mbank/commerzbank Chemicals Day Warsaw, January 20, 2016

Transcription

1 K+S Aktiengesellschaft mbank/commerzbank Chemicals Day Warsaw, January 20, 2016 Patrick Kofler, Senior Investor Relations Manager

2 Content A 1 2 B C K+S Unique Strategic Position Potash and Magnesium Products Salt Current Trading Outlook K+S Group 2

3 Investment Case K+S Group Potash and Magnesium Products Business Unit Salt Business Unit Complementary Activities Unique position in Europe and specialty fertilizers Legacy Project heading closer to commissioning in 2016 Salt business to improve earnings substantially Ongoing cost reductions and efficiency improvements 2015 EBIT I: Significant increase to million expected Dividend payout of 40-50% Attractive mid-term EBITDA guidance: ~ 1.6 billion in 2020 K+S Group 3

5 Potash and Magnesium Products Long-Term Dynamics Positive for Fertilizer Less arable land but more protein consumption per capita Jahr Global population development Each year additional 80m people need to be fed this equals to the population of Germany 3.0 billion 6.9 billion 9.7 billion Arable Land per capita Available arable land per capita will decrease at the same time m m m 2 Protein per capita 60 g/ day 80 g/ day 130 g/ day 1) By 2050 an expanded world population will be consuming two thirds more animal protein than it does today In 2050, less than half of a soccer field will be available to feed one person year round - 80 percent of future growth in crop production will come from yield advancements driven by balanced use of fertilizers Sources: UN, World Population Prospects, 2012 Revision, UNDP, 2013; FAOStat ) FAO forecasts based on the expected increase in animal protein K+S Group 5

6 Raw Salt Potash and Magnesium Products Utilizing Entire Range of Minerals in Complex Deposits Mineral extraction K+S product offering SOP Fertilizer Health Care & Nutrition Industrial Applications Residue 63.5% Kieserite Industrial products 0.7 Health Care & Nutrition Industrial potash Kieserite 20.4% Korn-Kali Magnesia-Kainit KCL (MOP) Specialties 3.0 Kieserite Korn-Kali KCl 16.1% MOP SOP e.g. Neuhof 2014 Basis: 2014 Sales volumes in million tons Reducing specific costs of our MOP products $$$ Extending our product offering K+S Group 6

7 K+S Potash and Magnesium business proven robust 30% Average selling price comparison with potash peers 20% 10% 0% -10% Source: Company reports -20% -30% Since Q Since Q YTD K+S Peer 1 Peer 2 K+S Group 7

8 Potash and Magnesium Products Leading Position in Europe Europe Asia South America Other regions K+S Group 8

9 Legacy Project Strengthening our Global Presence China India South East Asia North America Expanding our current production portfolio in Germany with a North American production site Second source supplier Securing a good asset base with competitive production costs Sales and distribution through existing distribution structures of the K+S group Exclusive outline agreement with Koch Fertilizer about supply and sales of Potash fertilizers in the US Regional growth projects in China and SEA Flexible multi-product strategy Located in the Heart of Saskatchewan s Potash-Rich Basin South America Regina Two additional potash permit areas in the Esterhazy potash region K+S Group 9

10 Legacy Project On Time and Budget 100% ~ 70% of CapEx spent 2014 and 2015 years of main construction and CapEx 100% Main parts awarded to suppliers 50% 50% Sustaining CapEx going forward 0% % August 2015 September 2015 October 2015 K+S Group 10

11 ~90 WACC Legacy Project Legacy Valuation Implied Value Per Share ( ) Terminal growth rate 0% 2% 7% ~ 21 8% ~ 11 Volume ramp-up (m metric tons)/ /costs per ton (CAD) Conservative price assumptions for Legacy based on MOP gran. Brazil Sustaining capex approximately CAD 100 million p.a. from ~1 ~2 ~2.1 ~2.3 ~2.4 ~2.6 ~2.9 Sales volumes (m metric tons) Production costs Logistics costs Mining taxes/ royalties K+S Group 11

