Standardpräsentation Investor Relations - K+S Aktiengesellschaft
Standardpräsentation Investor Relations - K+S Aktiengesellschaft
Standardpräsentation Investor Relations - K+S Aktiengesellschaft
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<strong>K+S</strong> <strong>Aktiengesellschaft</strong> · Compendium<br />
June 2013<br />
June 2013<br />
Experience growth.<br />
<strong>K+S</strong> Group
<strong>K+S</strong> Group<br />
Experience Growth<br />
<strong>K+S</strong> is one of the world's leading suppliers of standard<br />
and speciality fertilizers. In the salt business, with sites<br />
in Europe as well as North and South America, <strong>K+S</strong> is<br />
the world’s leading producer.<br />
<strong>K+S</strong> offers a comprehensive range of goods and<br />
services for agriculture, industry and private<br />
consumers which provides growth opportunities in<br />
virtually every sphere of daily life.<br />
We assume active responsibility for the sustained<br />
growth of our world. Our more than 14,000 employees<br />
display their commitment towards this goal day by<br />
day – by applying their knowledge and experience.<br />
June 2013 <strong>K+S</strong> Group 1
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy 2<br />
B. Potash and Magnesium Products 11<br />
C. Salt 63<br />
D. Complementary Activities 83<br />
E. Financial Data 85<br />
F. Outlook 97<br />
G. <strong>K+S</strong> Share 102<br />
June 2013 <strong>K+S</strong> Group 2
<strong>K+S</strong> Group<br />
Focus on Two Strong Pillars<br />
<strong>K+S</strong> Group<br />
Revenues 2012: € 3.9 billion (2011: € 4.0 billion)<br />
EBIT I 2012: € 808.5 million (2011: € 906.2 million)<br />
Potash and Magnesium<br />
Products Business Unit<br />
Salt Business Unit<br />
Revenue / EBIT I in € million<br />
1,867<br />
2,134 2,291 2,334<br />
476 740<br />
774<br />
772<br />
2010 2011 2012 LTM<br />
Revenue / EBIT I in € million<br />
1,729 1,710 1,485 1,641<br />
238 211<br />
62<br />
89<br />
2010 2011 2012 LTM<br />
Complementary Activities (Revenues 2012: € 154 million; EBIT I 2012: € 21 million)<br />
Waste Management & Recycling<br />
Logistics<br />
Animal Hygiene Products<br />
Trading business (CFK)<br />
June 2013<br />
<strong>K+S</strong> Group<br />
3
<strong>K+S</strong> Group<br />
Why invest in <strong>K+S</strong>?<br />
<strong>K+S</strong>…<br />
• … has access to megatrends of growing population, increasing living standards and<br />
changing diets toward higher meat consumption in developing countries<br />
• … is active in the growing potash fertilizer market having an attractive consolidated supply<br />
structure and high barriers to entry. Potash does not have any substitutes<br />
• … is a unique strategic combination of potash and salt with considerable synergies on<br />
production side and by being complementary on sales side<br />
• … has leading positions in potash and magnesium (big volume player in Europe,<br />
No. 5 worldwide)<br />
• … has a substantial capacity growth potential with the Legacy Project (set up of a potash<br />
solution mine) in Canada<br />
• … is the global leader in salt with leading positions in Europe, South and North America and<br />
with diversification through the global footprint and various end markets<br />
• … has very strong financials<br />
• … has a responsible management team with strong operational background and track record<br />
of creating value<br />
June 2013 <strong>K+S</strong> Group 4
<strong>K+S</strong> Group<br />
Expansion of Core Business Segments<br />
Start salt<br />
joint venture<br />
esco<br />
100%<br />
acquisition<br />
esco<br />
Acquisition<br />
SPL<br />
(Chile)<br />
Acquisition<br />
Morton Salt<br />
(USA)<br />
• Acquisition<br />
Potash One<br />
(Canada)<br />
• Divestment<br />
COMPO<br />
Divestment<br />
<strong>K+S</strong> Nitrogen<br />
2002 2004 2006<br />
2009 2011<br />
2012<br />
Our business rests on the two pillars of potash and magnesium products and salt.<br />
This combination gives us a nearly unique position in the international marketplace:<br />
<br />
<br />
Synergies on the production side (technology, mining and geology)<br />
Supplementation and seasonal equilibrium as to sales volumes (potash business depending<br />
on agronomic cycles – relatively crisis-resistant, but weather-dependent salt business)<br />
With the acquisition of Potash One and the divestments of COMPO and <strong>K+S</strong> Nitrogen,<br />
