K+S beats Q2 revenue forecasts as fertiliser sales recover

K+S increased revenues to €874 million in the second quarter of the current year from €826 million in the prior-year period. Operating earnings EBITDA rose significantly to €128 million, compared with the prior-year quarter. Adjusted free cash flow amounted to €+87 million in the first six months of the current financial year (H1/2023: €+274 million). The key figures were, therefore, in line with expectations.

• Q2 revenues: €874 million (Q2/2023: €826 million; Vara consensus estimate as of July 16, 2024: €832 million); H1: €1,862 million (H1/2023: €2,018 million)

  
  

• Q2 EBITDA: €128 million (Q2/2023: €24 million; Vara consensus estimate as of July 16, 2024: €129 million); H1: €328 million (H1/2023: €478 million)

  
  

• Agriculture customer segment with continued strong European and specialty business Industry+ customer segment: Recovery in demand for chemical and industrial products

  
  

• Transformation process on track

  
  

• H1 adjusted free cash flow: €+87 million (H1/2023: €+274 million; Vara consensus estimate as of July 16, 2024: €+78 million)

  
  

• 2024 outlook: EBITDA range specified and cash flow expectation confirmed:

• EBITDA expected to range between €530 million and €620 million with unchanged midpoint (previous outlook: €500 million to €650 million; 2023: €712 million; Vara consensus estimate as of July 16, 2024: €585 million)

• Adjusted free cash flow continues to be expected to at least break even (2023: €+311 million; Vara consensus estimate as of July 16, 2024: €+25 million)

″Both our European business and the share of fertilizer specialties continued to be strong in the second quarter, so that we can look back on a robust first half of the year overall,″ says Dr. Burkhard Lohr, Chairman of the Board of Executive Directors of K+S Aktiengesellschaft. ″For the full year 2024, we confirm our expectations for free cash flow and are now specifying the EBITDA forecast at between €530 million and €620 million.″

Development in the customer segments

In the Agriculture customer segment, revenues increased to €616 million in the second quarter (Q2/2023: €557 million). Lower average prices were offset by significantly higher sales volumes, particularly for fertilizer specialties. Revenues in Europe rose to €271 million (Q2/2023: €232 million). At 1.84 million tonnes (excluding trade goods), the sales volume in the second quarter was significantly higher than the prior-year figure (Q2/2023: 1.63 million tonnes).

Revenues in the Industry+ customer segment amounted to €258 million in the second quarter, despite significantly lower average prices for products containing potash. Therefore, they were only slightly below the record figure of the prior-year quarter (Q2/2023: €269 million). At 1.47 million tonnes, sales volumes in this customer segment were moderately higher, compared with the prior-year quarter (Q2/2023: 1.39 million tonnes). This moderate increase was mainly attributable to a tangible recovery in demand for chemical and industrial products.

2024 outlook: EBITDA range specified

For 2024 as a whole, K+S now expects operating earnings EBITDA to range between €530 million and €620 million (2023: €712 million). This confirms the midpoint of the previously forecast EBITDA range of between €500 million and €650 million and narrows it accordingly.

As previously forecast, adjusted free cash flow should at least break despite the elevated capital expenditure due to the ramp-up in Bethune and preparatory expenses for the Werra 2060 transformation project (2023: €+311 million).

Furthermore, an oversupply on the potash market is still not expected for the year as a whole. In the Agriculture customer segment, a stable price development compared to current levels is assumed for the rest of the year and annual sales volumes (excluding trade goods) in a range of 7.4 million and 7.7 million tonnes.

Other assumptions on which the estimate for the full year 2024 is based are described from page 17 of the H1/2024 Half-Year Financial Report onwards.