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UPDATE 1-K+S profit beats consensus as potash prices bottom out
May 14, 2014 / 6:39 AM / in 4 years

UPDATE 1-K+S profit beats consensus as potash prices bottom out

* Q1 adj EBIT 220 mln eur, above 200 mln eur poll avg

* K+S still sees significant decline in 2014 earnings

* CEO says sees signs of prices bottoming out (Adds industry background, peers’ recent earnings, details on salt unit)

By Ludwig Burger

FRANKFURT, May 14 (Reuters) - Earnings at German salt and potash miner K+S beat market expectations as prices of its fertiliser minerals began to recover following a slump last year and the cold winter in North America boosted demand for de-icing salt.

The group on Wednesday posted a 21 percent drop in first-quarter adjusted earnings before interest and tax (EBIT) to 220 million euros ($301 million), surpassing the 200 million euro average estimate in a Reuters poll of analysts.

“The demand for potash and magnesium products is robust and we see indications that the price level has bottomed out,” said Chief Executive Officer Norbert Steiner.

The global potash market plunged into turmoil in July 2013, when Russian producer Uralkali quit a powerful sales alliance with Belarus’ Belaruskali, causing higher output volumes and lower prices. Bulk purchasing contracts, signed by major buyers China and India earlier this year, have stabilised the market somewhat.

The German mining company, formerly part of BASF, said it still expects operating earnings and adjusted net income to decline significantly this year because average prices over the year are set to remain well below the year-earlier level.

K+S, which is the world’s No.1 salt supplier and owner of the Morton Salt brand, said the severe winter in the United States more than offset the effect of an unusually mild winter in Europe on its road salt business.

Its largest fertiliser rival Potash Corp of Saskatchewan said last month that potash demand and spot prices picked up during the first quarter, but that average prices remained nearly one-third lower than a year ago. Peer Mosaic , another competitor, said last week it would cut more than 500 jobs.

The average per-tonne price of K+S’s potash products in the first quarter was 15 percent below the year-earlier level, its financial report shows.

The shares were indicated unchanged in pre-market trading, while Germany’s blue-chip index DAX was seen opening 0.2 percent higher. ($1 = 0.7296 Euros) (Reporting by Ludwig Burger; Editing by Noah Barkin)

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