13 Salt Inevitable for life Demand driven by Winter weather conditions Infrastructure development Increasing standard of living Population growth Economic growth and industrialisation Product category De-Icing salt Food grade salt Industrial salt Salt for chemical use Urbanization K+S Group 13

14 Salt Unrivalled Global Production Network Evaluating several opportunities that will enable K+S to grow in Asia Competitive edge: Unrivalled global production network More than 30 assets on 3 continents allow close proximity to customers in a business that is highly freight-cost sensitive Broad range of products due to variety of production methods Best in class supply chain assets and competence Industry best cost production in Chile K+S Group 14

15 Salt Diverse Regional and Product Portfolio Chemical 2014 Revenue Distribution Industrial Food grade/ Consumer 1) De-icing figure normalized for winter effects K+S Group 15

16 Presence in Attractive De-Icing Markets Eastern Canada Scandinavia Great Lakes US East Coast Central Europe Indicative regional strength of winter e Europe North America K+S Group 16

17 Broad Variety of Salt Products Consumer Products Main applications Table salt Water softening Pool Salt Home (packaged) de-icing Our competitive advantage Brand equity supports price premiums over competitive brands and private labels > 60% 25 35% ~35% Industrial Salt Main applications Salt for oil/ gas drilling fluids Dialysis / Infusions Commercial water softening Animal lick stones Food processing / preservation Our competitive advantages Broad production footprint with close proximity to customers provides unrivalled service and supply certainty Widest product range in the salt industry Chemical Salt Main applications Soda ash (glass production) Chlorine production (PVC) Our competitive advantages Unrivalled footprint with close proximity to customers Chilean rock salt quality nearly matches vacuum salt quality Low cost production Additional processing by customers not necessary K+S Group 17

18 Salt Salt 2020 Strategy On Track Priority areas GROWTH Market share growth New segments New regions EFFICIENCY Fit for the Future Business and technical processes Supply chain and distribution network improvements CULTURE Safety first! Remove silo thinking Transparency/ Trust High performance and engaged workforce Expected EBIT development Salt 2020 Launched Equals more than 400 million EBITDA e Actual results Normalized K+S Group 18

20 P&L million Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 YoY Revenues 1, ,020 1, % EBIT I % t/o insurance gain EBIT I w/o insurance gain % Margin 19% 16% 15% 13% 23% 20% 15% Financial result EBT, adjusted Tax rate, adjusted 26% 26% 31% 35% 28% 28% 29% Net income, adjusted EPS, adjusted The adjusted key figures only include operating forecast hedges of the respective reporting period in EBIT I. In addition, related effects on deferred and cash taxes are also excluded. K+S Group 20

21 Cash Flow and Balance Sheet million FY/13 Q1/14 H1/14 9M/14 FY/14 Q1/15 H1/15 9M/15 Operating cash flow Investing cash flow (pre sale/ purchase of securities) , Adjusted free cash flow CapEx , Net debt (-) -1, ,098-1,305-1,676-1,653-2,019-2,224 t/o Net financial debt (-) ,005 Net debt/ EBITDA (LTM) Equity ratio 45% 46% 46% 52% 51% 52% 52% 51% K+S Group 21

22 Well Financed for Current Situation RCF 1 billion (undrawn) Bond III 500 million (expn. Dec 2018; coupon: 3.125%) Bond II 500 million (expn. Dec 2021; coupon: 4.125%) Bond I 500 million (expn. June 2022; coupon: 3.000%) Financial instruments Peak years in terms of leverage Group capex (in ) Capex spent of > 1.0 billion per year from 2014 to 2016 driven by Legacy Project K+S Group 22

23 Potash and Magnesium Products million Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 YoY Revenues % EBIT I % t/o special item EBIT I w/o special item % Margin 26% 28% 24% 18% 30% 29% 20% t/o Legacy OpEx Average selling price ( /t) Sales volumes (million tons) Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 LTM Costs per ton (1,2,3) (1) (Revenues EBIT) / Sales volumes (2) Excl. anticipated insurance payment (3) Excluding OpEx Legacy K+S Group 23

24 Salt million Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 YoY Revenues % EBIT I % Margin 14% 1% 7% 11% 20% 11% 11% Sales volumes (million tons) De-icing Non de-icing Average selling prices ( ) De-icing % Non de-icing % K+S Group 24

