Goldman Sachs Eighth Annual Chemicals Conference · 2019. 9. 5. · Goldman Sachs Eighth Annual...
Transcript of Goldman Sachs Eighth Annual Chemicals Conference · 2019. 9. 5. · Goldman Sachs Eighth Annual...
Goldman Sachs Eighth Annual Chemicals Conference
K+S Group
Dr Burkhard Lohr, CEOJulia Bock, Senior Investor Relations Manager
London, 15 March 2019
1
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 – 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.
Current Trading
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K+S Group
K+S Group
Higher potash prices
Strongly improved Bethune volumes
Productivity issues and weather-related
stoppages in Germany
Significantly more salt products shipped
(+3mt), but freight cost headwind
EBITDA and FCF improved
Shaping 2030 accelerated
577 606
117
99 -70 -16
-101
FY17 Price Volume/Mix
Droughteffect
FX Othereffects
FY18
Highlights Financials
€ million FY17 FY18 YoY
Revenues 3,627 4,039 +11%
t/o Potash 1,704 1,973 +16%
t/o Salt 1,762 1,891 +7%
D&A -306 -379 -24%
EBITDA 577 606 +5%
t/o Potash 269 359 +33%
t/o Salt 325 275 -15%
Adj. net profit 145 85 -41%
Adj. EPS (€) 0.76 0.45 -41%
DPS (€) 1) 0.35 0.25 -29%
Operating cash flow 307 309 +1%
Adj. FCF -390 -206 +47%
CapEx 811 443 -45%
Net debt/EBITDA 7.2 7.3 -
EBITDA in €m
Main effects:
- Logistic costs
- Shaping 2030
- Others, e.g.
insurance pay-
ment Bethune
in 2017
FY 2018: Revenues and EBITDA increased
Main effects:2017: - ~40
2018: -110
∆: - 70
1) Proposal to the AGM
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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
SOP Europe
MOP Brazil
Global demand 2018 again slightly up to
~71mt KCl (2017: ~69mt)
Sound demand holds across all regions
Most producers are sold out into Q1
MOP price momentum continued
during Q4
European MOP and Specialty prices
have started to pick up but are still
lagging behind
K+S average selling price 2018:
264 €/t (2017: 254 €/t)
Trading Update Potash
MOP Europe
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K+S Group
K+S Group
Trading Update Salt
Pricing trends in de-icing
De-icing
Mixed picture in our winter regions
Good pre-stocking in US Mid-West
Highly competitive US East Coast
Dec below average in terms of
volumes, Jan/Feb more normal
Non de-icing
Solid demand, gradually increasing
sales volumes
Logistics costs inflation to continue in
2019
2.43 2.262.49 2.48 2.44 2.51 2.54 2.66
Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18
K+S non de-icing volumes (in mt)
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K+S Group
K+S Group
0
50
100
Ma
y
Jun
Jul
Au
g
Se
p
Oct
Nov
Dec
In l/m2
Rainfall comparison (River Werra)
2018
5yr Average
Source: Wetterkontor.de
Impact on K+S
Long-lasting severe drought in 2018 led to temporary
shutdowns in Q3 and Q4:
Wintershall: 38 days
Hattorf: 23 days
Unterbreizbach: 3 days
Negative EBITDA impact of about € 110 million in 2018
Basin capacities have been increased by
> 10% to 600,000 cubic meters
Water levels were low!
