Bernstein's 16th Annual Strategic Decisions Conference ... · London, 25 September 2019 Alexander...

K+S Group

Bernstein 16th AnnualStrategic DecisionsConference London, 25 September 2019

Alexander Enge, IR Manager

K+S Group 2

K+S Group

IndustryAgriculture Consumers Communities

Group financials 2018

Revenues

€ 4.04 billionEBITDA

€ 606 millionEBITDA-Margin

15%Earnings after taxes, adj.

€ 85 million

Customer Segments

Revenues€ 1.74 billion

EBITDA€ 275 millionMargin 16%







43%

28%

11%

18%

41%34%

7%18%

OU Europe+: Revenues: € 2.59 billion; EBITDA: € 443 million; Margin: 17%

OU Americas: Revenues: € 1.45 billion; EBITDA: € 222 million; Margin: 15%

K+S at a Glance

3

K+S Group

K+S Group

2019 FULL-YEAR GUIDANCE reflecting current market environment

CASH CONVERSION AND LEVERAGE improved

WASTEWATER MANAGEMENT improved

BETHUNE RAMP-UP on track

OPERATING PERFORMANCE improved

4

K+S Group

K+S Group

EBITDA again with a nice improvement: +24%

Europe+: Price increase across all PMP products

Americas: Maintenance measures and elevated logistics costs showing impact on EBITDA especially in a seasonally low quarter

FCF plus €150m to €102m best Q2 FCF since 2011; supportive on our path to strengthen our balance sheet

Highlights Financials

€ million Q2/18 Q2/19 YoY

Revenues 812 879 +8%

t/o Europe+ 572 627 +10%

t/o Americas 239 251 +5%

D&A -92 -104 -13%

EBITDA 105 130 +24%

t/o Europe+ 100 128 +29%

t/o Americas 22 14 -38%

Adj. net profit -9 3 -

Adj. EPS (€) -0.05 0.01 -

Operating cash flow 59 193 -

Adj. FCF -49 102

CapEx 91 93 +2%

-

Net fin. debt/EBITDA (LTM) 4.6x 4.4x -

Q2 2019 at a glance

105

13047

-3 -1

-18

Q2/18 Price Volume/Mix

FX Costinflation,Others

Q2/19

EBITDA in €m

- General costinflation

+ Mainlyprices in Agriculture

Main effects:+ Volumes

Agriculture- Volumes

Industry andCommunities

5

K+S Group

K+S Group

Pricing (Source: FMB)

80%

90%

100%

110%

120%

130%

140%

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19

SOP Europe

MOP Brazil

H1/19:

Robust demand in Europe and Brazil, weather effects

postpone demand in NA, constant deliveries to China and

India, SE Asia demand weaker due to palm oil price

However, MOP price momentum remains supportive (YoY)

Specialty prices were picking up but still lagging behind

K+S Agriculture average selling price:

FY/18: 254 €/t (FY/17: 241 €/t);

Q4/18: 268 €/t; H1/19: 277 €/t

Q3/19:

Announcements of production cuts of potash producers

against the backdrop of current weak market environment,

also due to Chinese import stop

Trading Update: Customer Segment Agriculture

MOP Europe

6

K+S Group

K+S Group

Growth drivers

Oil and Gas1

Water Softening4

Revenue Split by Products 2018 (%)

Customer Segment Industry at a Glance

Complementary15

Other24

Animal Nutrition7

Chemical23

Food21

Pharma5

in € million FY 2018 H1/19

Revenues 1,132.8 564.3

Sales volume (mt) 10.30 4.91

EBITDA 225.5 114.3

Population growth

Economic growth and industrialization

Increasing standard of living

Urbanization

Current trading

Solid demand, gradually increasing

sales volumes

Slightly lower product availability

after the planned closure of

Sigmundshall at the end of 2018

Key financials

7

K+S Group

K+S Group

Growth drivers

Ice Melt7

1

2

Revenue Split by Products 2018 (%)

Customer Segment Consumer at a Glance

Other1

Water and Pool53

Culinary39

in € million FY 2018 H1/19

Revenues 453.7 228.0

Sales volume (mt) 1.81 0.88

EBITDA 43.3 25.4

Population growth

Economic growth andindustrialization

Increasing standardof living

Current trading

Consumers customer segment

showed first success in H1/19 to

pass on higher costs, especially for

logistics

Key financials

8

K+S Group

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

Q1: average demand

In total, Q4 almost on and Q1 above

long-term average

Widely promising bidding season 2019

6.86

0.93 1.53

4.00

7.11

0.86

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Sales volumes in customer segment Communities (in mt)

9

K+S Group

K+S Group

Our wastewater management makes us less vulnerable to droughts

~54%

August2018

~37%

600k cbm

600k cbm

August 2019

up to1,000k

cbm

Capacity Utilization rate

August 2019: Approval received for an additional (temporary) underground wastewater storage capacity of up to 400k cbm.