we consistently follow our two-pillar strategy<br />
June 2013 <strong>K+S</strong> Group 5
<strong>K+S</strong> Group<br />
History<br />
1889 Formation of „<strong>Aktiengesellschaft</strong> für Bergbau und Tiefbohrung“, the eldest predeceasing<br />
company of today’s <strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
1970/71 Merger of all three West-German potash producers to Kali und Salz GmbH; BASF is majority<br />
shareholder / change of corporate form into Kali und Salz AG<br />
1993 Merger of the potash and rock salt activities of Kali und Salz AG and the East-German<br />
Mitteldeutsche Kali AG into the Kali und Salz GmbH (Kali und Salz AG share: 51%)<br />
1997 BASF reduces its stake of Kali und Salz AG below 50%<br />
1998 Purchase of the remaining share capital (49%) of Kali und Salz GmbH;<br />
<strong>K+S</strong> is included in the MDAX<br />
1999 Change of company name to <strong>K+S</strong> <strong>Aktiengesellschaft</strong>; acquisition of COMPO and fertiva;<br />
2000 <strong>K+S</strong> cancels 10% own shares<br />
2002 Foundation of salt joint venture esco - european salt company (<strong>K+S</strong> stake: 62%)<br />
2003 <strong>K+S</strong> cancels 5.6% own shares<br />
2004 Acquisition of 38% share in esco<br />
2005 Share buyback and cancellation of 1.25 million shares<br />
2006 Acquisition of the Chilean salt producer Sociedad Punta de Lobos<br />
2008 Inclusion in the DAX<br />
2009 Acquisition of the North American salt producer Morton Salt<br />
2011 Acquisition of the Canadian potash exploration company Potash One, Divestment of COMPO<br />
2012 Divestment of <strong>K+S</strong> Nitrogen<br />
June 2013 <strong>K+S</strong> Group 6
<strong>K+S</strong> Group<br />
Board of Executive Directors<br />
Norbert Steiner<br />
CEO<br />
Lawyer<br />
Gerd Grimmig<br />
Engineering graduate<br />
Dr. Thomas Nöcker<br />
Lawyer<br />
Dr. Burkhard Lohr<br />
CFO<br />
Business administration<br />
graduate<br />
Responsible for:<br />
• Finance and<br />
Accounting<br />
• Corporate Controlling<br />
• Taxes<br />
• Internal Audit<br />
• Purchasing and<br />
Procurement<br />
• Insurance<br />
• Data protection<br />
Mark Roberts<br />
Bachelor of Science<br />
(Marketing)<br />
Responsible for:<br />
Responsible for:<br />
Responsible for:<br />
Responsible for:<br />
• Potash and Magnesium • Waste Management and • <strong>K+S</strong> Transport<br />
• Salt business<br />
Products business unit Recycling business unit • CFK (Trading)<br />
unit<br />
• Corporate Development • Animal Hygiene Products • Human Ressources<br />
• Legal affairs/Compliance • MSW Chemicals<br />
(including Health<br />
• <strong>Investor</strong> <strong>Relations</strong> • <strong>K+S</strong> Consulting<br />
Management)<br />
• Corporate<br />
• Mining / Geology • IT-Services<br />
Communications • Engineering / Energy • Organisation and<br />
• Executive Staff<br />
• Research and<br />
Project Management<br />
Matters/International HR- Development<br />
• Real Estate<br />
Coordination<br />
• Environment,<br />
Management<br />
Occupational Safety, • Knowledge<br />
Quality Management Management<br />
• Inactive Plants<br />
• Global Logistics<br />
Strategy<br />
• Logistic Purchasing<br />
June 2013 <strong>K+S</strong> Group 7
<strong>K+S</strong> Group<br />
<strong>K+S</strong> is the Leading Player in its Markets<br />
Potash and Magnesium Products<br />
Potash<br />
Sulphate of potash and<br />
magnesium sulphate<br />
One of the leading suppliers worldwide<br />
• Leader in Europe<br />
• Fifth-largest producer worldwide<br />
• Leading position worldwide<br />
Salt<br />
Europe<br />
The leading supplier worldwide<br />
• With esco No. 1 in Europe<br />
South America<br />
North America<br />
• With SPL No. 1 in South America<br />
• With Morton Salt, Windsor and ISCO one of<br />
the leading suppliers in North America<br />
Sources: IFA, Roskill, <strong>K+S</strong><br />
June 2013 <strong>K+S</strong> Group 8
<strong>K+S</strong> Group<br />
Worldwide Presence<br />
Production Sites and Sales Offices<br />
Kassel<br />
Revenues by Region 2012<br />
South America<br />
17%<br />
North America<br />
26%<br />
Asia<br />
12%<br />
Africa, Oceania<br />
3%<br />
Europe<br />
42%<br />
Production<br />
Sales<br />
June 2013 <strong>K+S</strong> Group 9
<strong>K+S</strong> Group<br />
Corporate Strategy<br />
Differentiation and Sustainable Margin<br />