High logistics costs for remote disposal (old mines)
Inland shipping was also impacted
In 2019, significantly higher storage capacity expected
(400,000 cubic meters underground storage by summer)
High probability to have no weather-related standstills
in 2019
Extreme weather situation in Germany - implications
Shaping 2030 Strategy
K+S Group 8
K+S Group
Tapping the full potential of our existing assets... and establish 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... to ensure an overall stabilized performance and reduce our dependency on standard products and weather
'One Company' ... thinking and acting as 'One Company' and realizing 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 9
K+S Group
Phase 2: Growth
203020202017
Phase 1: Transformation
Realize synergies
Advance corporate culture
Net 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
Phase I
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K+S Group
K+S Group
Phase I: Building a basis for our growth options
Matrix
Operating Unit Function
Agriculture
Industries
Consumers
Communities
Customer Segments
Operations
IndustryAgriculture
ConsumersCommunities
Board of Executive Directors
COO Group CFO GroupCEO Group
CEO Americas
Head of Human Resources
Head of Corporate Communications
Head of Corporate Development
Head of Corporate Controlling
Matrix
Executive Committee
Head of Marketing,Sales & Supply Chain
Excellence
Marketing & SalesCommittee
Operations Excellence Committee
Head of Operations Excellence
CEO Europe+
Board of Executive Directors
Divisional Silos
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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
Net synergies YE 2020 (vs. 2017)
> €30m
> €20m
> €20m
~ €30m
COO
Sponsor
CFO
COO
COO
CEO
∑ > €150m
Synergies: Breakdown by program
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K+S Group
Shaping 2030 EBITDA impact
Costs Synergies > €150m
Total costs for synergy program: ~ €150m (2020 year end)
2018e 2019e 2020e
K+S Group 14
K+S Group
This NPV equals an EV per share of 25 EUR
Variation NPV change
MOP gran. Brazil +/- 10 USD/t +/- €200 million
“We create value for our stakeholders!”
Net Present Value (NPV) Bethune
Sen
siti
viti
es
NPV for Bethune EUR 4.8 bn
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K+S Group
K+S Group
Site costs (FOB) in comparison (2020)
* column width = production capability in million tonsSource: CRU Report 2016, K+S
-30%
BU Potashw/o Bethune
(incl. Specialties)
Best-in-class
USD/t
K+S Bethune(in 2023)
K+S Zielitz(Purely MOP)
K+S Bethune*
The Bethune ramp-up to 2.86 million tons in 2023 (production capability) significantly improves K+S's competitive position.
Phase II
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K+S Group
K+S Group
Implications for K+S
Arable land shrinking
Yield needs to be improved
Higher efficiency of fertilizationand irrigation needed
Plants have to be more stressresistent
Infrastructure needs to beimproved focus on renewable energy
Growing population, especiallyin Asia, needs more salt forvarious purposes
Today: 7.3bn
8.5bnGlobal population in 2030
Per decade
0.2Average global warming (ºC)
70% of water used for agriculture
40%of population suffer from water shortage by 2030
2015: 3.0bn
5.4bnpeople belong to the middle-class by 2030
Our strategy has incorporated important megatrends
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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
Growth areas and ideas cover the full growth landscape
K+S Growth Landscape
Growth areas and ideas cover core and adjacent businesses
Financials
K+S Group 20
K+S Group
P&L
€ million Q1/17 Q2/17 Q3/17 Q4/17 FY/17 Q1/18 Q2/18 Q3/18 Q4/18 FY/18
Revenues 1,126 742 723 1,032 3,627 1,170 812 840 1,217 4,039
EBITDA 211 102 77 187 577 237 105 36 228 606
Margin 19% 14% 11% 18% 16% 20% 13% 4% 19% 15%
EBIT I 137 29 12 93 271 147 13 -58 125 227
Financial result -9 -4 -9 -5 -26 -31 -25 -26 -30 -112
EBT, adjusted 129 25 3 87 244 116 -12 -84 95 115
Tax rate, adjusted 27% 24% 33% 66% 41% 28% 25% 27% 25% 26%
Net income, adjusted 95 19 2 30 145 84 -9 -61 71 85
EPS, adjusted 0.49 0.10 0.01 0.16 0.76 0.44 -0.05 -0.32 0.38 0.45
