DbAccess Conference, Berlin - 5 June 2019 Dr Burkhard Lohr, Chief Executive Officer Martin Heistermann, Senior Investor Relations Manager - K+S
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K+S Group dbAccess Conference, Berlin 5 June 2019 Dr Burkhard Lohr, Chief Executive Officer Martin Heistermann, Senior Investor Relations Manager
K+S Group
Disclaimer
No reliance may be placed for any purpose whatsoever on the information or opinions contained in the Presentation or on its completeness, accuracy of fairness. No
representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its respective directors, officers, employees, agents or
advisers as to the accuracy, completeness or fairness of the information or opinions contained in the Presentation and no responsibility or liability is accepted by any of
them for any such information or opinions. In particular, no representation or warranty, express or implied, is given as to the achievement or reasonableness of, and no
reliance should be placed on any projections, targets, ambitions, estimates or forecasts contained in this Presentation and nothing in this Presentation is or should be
relied on as a promise or representation as to the future.
This Presentation contains facts and forecasts that relate to the future development of the K+S Group and its companies. The forecasts are estimates that we have made
on the basis of all the information available to us at this moment in time. Should the assumptions underlying these forecasts prove not to be correct or should certain
risks – such as those referred to in the Annual Report – materialise, actual developments and events may deviate from current expectations. Given these risks,
uncertainties and other factors, recipients of this document are cautioned not to place undue reliance on these forecasts.
This Presentation is subject to change. In particular, certain financial results presented herein are unaudited, and may still be undergoing review by the Company’s
accountants. The Company may not notify you of changes and disclaims any obligation to update or revise any statements, in particular forward-looking statements, to
reflect future events or developments, save for the making of such disclosures as are required by the provisions of statue. Thus statements contained in this
Presentation should not be unduly relied upon and past events or performance should not be taken as a guarantee or indication of future events or performance.
This Presentation has been prepared for information purposes only. It does not constitute an offer, an invitation or a recommendation to purchase or sell securities
issued by K+S Aktiengesellschaft or any company of the K+S Group in any jurisdiction.
K+S Group 1
Current Trading
K+S Group
Q1 2019: Another quarter with solid results
Highlights Financials
Potash pricing remains strong € million Q1/18 Q1/19 YoY
Higher Bethune production; first quarter w/o Revenues 1,170 1,264 +8%
volumes from Sigmundshall potash mine t/o Europe+ 662 692 +5%
Good de-icing salt business in North America; t/o Americas 507 571 +13%
higher freight cost headwind YoY persists D&A -90 -100 -10%
EBITDA and FCF improved again EBITDA 237 270 +14%
t/o Europe+ 156 177 +14%
New reporting structure in place
t/o Americas 96 108 +12%
EBITDA in €m 6 -27 Adj. net profit 84 108 +29%
89 Main effects: -35 Adj. EPS (€) 0.44 0.56 +27%
- Shaping
Main effects:
+ FX 270
- General
- Others
237 cost
Main effects:
+ Prices in
inflation: Operating cash flow 233 324 +39%
e.g. freight
agriculture
+ North American Adj. FCF 143 233 +63%
de-icing/consumer
business CapEx 63 73 +16%
Q1/18 Price Volume/ FX, Cost Q1/19 -
Mix Others inflation
Net fin. debt/EBITDA 4.7 4.6 -
K+S Group 3
K+S Group
BETHUNE RAMP-UP on track
OPERATING PERFORMANCE improved
WASTEWATER MANAGEMENT improved
CASH CONVERSION RATE improved
2019 FULL-YEAR GUIDANCE confirmed
SHAPING/CUSTOMER ORIENTATION on track
K+S Group 4
K+S Group
Trading Update: Customer Segment Agriculture
Pricing (Source: FMB)
