K+S Group on July 24 cut its EBITDA guidance again for full-year 2023. It now sees EBITDA at €600-€800 million, versus projections in excess of €800 million in June (GM June 16, p. 25), largely due to potassium chloride price effects in the second quarter, particularly in the Brazilian market.
The latest guidance missed the average analyst estimate of €876.2 million (Bloomberg Consensus). In June, K+S cut its full-year EBITDA guidance from its May forecast of €1.15-€1.35 billion due to depressed potash prices (GM May 12, p. 27).
In addition, K+S now sees adjusted free cash flow at €300-€450 million, down from the previous estimate of €650-€850 million. The group sees preliminary EBITDA for the second quarter at about €24 million due to price effects, which it noted underperforms market expectations.
“In the second quarter, the potassium chloride selling price in the Brazilian market faced a more significant drop than previously expected,” K+S said. “The price recovery, which is currently observed, has also started later than assumed.” For the rest of the year as a whole, the company said it will not be possible to compensate for the EBITDA shortfall of the second quarter.
K+S added that sales-related optimization of the product portfolio will have an impact on production volumes. Furthermore, as a result of the port strike in Canada, the group said negative effects from the still ongoing normalization of supply chains cannot be ruled out.
K+S believes that if the current positive demand impetus and price trends continue for the rest of the year, it would still be possible to achieve the market expectation of about €800 million at the upper end of the guidance range. At the same time, however, K+S warned that a renewed reluctance to buy in key sales regions could lead to negative volume and price effects, in which case full-year EBITDA would be at the lower end of the range at about €600 million.
K+S will publish its second-quarter earnings on Aug. 10.