K+S Group 21
Cash Flow and Balance SheetK+S Group
€ million Q1/17 H1/17 9M/17 FY/17 Q1/18 H1/18 9M/18 FY/18
Operating cash flow 267 384 383 307 233 292 276 309
- Investing cash flow(pre sale/ purchase of securities)
-212 -410 -623 -697 -90 -198 -336 -515
Adjusted free cash flow 55 -26 -241 -390 143 94 -60 -206
CapEx 277 410 568 811 63 154 278 443
Net debt 3,614 3,745 3,939 4,141 4,009 4,129 4,299 4,444
t/o Net financial debt 2,440 2,592 2,780 2,974 2,834 2,944 3,100 2,974
Net debt/ EBITDA (LTM) 8.1 8.1 8.1 7.2 6.7 6.8 7.6 7.3
Equity ratio 48% 45% 44% 43% 42 % 43% 41% 41%
K+S Group 22
K+S Group
NEW OLD NEW
New Reporting Structure
Europe+:Potash and Magnesium Products (incl. Bethune)
Salt Europe
Americas:Salt excluding Europe
Potash and MagnesiumProducts (incl. Bethune)
Salt
Potassium chlorideFertilizer specialities
Industrial products
Complementary
Non De-icing
Non De-icing
De-icing salt
Agriculture
Industry
Consumers
Communities
Operating Units Business segments Products Customer Segments Subsegments
• Potassium chloride (MOP)• Fertilizer specialities:
SOP, Kieserite, Kornkali
• Chemical• Animal Nutrition• Oil and Gas• Water Softening• Food• Pharma• Complementary
• Culinary• Water and Pool• Ice Melt
• De-icing Bulk • De-icing Packaged
Complementary Activities
Segments according to IFRS 8
Reconciliation Reconciliation
K+S Group 23
K+S Group
Guidance 2019
K+S EBITDA 2019: € 700 to 850m (2018: € 606m)
606
700-
850
FY18 Price Volume/Mix
FX,Others
Costinflation
FY19
EBITDA in €m
Main effects:
+ Bethune
+ Absence of
drought
effect
- Roof stability
Neuhof
- Average de-
icing salt
business
after good
Q1/18
Developments in new reporting structure:
Operating Unit Europe+
EBITDA significantly up (2018: € 443m)
Good market environment for fertilizers
Further increase of Bethune production
No weather-related stoppages assumed, but off-site
disposal is still required
Operating Unit Americas
EBITDA about stable (2018: € 222m)
Start into de-icing salt business overall on long-term
average
Assumption: avg. de-icing salt business for rest of the year
Overall supportive product prices might be
compensated by cost inflation
Adjusted free cash flow will improve significantly and turn positive in 2019
Avg. spot rate EUR/USD 1.20 (2018: 1.18)
Main effects:
+ Sigmunds-
hall
+ Shaping
- FX
+/- Others
Main effects:
+ ASP in CS
Agriculture
moderately
up on last
year
+ Supportive
product prices
in other CSs
Main effects:
- Inflation
returning:
Higher
personnel,
energy, freight
and material
costs
K+S Group 24
K+S Group
Expected development of our potash production
Change in production
~500ktWerra (+): challenges addressed, improving product availabilityWerra (+): no weather-related outage days assumed Neuhof (-): roof stability remains an issue
+100ktKCF
-600ktSigmundshall
+300 to 500ktBethune (+)
-100ktLower K2O content in
Germany
High-cost production to be replaced by low-cost volumes from Bethune
~6.0mt Germany (incl. all outage days)
~1.4mt Bethune
0.1mt Huludao
Total: 7.5mt
Sales Volume ofPMP: 7.5mt
2018
~ 5.9mt Germany
1.7 – 1.9mt Bethune
0.1mt Huludao
Total: 7.7 – 7.9mt
Cash Unit Cost*: >200 €/t
due to overall cost inflation
2019
* Defined as (Revenues-EBITDA)/Sales volume in the Potash and Magnesium Business Segment
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K+S Group
K+S Group
0
200
400
600
800
1.000
1.200
2015 2016 2017 2018 2019e 2020e
BU Potash (ex Bethune)
Bethune
BU Salt
Complementary Activities
in m€
CapEx development 2015-2020
K+S sustainability KPIs and targets 2030
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K+S Group
K+S Group
Goal KPI 2018Target by
2030 at the latest
PEO
PLE
Health & Safety
Lost time incident rate (LTIR) 7,90
Vision 2030
Diversity & Inclusion
Employees’ favorable perception of inclusive work environment (percent)
68 (2015) >90
Human Rights
Sites covered by a human rights due diligence process (percent)
0 100
K+S sustainability KPIs and targets 2030 – People
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K+S Group
K+S Group
Goal KPI 2018 Target by2030 at the
latest
ENV
IRO
NM
ENT
Water
Deep-well injection of saline wastewater in Germany (m³ p.a.)
