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    SDF   DE000KSAG888

K+S AG

(SDF)
  Report
Delayed Quote. Delayed Xetra - 01/21 11:35:25 am
16.995 EUR   -2.91%
01/18K+S : UBS sticks Neutral
MD
01/13K+S : Berenberg raises its recommendation to Buy
MD
01/11K+S : Baader Bank keeps its Buy rating
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K+S : Q3/21 Quarterly Report

11/15/2021 | 11:45am EST

Q3/2021

Quarterly Report

Q3/2021 figures (continuing operations):

  • K+S Group revenues rise to €746 million in the third quarter (Q3/2020: €566 million)
  • EBITDA of €121 million significantly above previous year's level (Q3/2020: €81 million, prior-year figure benefiting from non-cash,one-off gain of €56 million)
  • Adjusted Group earnings after taxes positively impacted by reversal on impairment loss; non-cash impairment loss of prior year fully offset
  • Adjusted free cash flow of €-152 million in the first nine months (9M/2020: €-10 million)

2021 outlook:

  • EBITDA outlook raised to €630 million (previously: € 500-600 million; excluding REKS transaction)
  • Expectation of balanced free cash flow for 2021 (previously: €-180 million; excluding REKS transaction)
  • Antitrust approval process for REKS transaction ongoing

Key figures from continuing operations

Q3/2020

Q3/2021

%

9M/2020

9M/2021

%

K+S Group

Revenues

€ million

566.1

746.3

+31.8

1,803.4

2,143.7

+18.9

EBITDA 1

€ million

80.6

120.7

+49.8

232.6

358.1

+54.0

EBITDA margin

%

14.2

16.2

+13.6

12.9

16.7

+29.5

Depreciation and amortization 2

€ million

87.3

74.2

-15.0

262.0

206.3

-21.2

Agriculture customer segment 3

Revenues

€ million

373.0

529.1

+41.8

1,231.3

1,471.7

+19.5

Sales volumes

t million

1.66

1.76

+6.0

5.31

5.67

+6.7

Industry+ customer segment 3

Revenues

€ million

193.1

217.2

+12.5

572.1

672.0

+17.5

Sales volumes

t million

1.35

1.73

+28.4

3.89

5.69

+46.2

- of which de-icing salt

t million

0.24

0.65

> +100

0.67

2.29

> +100

Capital expenditure (CapEx) 4

€ million

113.7

87.8

-22.8

287.7

222.6

-22.6

Equity ratio

%

-

-

-

28.0

54.8

+95.4

Return on Capital Employed (LTM) 5

%

-

-

-

-31.7

31.0

-

ROCE (LTM) without effects from impairment loss /

%

-

-

-

-0.8

0.1

-

reversal of impairment loss of non-current assets

Book value per share as of September 30

-

-

-

12.05

24.24

> +100

Average number of shares

million

191.4

191.4

-

191.4

191.4

-

Employees on September 30 6

number

-

-

-

11,189

10,738

-4.0

Key figures for continuing and discontinued operations

Group earnings after taxes, adjusted 7

€ million

-1,767.2

1,278.9

-

-1,772.7

2,548.2

-

- of which continuing operations

€ million

-1,757.3

1,285.1

-

-1,825.0

1,671.9

-

- of which impairment loss (-) / reversal of

impairment loss (+) of non-current assets

€ million

-1,791.7

1,420.0

-

-1,791.7

1,746.7

-

- of which discontinued operations

€ million

-9.9

-6.2

+37.5

52.3

876.3

> +100

Earnings per share, adjusted 7

-9.23

6.68

-

-9.26

13.31

-

- of which continuing operations

-9.18

6.71

-

-9.53

8.74

-

- of which impairment loss (-) / reversal of

impairment loss (+) of non-current assets

-9.35

7.42

-

-9.37

9.13

-

- of which discontinued operations

-0.05

-0.03

+37.5

0.27

4.57

> +100

Net cash flows from operating activities

€ million

5.0

13.6

> +100

328.0

82.8

-74.8

- of which continuing operations

€ million

57.8

14.2

-75.4

227.0

94.8

-58.2

- of which discontinued operations

€ million

-52.8

-0.6

+98.9

101.0

-12.0

< -100

Adjusted free cash flow

€ million

-116.2

-69.0

+40.6

45.0

2,479.9

> +100

- of which continuing operations

€ million

-41.8

-68.6

-64.1

-10.4

-152.1

< -100

- of which discontinued operations

€ million

-74.4

-0.4

+99.4

55.4

2,632.0

> +100

Net financial debt as of September 30

€ million

-

-

-

-3,108.78

-784.4

+74.8

Net financial debt/EBITDA (LTM) 5

x-times

-

-

-

5.7 8

2.0

-64.9

Market capitalization as of September 30

€ billion

-

-

-

1.13

2.67

> +100

Enterprise value (EV) as of September 30

€ billion

-

-

-

5.68 8

4.63

-18.5

  • EBITDA is defined as earnings before interest, taxes, depreciation, and amortization, adjusted for depreciation and amortization of own work capitalized recognized directly in equity, gains/losses from fair value changes arising from operating anticipatory hedges still outstanding, and changes in the fair value of operating anticipatory hedges recognized in prior periods.
  • Relates to scheduled amortization of intangible assets and depreciation of property, plant, and equipment, adjusted for depreciation and amortization of own work capitalized recognized directly in equity.
  1. No segments in accordance with IFRS 8.
  2. Relates to cash payments for investments in property, plant, and equipment and intangible assets, excluding leases in accordance with IFRS 16.
  3. LTM = last twelve months
  4. FTE = full-time equivalents; part-time positions are weighted according to their share of working hours.
