K+S Group, Kassel, said in future it will strategically focus on its core business with potash and magnesium products. The new corporate strategy has three focal points: optimization of existing business, the expansion and further development of core business, and establishing new business areas, including sustainable waste management solutions, according to a company statement on Nov. 11.
“Our strategic focus is on the core business with potash and magnesium and the Agriculture customer segment. As a global supplier of plant nutrients, we are therefore addressing the megatrends of nutrition, water, and energy,” said K+S Chairman Burkhard Lohr.
With the sale of its Americas salt business consolidated in the Operating Unit Americas completed on April 30 (GM May 7, p. 44), the significant reduction in debt, and the restructuring of the organization, the company has reached “decisive milestones” on the path to strategic realignment, he said.
Lohr said the main management focus in the coming years will be on further optimizing the existing business.
At the Bethune and Zielitz sites, production is focused on the standard product potassium chloride, and the aim is to continuously reduce production costs and increase competitiveness there.
At the Werra and Neuhof sites, the focus is on the production of specialties. K+S said the further development of its product portfolio at these sites will be towards innovative specialty products. It said it is considering adjacent nutrients and so-called biostimulants in its portfolio development, but also a greater expansion of liquid fertilization.
For its salt business, the company said the future focus will be on operational improvements in terms of product portfolio, costs, and efficiency. K+S is the largest salt producer in Europe.
In terms of potential new business areas, the company noted there is a growing market for sustainable waste management solutions.
K+S said for this purpose, the company wants to combine the operations and infrastructure of the state-of-the art disposal facilities with the distribution network of its new partner – Germany’s Remex GmbH – in the REKS joint venture. K+S said it also examining alternative uses for the infrastructure, citing underground caverns as offering the potential to store CO2 or hydrogen in the medium to long term, as an example.
K+S and Remex reached an agreement in December 2020 to partner up to bundle their respective waste management activities in a new jv, REKS GmbH & Co. KG, in which both companies would be equal partners, each with 50 percent participation (GM Dec. 31, 2020). However, K+S disclosed late last month that there is a delay to the antitrust clearance for the transaction, which now may not be granted in 2021, as previously assumed (GM Oct. 29, p. 28). The E.U. Commission has referred the antitrust clearance procedure to the Federal Cartel Office, but K+S said it continues to believe a release can be granted.
Germany’s Baader sees K+S’ new corporate strategy as looking “ambitious,” with analyst Markus Mayer saying in a note to investors, cited by a Bloomberg report, that K+S likely first has to deliver before the market believes in these goals, given that the company has not always been successful in reaching mid-term goals.