1.0 0 starting January
2022
Additional reduction of saline process water from potash production in Germany (m³ p.a.)
+400,000-500,000
excluding reduction by KCF facility and
end of production SI
Waste
Amount of residues used for other purposes than tailings piles or increased amount of raw material yield (million tons p.a.)
1.0 3
Additional area of tailings piles covered (ha) 5.9 155
Energy & Climate
Carbon footprint for power consumed (kg CO2/MWh) (percent)
-1.5 -20
Specific greenhouse gas emissions (CO2) in logistics (percent)
-2.0 -10
K+S sustainability KPIs and targets 2030 – Environment
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K+S Group
K+S Group
Goal KPI 2018Target by
2030 at the latest
BU
SIN
ESS
ETH
ICS
Sustainable Supply Chains
Critical suppliers aligned with the K+S Group Supplier Code of Conduct (SCoC) (percent)
14.7100
by end of 2025
Spend coverage of the K+S Group SCoC (percent) 29.4> 90
by end of 2025
Compliance & Anti-Corruption
All employees reached by communication measures and trained appropriately in compliance matters (percent)
71100
by end of 2019
K+S sustainability KPIs and targets 2030 – Business Ethics
K+S Group 30
K+S Group
Housekeeping Items / Financial Calendar
Tax rate: ~30%
Financial result: -120 to -130 million EUR
CapEx: ~ 600 million EUR
D&A (incl. Bethune): 380 to 400 million EUR
Reconciliation (EBITDA): -60 to -70 million EUR
Additional information on Outlook FY 2019
Financial Calendar
Customer Segment Agriculture:Sales volume: 6.9-7.2 mt(2018: 6.8 mt)ASP: moderately up (2018: 255 €/t)
Customer Segment Communities:Sales volume: 12.5-13.0 mt(2018: 13.3 mt)
Roadshow Frankfurt, Société Générale 15 March 2019
Goldman Sachs 8th Annual European Chemicals Conf., London 15 March 2019
Bankhaus Lampe Deutschlandkonferenz, Baden Baden 3 April 2019
Q1 2019 Earnings Release 14 May 2019
Annual General Meeting, Kassel 15 May 2019
31
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)
Laura SchumberaJunior Investor Relations Manager
Phone: +49 561 / 9301-1607Fax: +49 561 / [email protected]
Lutz GrütenHead of Investor Relations
Phone: +49 561 / 9301-1460Fax: +49 561 / [email protected]
Christiane MartelRoadshow Management
Phone: +49 561 / 9301-1100Fax: +49 561 / [email protected]
Martin HeistermannSenior Investor Relations Manager
Phone: +49 561 / 9301-1403Fax: +49 561 / [email protected]
Alexander EngeInvestor Relations Manager
Phone: +49 561 / 9301-1885Fax: +49 561 / [email protected]
Julia Bock, CFASenior Investor Relations Manager
Phone: +49 561 / 9301-1009Fax: +49 561 / [email protected]