26 2015 Guidance Significant Increase Confirmed billion million million EBITDA EBIT I Net Profit K+S Group 26

27 Attractive Mid-Term Guidance Confirmed Group EBITDA expected to increase significantly by 2020 ~ 1.6 billion Potash and Magnesium Products Despite current market turmoil, midterm fundamentals of the potash business remain intact Legacy will significantly contribute to the mid-term earnings goal Our Salt business continues to grow its profitability Salt FY 2020 K+S Group 27

28 To be determined K+S Group Dividend Policy Implies Increase for % 45% 40% 35% 30% Target payout ratio of 40-50% 10% 8% 6% Current guidance implies dividend per share of (2014: 0.90) 25% 20% 15% 4% This represents a dividend yield of % 2) 10% 2% 5% 0% e Payout ratio (lhs) Dividend yield (rhs) 1) 0% 1) Based on year-end share prices 2) Share price of 24 assumed K+S Group 28

29 Cost Discipline Will Remain High million Initiated measures unfolding full effect >150 >120 >120 >120 Original savings Additional savings beyond scope of Fit for the Future resolved K+S Group 29

30 From Capex to Cash Capex Phase Operating and Free Cash Flow Cash Phase 2020 Net debt: 2.2 billion 1) million CAGR > 10% Net debt: < 2.0 billion Leverage: 2.1x 1) Leverage: x CapEx: ~ 1.3bn billion 2) FCF: Negative 2) EBITDA: billion 2) 2015e 2016e 2017e 2018e 2019e 2020e Operating Cash Flow Free Cash Flow (adjusted) CapEx: Maintenance FCF: Positive EBITDA: ~ 1.6 billion 1) 9M ) Guidance 2015 K+S Group 30

31 Management s Task List Opening Legacy this summer Managing environmental challenges particularly in Germany Enhancing portfolio of higher yielding products Successful execution of Salt 2020 Strategy Keeping cost discipline beyond 2016 Low cost commodity production with Legacy in Canada ensuring cost competitiveness and participation in future growth in the potash markets German mines remaining attractive with broad specialty portfolio and close proximity to customers Salt with unrivalled footprint and product offering K+S Group 31

32 IR Contact Details K+S Aktiengesellschaft Bertha-von-Suttner-Str Kassel (Germany) investor-relations@k-plus-s.com Homepage: IR-website: Thorsten Boeckers Head of Investor Relations Phone: / Fax: / thorsten.boeckers@k-plus-s.com Andrea Rach Investor Relations Assistant Phone: / Fax: / andrea.rach@k-plus-s.com Patrick Kofler Senior Investor Relations Manager Phone.: / Fax: / patrick.kofler@k-plus-s.com Matthias Jelden Investor Relations Manager Phone.: / Fax: / matthias.jelden@k-plus-s.com Martin Heistermann Investor Relations Manager Phone.: / Fax: / martin.heistermann@k-plus-s.com K+S Group 32

33 Forward-Looking Statements 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 Risk Report materialise, actual developments and events may deviate from current expectations. The Company assumes no obligation to update the statements, save for the making of such disclosures as are required by the provisions of statute. K+S Group 33

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35 K+S Share WKN: KSAG88 ISIN: DE000KSAG888 Ticker-Symbols: Bloomberg SDF / Reuters SDFG K+S ADR CUSIP: 48265W108 ADR Ticker-Symbol: Bloomberg: KPLUY / Reuters: KPLUY.PK K+S Bond 06/2022 WKN: A1P GZ8 ISIN: DE000A1PGZ82 K+S Bond 12/2018 WKN: A1Y CR4 ISIN: XS K+S Bond 12/2021 WKN: A1Y CR5 ISIN: XS K+S Aktiengesellschaft Bertha-von-Suttner-Straße Kassel Germany Internet: Investor Relations phone: +49 (0)561 / fax: +49 (0)561 / investor-relations@k-plus-s.com Financial Calendar 10 March 2016: FY report May 2016: AGM / Q1 report 11 Aug 2016: Q2 report K+S Group 35