Global demand 2018 again slightly up to
140%
~71mt KCl (2017: ~69mt)
MOP Brazil
Robust demand holds across all regions
130% MOP Europe Most producers are committed until end
of Q2/19
120%
MOP price momentum remains
110% supportive into Q2 (YoY)
European MOP and Specialty prices are
100%
picking up but are still lagging behind
90%
K+S Agriculture average selling price:
SOP Europe
FY/18: 254 €/t (FY/17: 241 €/t);
80% Q4/18: 268 €/t; Q1/19: 282 €/t
Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19
K+S Group 5
K+S Group
Trading Update: Customer Segments
Industry and Consumers
Sales volumes (in mt)
Solid demand, gradually increasing
Sigmundshall sales volumes
volumes
missing Logistic costs after inflation,
0.50
0.48 0.41 0.42
0.48 especially in North America, in 2018:
2.74
2.47 2.52 2.57 “new normal” for 2019
2.44
In the Consumers customer segment,
Q1/19 showed first success to pass
on higher costs, especially for
logistics, to our customers
Q1/18 Q2/18 Q3/18 Q4/18 Q1/19
Industry Consumers
K+S Group 6
K+S Group
Trading Update: Customer Segment Communities
Pricing trends in customer segment Communities
Mixed picture in our regions in winter
2018/19
Good business in US Mid-West and
Canada
Highly competitive US East Coast
Europe:
Q4: mild weather
Sales volumes in customer segment Communities (in mt)
Q1: average demand
6.86 7.11 In total, Q4 almost on and Q1 above
long-term average
4.00 Widely promising start into bidding
season 2019
1.53
0.93
Q1/18 Q2/18 Q3/18 Q4/18 Q1/19
K+S Group 7
Shaping 2030 Strategy
K+S Group
Our vision for 2030
We will be the most customer-focused, 'One Company'
independent minerals company and grow ... thinking and acting as 'One Company' and lifting
our EBITDA to €3bn in 2030 by ... synergies between our businesses
Tapping the full potential of our
existing assets
... establishing the most value-creating portfolio
combination
Exploring new adjacent growth areas
... pursuing growth by venturing into new markets
Agriculture Industry where we can use our existing capabilities
Communities Consumers
Increasing the share of our specialties
business
... ensuring an overall stabilized performance and
reducing our dependency on standard products and
weather
K+S Group 9K+S Group
We will implement our strategy in two phases
Phase 1: Transformation Phase 2: Growth
2017 2020 2030
Reduce indebtedness Tapping the full potential of our
existing assets
Realize synergies Exploring new adjacent growth areas
Advance corporate culture Increased share of specialties
Shaping the organization
and focusing towards our clients
Net financial debt/ halved Investment grade rating EBITDA-Ambition €3bn
EBITDA vs. H1/2017 achieved in 2023
ROCE > 15%
Synergies > €150m Revenue growth
> 4%
beyond 2030
K+S Group 10Phase I
K+S Group
Phase I: Building a basis for our growth options
Divisional Silos Matrix
Board of Executive Directors
Matrix
COO Group CEO Group CFO Group
Board of Executive Directors Head of Human Head of Corporate Head of Corporate Head of Corporate
Resources Development Controlling Communications
CEO Americas CEO Europe+
Agriculture Industry
Communities Consumers
Head of Marketing,
Sales & Supply Chain
Agriculture
Excellence
Industries
Customer Marketing & Sales
Segments Committee Consumers
Communities
Head of Operations
Operations Excellence
Operations Excellence
Committee
Operating Unit Function Executive Committee
K+S Group 12K+S Group
Synergies: Breakdown by program
SHAPING
2030 Sponsor Net synergies YE 2020
(vs. 2017)
SG&A Optimization CEO ~ €30m
Operations COO > €50m
Lift Procurement CFO > €30m
synergies
Supply Chain and Logistics COO > €20m
Commercial Excellence COO > €20m
∑ > €150m
K+S Group 13K+S Group
Shaping 2030 EBITDA impact
Costs Synergies > €150m
2018e 2019e 2020e
Total costs for synergy program: ~ €150m (end of 2020)
K+S Group 14K+S Group
Net Present Value (NPV) Bethune
NPV for Bethune EUR 4.8bn
This NPV equals an EV per share of 25 EUR
Sensitivities
Variation NPV change
MOP gran. Brazil +/- 10 USD/t +/- €200 million
“We create value for our stakeholders!”
