07 | (6) | 3.07 | 3.24 | (5) |
| Average price €/mt | 744.5 | 300.6 | – | 641.0 | 259.7 | – |
| Europe €/mt | 675.9 | 289.9 | – | 586.9 | 269.0 | – |
| Overseas $/mt | 787.3 | 362.6 | – | 719.1 | 301.9 | – |