Offsite disposal of saline wastewater by truck and railcar

Basin capacity andutilization¹(as of 05 Aug 19)

400k cbm

¹Basin capacities were at 500k cbm in 2018 , but adjusted for comparative purposes

~22%

K+S Group 10

K+S Group

Bethune: Product quality is improving

Quality improvement already in 2019 but somewhat lower production than previously expected. Customers will recognize this improvement early 2020.

Installation ofgrinder pumps in

July 2019

Preparation andinstallation of

cooling-, sievingand crushingequipment in

September 2019

Implementation in Q4/2019

11

K+S Group

K+S Group

606

700-

850

730-

830

FY18 Price Volume/Mix

Others Costinflation

FY19guidancein May

+ - FY19guidancein August

Ad hocof 23/9/

2019

EBITDA in €m

+ Bethune+ Absence of

droughteffect

- Roof stabilityNeuhof

- Average de-icing saltbusiness

+ Sigmundshall+ Shaping- FX+/- Others

+ ASP in CSAgriculturemoderatelyup

+ Supportiveproduct pricesin other CS

- Inflation returning: Higher personnel, energy, freight andmaterialcosts

Outlook 2019

+ Changedassumptionregardingthe EUR/USD exchange rate (1.15 vs. 1.20 EUR/USD)

- Bethune:Quality initiative causingextendedmaintenanceshutdown

- Temporaryslowdown in H2 on theback ofChinese MOPimport stop

- Reduction ofK+S MOP pro-duction of upto 300kt re-lated to thecurrent weakmarket enivron-ment with an EBITDA impactof up to € 80m for 2019

Shaping 2030 Strategy

K+S Group 13

K+S Group

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 where we can use our existing capabilities

Increasing the share of our specialties business... ensuring an overall stabilized performance and reducing our dependency on standard products and weather

'One Company' ... thinking and acting as 'One Company' and lifting synergies between our businesses

We will be the most customer-focused, independent minerals company and grow our EBITDA to €3bn in 2030 by ...

Our vision for 2030

IndustryAgriculture

ConsumersCommunities

K+S Group 14

K+S Group

Phase 2: Growth

203020202017

Phase 1: Transformation

Realize synergies

Advance corporate culture

Net financial debt/ halvedEBITDA vs. H1/2017

Synergies > €150m

EBITDA-Ambition €3bn

ROCE > 15%

Revenue growthbeyond 2030

> 4%

Increased share of specialties

Tapping the full potential of our existing assets

Exploring new adjacent growth areas

Shaping the organizationand focusing towards our clients

Reduce indebtedness

Investment grade ratingachieved in 2023

We will implement our strategy in two phases

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K+S Group

K+S Group

SHAPING 2030

Lift synergies

Operations

Procurement

Supply Chain and Logistics

Commercial Excellence

SG&A Optimization

> €50m

Synergies YE 2020 (vs. 2017)

> €30m

> €20m

> €20m

~ €30m

COO

Sponsor

CFO

COO

COO

CEO

∑ > €150m

Phase I: Synergies breakdown by program

16

K+S Group

K+S Group

Geo-expansion Fertilizer Industry

Africa

Asia

Increase of fertilizer specialties

Ramp of low cost commodities

Expand Pharma & Food portfolio

Chemical applications

Phase II: Growth ideas cover the full growth landscape

K+S Growth Landscape

Growth areas and ideas cover core and adjacent businesses

17

K+S Group

K+S Group

IR Contact Details

e-mail: [email protected]: www.k-plus-s.comIR-website: www.k-plus-s.com/ir

K+S AktiengesellschaftBertha-von-Suttner-Str. 734131 Kassel (Germany)

Janina RochellInvestor Relations Manager

Phone: +49 561 / 9301-1403Fax: +49 561 / [email protected]

Lutz GrütenHead of Investor Relations


Christiane MartelRoadshow Management


Alexander EngeInvestor Relations Manager


Julia Bock, CFASenior Investor Relations Manager


18

K+S Group

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 – materialize, 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.

Bernstein's 16th Annual Strategic Decisions Conference ... · London, 25 September 2019 Alexander...

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