K+S Group 15K+S Group
Site costs (FOB) in comparison (2020)
USD/t
-30%
Best-in-class
*
K+S Bethune K+S Zielitz K+S Bethune BU Potash
(in 2023) (Purely MOP) w/o Bethune
(incl. Specialties)
* column width =
Source: CRU Report 2016, K+S production capability in million tonnes
The Bethune ramp-up to 2.86 million tons in 2023 (production capability)
significantly improves K+S's competitive position.
K+S Group 16Phase II
K+S Group
Our strategy has incorporated important megatrends
8.5bn 0.2 Arable land shrinking
Global population in 2030 Average global warming (ºC)
Yield needs to be improved
Today: 7.3bn Per decade Higher efficiency of fertilization
and irrigation needed
Implications for K+S Plants have to be more stress
resistent
Infrastructure needs to be
40% 5.4bn improved focus on
of the population will suffer people will be renewable energy
from water shortage by 2030 middle-class by 2030
Growing population, especially
in Asia, needs more salt for
70% of water used 2015: 3.0bn various purposes
for agriculture
K+S Group 18K+S Group
Growth areas and ideas cover the full growth landscape
K+S Growth Landscape
Geo-expansion Fertilizer Industry
Africa Increase of fertilizer specialties Expand Pharma & Food portfolio
Asia Ramp of low cost commodities Chemical applications
Growth areas and ideas cover core and adjacent businesses
K+S Group 19Financials
K+S Group
P&L
€ million Q1/18 Q2/18 Q3/18 Q4/18 FY/18 Q1/19
Revenues 1,170 812 840 1,217 4,039 1,264
EBITDA 237 105 36 228 606 270
Margin 20% 13% 4% 19% 15% 21%
Depreciation 90 92 94 103 379 99
Financial result -31 -25 -26 -30 -112 -17
EBT, adjusted 116 -12 -84 95 115 154
Tax rate, adjusted 28% 25% 27% 25% 26% 30%
Net income, adjusted 84 -9 -61 71 85 108
EPS, adjusted 0.44 -0.05 -0.32 0.38 0.45 0.56
K+S Group 21K+S Group
Cash Flow and Balance Sheet
€ million Q1/18 H1/18 9M/18 FY/18 Q1/19
Operating cash flow 233 292 276 309 324
- Investing cash flow
-90 -198 -336 -515 -91
(pre sale/ purchase of securities)
Adjusted free cash flow 143 94 -60 -206 233
CapEx 63 154 278 443 73
Net financial debt 2,834 2,944 3,100 3,242 2,935
Net financial debt/ EBITDA (LTM) 4.7 4.9 5.5 5.3 4.6
Equity ratio 42 % 43% 41% 41% 43 %
K+S Group 22K+S Group
New Reporting Structure
NEW OLD NEW
Operating Units Business segments Products Customer Segments Subsegments
Potassium chloride • Potassium chloride (MOP)
Agriculture • Fertilizer specialities:
Potash and Magnesium Fertilizer specialities SOP, Kieserite, Kornkali
Europe+: Products (incl. Bethune)
Potash and Magnesium Industrial products • Chemical
Products (incl. Bethune) • Animal nutrition
Salt Europe Complementary Activities Complementary • Oil and gas
Industry • Water softening
• Food
• Pharma
Non De-icing • Complementary
• Culinary
Americas: Salt Non De-icing Consumers • Water and pool
Salt excluding Europe • Ice melt
De-icing salt Communities • De-icing bulk
• De-icing packaged
Reconciliation Reconciliation
Segments according to IFRS 8
K+S Group 23K+S Group
Guidance 2019 confirmed
K+S EBITDA 2019: € 700 to € 850m (2018: € 606m)
EBITDA in €m
Main effects:
+ Sigmunds-
hall Main effects:
Main effects: + Shaping - Inflation
+ Bethune - FX returning: 700
+ Absence of +/- Others Higher -
Main effects: drought personnel,
606 + ASP in CS effect energy, freight, 850
Agriculture - Roof stability and material
moderately Neuhof costs
up on last - Average de-
year icing salt
+ Supportive business
product prices
in other CSs
FY18 Price Volume/ Others Cost inflation FY19
Mix
High probability to have no weather-related standstills in 2019!
