Salt: K+S expects significant increase in earnings for 2019

German minerals miner K+S Group forecasts a significant rise in core profit for 2019, boosted largely by higher fertiliser prices and rising potash volumes after a severe drought in Germany halted production at its main mine last year.

Production outages at its largest site on the Werra river, higher logistics costs due to the drought, and an outage at its new Bethune mine in Canada forced K+S to cut its guidance twice last year.

The company said last week that it has increased storage capacity for saline wastewater in the Werra area and does not expect a repeat of the stoppages this year. It has also forecasted a rise in production at the Bethune mine this year.

As a result, it said earnings before interest, tax, depreciation and amortisation (EBITDA) should rise to between EUR700M and EUR850M (US$792M-US$962M), from EUR606M in 2018.

Roskill view:

K+S Group has two business units, Potash and Magnesium Products, and Salt. The Salt group is the world’s largest producer with operations in North America (Morton Salt), Europe (esco) and Latin America (K+S Chile). As part of its ‘Shaping 2030’ plan, K+S intends to reorganise its business into Agriculture, Industry, Consumers and Communities market segments and, as a result, the existing Potash and Magnesium Products and Salt business units will be integrated. The company reports in March 2019 that it continues to make good progress in the implementation of this new strategy.

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