  5. The adjusted key figures include the gains/losses from operating anticipatory hedges for the respective reporting period; effects from fluctuations in the fair value of hedges are eliminated. The effects on deferred and cash taxes are also adjusted; tax rate Q3/2021: 30.1% (Q3/2020: 30.0%).
  • Related to continuing and discontinued operations, as no retrospective restatement of the balance sheet as of September 30, 2020 has been made.
  • K+S Quarterly Report Q3 2021

our new corporate strategy

Our strategic focus is on our core business with potash and magnesium products. Our corporate strategy is characterized by three focal points: We want to optimize our existing business, expand and further develop our core business as well as establish new business areas. Our focus on the environment, nature, and climate protection remains unchanged. Every corporate decision must be consistent with our climate strategy and sustainability goals.

We have developed a common understanding for allocating our management resources to these goals. With the sale of the Americas operating unit, the significant reduction in debt, and the restructuring of our organization, we have already achieved important milestones in the strategic realignment. We must, nevertheless, continue to strengthen our competitiveness, become more efficient, and act in a cost-conscious manner. That is why, we will initially devote most of our effort to optimizing our existing business. In this way, we will establish the basis for the successful further development of our K+S, while maintaining a solid balance sheet as the overriding goal.

OPTIMIZATION OF THE EXISTING BUSINESS

At our Bethune and Zielitz sites, we efficiently produce the standard product potassium chloride. We are improving all processes at these sites in accordance with the strategic principle of cost leadership. Our goal is to continuously reduce production costs and increase competitiveness.

Our specialties are produced at the Werra and Neuhof sites. We will continuously optimize the product portfolio to serve our customers in the best possible manner. At the same time, we strive to significantly reduce the ecological footprint in the manufacturing process.

In the salt business, we focus on operational improvements, rather than strategic growth. Optimizing our existing business also involves focusing on digitalization and automation along the entire value chain. We particularly identified potential in the areas of production, sales, and supply chain.

EXPANSION AND FURTHER DEVELOPMENT OF OUR CORE BUSINESS

Our products are of great importance for an ever-changing planet. High-yielding farmland is a prerequisite for feeding a growing world population, even under changing climatic conditions. We already supply the agricultural industry with numerous products to effectively increase yields and enable farmers to master challenges. Our portfolio is set to develop even further. This may not only include adjacent nutrients and bio stimulants, but also the further development of fertigation. Our water-soluble products already contribute to the cultivation of crops in hot and dry regions of the world - even in desert regions, and our nutrients are an important growth driver for plants when using irrigation under film and glass. Our business model is supplemented by a comprehensive range of advisory and other services. In the future, digital services in particular will play an even greater role in our business. We will furthermore intensify our presence directly at the customer's site in selected markets. In expanding our core business, our primary focus is on organic growth and cooperation with strong partners.

NEW BUSINESS AREAS

There is a growing market for sustainable waste management solutions. We therefore want to combine the operations and unique infrastructure of our state-of-the-art disposal facilities with the distribution network of our new partner, a subsidiary of the Remondis Group, in the REKS joint venture. Furthermore, this business model provides us with the best possible access to materials needed for covering our tailings piles in the future. We are also looking at alternative utilization options for our infrastructure. Our underground caverns, for example, offer the potential to store CO2 or hydrogen in the medium to long term.

  • K+S Quarterly Report Q3 2021

OUR AMBITIOUS CLIMATE strategy

Since 1990, we have already reduced our CO2 emissions by absolute 80% - a major effort for an energy-intensive company. We want to continue to actively promote the energy transition. For this purpose, we have introduced a climate fund. By 2030, our goal is to reduce our CO2 emissions by 10% compared with 2020. Moreover, we support the goals of the Paris Agreement on climate change. We are convinced that climate neutrality can be achieved by 2050. This requires urgent improvements on the part of policymakers in the energy industry and energy policy. After all, energy must remain affordable for everyone and its price should not have a negative impact on our international competitiveness.

OUR FINANCIAL TARGETS

With our corporate strategy, we safeguard economic success in the future. We strive to achieve our financial targets based on a solid balance sheet to meet the demands and return expectations of our investors.