K+S Group 24K+S Group
CapEx development 2015-2020
in m€
1.200 BU Potash (ex Bethune)
Bethune
BU Salt
1.000
Complementary Activities
800
600
400
200
0
2015 2016 2017 2018 2019e 2020e
K+S Group 25K+S sustainability KPIs and targets 2030
K+S Group
K+S sustainability KPIs and targets 2030 – People
Target by
Goal KPI 2018 2030 at the
latest
Health & 0
Lost time incident rate (LTIR) 7.9
Safety Vision 2030
PEOPLE
Diversity & Employees’ favorable perception of inclusive
68 (2015) >90
Inclusion work environment (percent)
Human Sites covered by a human rights due diligence
0 100
Rights process (percent)
K+S Group 27K+S Group
K+S sustainability KPIs and targets 2030 – Environment
Goal KPI 2018 Target by
2030 at the
latest
Deep-well injection of saline wastewater in 0 starting January
1.0
Germany (m³ p.a.) 2022
Water -500,000
Additional reduction of saline process water from excluding reduction
+400,000
potash production in Germany (m³ p.a.) by KCF facility and
end of production SI
ENVIRONMENT
Amount of residues used for other purposes than
tailings piles or increased amount of raw material 1.0 3
Waste yield (million tons p.a.)
Additional area of tailings piles covered (ha) 5.9 155
Carbon footprint for power consumed (kg
-1.5 -20
Energy & CO2/MWh) (percent)
Climate Specific greenhouse gas emissions (CO2) in logistics
-2.0 -10
(percent)
K+S Group 28K+S Group
K+S sustainability KPIs and targets 2030 – Business Ethics
Target by
Goal KPI 2018 2030 at the
latest
Critical suppliers aligned with the K+S Group 100
Sustainable 14.7
Supplier Code of Conduct (SCoC) (percent) by end of 2025
BUSINESS ETHICS
Supply
Chains > 90
Spend coverage of the K+S Group SCoC (percent) 29.4
by end of 2025
Compliance All employees reached by communication
100
& Anti- measures and trained appropriately in 71
by end of 2019
Corruption compliance matters (percent)
K+S Group 29K+S Group
Housekeeping Items / Financial Calendar
Additional information on Outlook FY 2019
Tax rate: ~30% Customer Segment Agriculture:
Financial result: ~-120 million EUR Sales volume: 6.9-7.2m t
(2018: 6.8m t)
CapEx: ~600 million EUR ASP: moderately up
D&A (incl. Bethune): 380 to 400 million EUR (2018: 255 €/t)
Reconciliation (EBITDA): -60 to -70 million EUR Customer Segment Communities:
Sales volume: 12.5-13.0m t
(2018: 13.3m t)
Financial Calendar
mBank Chemical Event, Warschau 4 June 2019
Credit Suisse Chemicals and Agriculture Conference, London 4 June 2019
DB Access Conference, Berlin 5-7 June 2019
Scotiabank Roadshow, Montreal 10 June 2019
Commerzbank Roadshow, Hamburg 19 June 2019
K+S Group 30K+S Group
IR Contact Details
K+S Aktiengesellschaft
Bertha-von-Suttner-Str. 7
34131 Kassel (Germany)
e-mail: investor-relations@k-plus-s.com
homepage: www.k-plus-s.com
IR-website: www.k-plus-s.com/ir
Lutz Grüten Christiane Martel
Head of Investor Relations Roadshow Management
Phone: +49 561 / 9301-1460 Phone: +49 561 / 9301-1100
Fax: +49 561 / 9301-2425 Fax: +49 561 / 9301-2425
lutz.grueten@k-plus-s.com christiane.martel@k-plus-s.com
Julia Bock, CFA Martin Heistermann Alexander Enge Janina Rochell
Senior Investor Relations Manager Senior Investor Relations Manager Investor Relations Manager Investor Relations Manager
Phone: +49 561 / 9301-1009 Phone: +49 561 / 9301-1403 Phone: +49 561 / 9301-1885 Phone: +49 561 / 9301-1403
Fax: +49 561 / 9301-2425 Fax: +49 561 / 9301-2425 Fax: +49 561 / 9301-2425 Fax: +49 561 / 9301-2425
julia.bock@k-plus-s.com martin.heistermann@k-plus-s.com alexander.enge@k-plus-s.com Janina.rochell@k-plus-s.com
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