Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- K+S AG (KPLUF, Financial) reported a robust Q3 performance, slightly above expectations, driven by a strong specialty business.
- The company achieved a Q3 EBITDA of EUR66 million, with lower costs and positive currency effects offsetting lower revenues.
- Free cash flow for the first nine months amounted to EUR111 million, indicating strong cash management.
- The specialty business, particularly SOP, remains strong due to limited competition and favorable sulfur prices.
- The Werra 2060 project is on track, promising significant environmental and operational benefits by 2028.
Negative Points
- Q3 EBITDA decreased from EUR72 million last year to EUR66 million this year, primarily due to lower prices.
- The company reduced the upper end of its agriculture sales volume guidance due to production bottlenecks caused by high illness rates.
- Production shortages due to sickness rates are expected to continue impacting Q4, affecting sales volumes.
- Bethune's production increase will be flat in 2025 due to technical reasons, affecting expected growth.
- The potash market faces challenges with low pricing and lack of price discipline among players, impacting profitability.
Q & A Highlights
Q: Was the production shortage due to sickness rates in Q3 also a concern for Q4?
A: Yes, the illness rate is a broader issue affecting Germany and other European countries. We expect some impact in Q4, but it is already factored into our guidance for the rest of the year. - Burkhard Lohr, CEO
Q: Can you provide an early view on own produced volumes for 2025?
A: We do not guide production volumes, but we expect strong demand in 2025, which will influence our sales volumes positively. - Burkhard Lohr, CEO
Q: How are production bottlenecks impacting profits in Q4?
A: The impact is not significant. We have reduced the upper end of the sales volume range by 100,000 tonnes, translating to a low EBITDA impact. - Burkhard Lohr, CEO
Q: Can you update us on the Werra 2060 project progress and CapEx spend?
A: The project is on track, with major CapEx still ahead. We aim to reduce CO2 output by 50% and production waters by more than 50%, extending the project's lifetime by 10 years. - Burkhard Lohr, CEO
Q: What is your outlook on potash prices and market discipline?
A: Current pricing is challenging for profitability, even for Belarusian and Russian competitors. We expect higher demand in 2025, indicating that we may have reached the bottom of the cycle, with rising prices anticipated. - Burkhard Lohr, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