  • Our target is to earn our cost of capital over a 5-year cycle (ROCE > WACC).
  • We also aim to achieve an EBITDA margin of more than 20% over this cycle.
  • From 2023, each site and the Group as a whole will generate positive free cash flow - even in the event of low potash prices.
  • Our new dividend policy generally provides for a basic dividend of 15 cents per share. This can be increased by a discretion- ary amount in the event of favorable economic development. Several factors are additionally taken into account, in particular the balance sheet structure as well as the expected development of business and adjusted free cash flow.

With our strategy, we have set the course for the coming years. We will continue to promote and initiate numerous measures and projects within these strategic guidelines. With passion and commitment!

Further information can be found at www.kpluss.com/strategy

Significant events in the reporting period

After the EU Commission referred the antitrust clearance procedure to the Federal Cartel Office, the review of the REKS transaction is still ongoing. K+S continues to assume that approval can be granted. It may, however, no longer be possible for this to take place in 2021 as previously assumed (previous forecast: fourth quarter of 2021). Against this background, K+S only includes the operating business in the 2021 full-year outlook.

The Financial Reporting Enforcement Panel (Deutsche Prüfstelle für Rechnungslegung e.V. − DPR) has sent preliminary examination findings to K+S on September 6 and 14, 2021, in the procedure for the examination of the consolidated financial statements of K+S as of December 31, 2019, together with the associated Group management report, as well as the abbreviated financial statements as of June 30, 2020, together with the associated interim management report. Following its own comprehensive review and the involvement of external advisors, K+S considers these to be unfounded. K+S therefore commented in detail on the preliminary examination findings in writing and provided the DPR with an expert opinion by renowned IFRS experts. On Novem- ber 2, 2021, K+S explained its differing opinions to the DPR in a so-called company meeting. K+S has provided the DPR with further information. The proceedings are ongoing.

For further information, please refer to the ad hocrelease published on November 11, 2021

  • K+S Quarterly Report Q3 2021

EARNINGS POSITION, FINANCIAL POSITION, AND NET ASSETS

EARNINGS POSITION

Key figures for earnings from continuing operations

in € million

Q3/2020

Q3/2021

%

9M/2020

9M/2021

%

Revenues

566.1

746.3

+31.8

1,803.4

2,143.7

+18.9

EBITDA

80.6

120.7

+ 49.8

232.6

358.1

+54.0

Depreciation and amortization 1

87.3

74.2

-15.0

262.0

206.3

-21.2

Group earnings after taxes, adjusted 2

-1,757.3

1,285.1

-

-1,825.0

1,671.9

-

  • of which impairment loss (-) / reversal of impairment loss (+)

of non-current assets

-1,791.7

1,420.0

- -1,791.7

1,746.7

-

  • Relates to scheduled amortization of intangible assets and depreciation of property, plant, and equipment, adjusted for depreciation and amortization of own work capitalized recognized directly in equity.
  • Includes gains/losses from operating forecast hedges for the respective reporting period; effects from fluctuations in the fair value of hedges are eliminated. Effects on deferred and cash taxes are also adjusted for; tax rate Q3/2021: 30.1% (Q3/2020: 30.0%).

In the quarter under review, revenues of the K+S GROUP rose by about 32% year-on-year from €566.1 million to €746.3 million. This was mainly attributable to higher average prices and sales volumes in the Agriculture customer segment as well as higher sales volumes in the Industry+ customer segment. In the first nine months, revenues of €2,143.7 million were significantly above the previous year's level (9M/2020: €1,803.4 million).

Overall, EBITDA of the K+S Group reached €120.7 million in the third quarter and was therefore almost 50% above the prior-year level (Q3/2020: €80.6 million), which benefited from non-cash,one-off gain of €55.6 million. Excluding the one-off effect in the previous year, EBITDA actually more than quadrupled. The effects contributing to the development of revenues more than offset higher costs for logistics and energy.

After the first nine months, EBITDA amounted to €358.1 million (9M/2020: €232.6 million). In this period, higher average prices in the Agriculture customer segment and higher volumes in both customer segments, especially for de-icing salt, more than offset higher logistics and energy costs. Furthermore, improved operating performance had a positive impact.

Variance compared to previous year

Revenues by regions

in %

Q3/2021

9M/2021

in %

Change in revenues

+ 31.8

+ 18.9

- volume/structure-related

+ 7.1

+ 10.8

14.3/16.4

4.4/5.2

- price/pricing-related

+ 25.0

+ 10.0

Asia

Africa, Ozeania

- currency-related

- 0.3

- 1.9

16.2/12.7

59.3/63.1

South America

Europe

22.1/21.8

5.8/2.6

thereof Germany

North America

January to September 2021/2020

  • K+S Quarterly Report Q3 2021

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

K+S AG published this content on 15 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 November 2021 16:44:38 UTC.


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Yield 2021 0,96%
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Nbr of Employees 10 738
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