Growth through Specialisation<br />
Expansion of Strategic Business Sectors<br />
through Acquisitions and Cooperations<br />
➨<br />
➨<br />
Consolidation and expansion of market<br />
positions by increased marketing of<br />
speciality products<br />
Realisation of more attractive margins<br />
through refinement strategy<br />
➨<br />
External growth in the core business<br />
sectors Fertilizers and Salt<br />
Expansion of a Balanced<br />
Regional Portfolio<br />
Setting Standards for Quality,<br />
Reliability and Service<br />
Increasing Efficiency and<br />
Exploiting Synergies<br />
➨<br />
➨<br />
➨<br />
Reduction of seasonal and regional<br />
fluctuations in demand for salt and<br />
fertilizers due to a balanced<br />
regional portfolio<br />
Fertilizers: Expansion of market<br />
presence in important overseas<br />
markets and tapping into new<br />
attractive sales markets in future<br />
growth regions<br />
Salt: Local production in the volumedriven<br />
Salt business<br />
➨<br />
➨<br />
The goal is to be our customers’<br />
preferred partner<br />
Strengthening of customer loyalty<br />
through service efforts, e.g.<br />
targeted advice to customers in the<br />
use of fertilizers<br />
➨<br />
➨<br />
Optimisation of the international<br />
production network<br />
Generation of synergies in the<br />
exchange of technical, geological<br />
and logistics know-how between<br />
the potash and salt production<br />
June 2013 <strong>K+S</strong> Group 10
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy 2<br />
B. Potash and Magnesium Products 11<br />
- Demand Drivers<br />
- Supply Situation<br />
- Business Unit Performance<br />
- Legacy Project<br />
C. Salt 63<br />
D. Complementary Activities 83<br />
E. Financial Data 85<br />
F. Outlook 97<br />
G. <strong>K+S</strong> Share 102<br />
June 2013 <strong>K+S</strong> Group 11
Potash and Magnesium Products<br />
Why Fertilize?<br />
There are only few soils on earth<br />
which have a sufficient content and<br />
availability of nutrients to achieve<br />
high yields over a longer period<br />
without fertilization<br />
Indispensable supplement to the natural<br />
nutrient content of soils<br />
Compensation of the nutrient losses<br />
by harvest and other losses<br />
June 2013 <strong>K+S</strong> Group 12
Potash and Magnesium Products<br />
Key Drivers of the Fertilizer Business<br />
• Despite decreasing availability of arable farm land, global production of agricultural products<br />
has to be increased:<br />
• steadily increasing world population<br />
• changing diets toward higher meat consumption (e.g. 1 kg beef = 8 kg animal feed)<br />
• increasing importance of renewable raw materials for the production of bio energy<br />
• Fertilizing with the key nutrients nitrogen (N), phosphate (P)<br />
and potash (K), but also increasingly magnesium (Mg) and sulphur (S)<br />
is necessary to cope with this challenge<br />
• Nutrients cannot be substituted and a balanced fertilization of all nutrients is<br />
necessary to achieve optimal yields. Emerging countries, in particular, should<br />
significantly increase the potash proportion of their total fertilizer application<br />
• Medium- and long-term increase in global fertilizer consumption (N, P and K)<br />
of 2% to 3% p.a. is expected (Source: IFA)<br />
Advantage: <strong>K+S</strong> offers its worldwide customers important nutrients<br />
in a market-oriented specialised product range<br />
June 2013 <strong>K+S</strong> Group 13
1982/83<br />
1987/88<br />
1992/93<br />
1997/98<br />
2002/03<br />
2007/08<br />
2011/12<br />
2012/13<br />
e<br />
in million tonnes<br />
Potash and Magnesium Products<br />
Low Stocks-to-use Ratios of Agricultural Products<br />
Production and demand development vs. stocks-to-use ratio (Wheat and coarse grains)<br />
1900<br />
45,0 45.0<br />
1800<br />
Production Demand Stocks-to-use<br />
40,0 40.0<br />
1700<br />
35,0 35.0<br />
1600<br />
30,0 30.0<br />
1500<br />
25,0 25.0<br />
1400<br />
Critical Level<br />
20,0 20.0<br />
1300<br />
15,0 15.0<br />
1200<br />
10,0 10.0<br />
1100<br />
5,0 5.0<br />
1000<br />
0,0 0.0<br />
Stocks-to-use ratio<br />
• Over the past thirty years, annual global production has often fallen short of demand.<br />
• Despite reasonable harvest levels during the last ten years, these structural supply and<br />
demand gaps have resulted in historically low stocks-to-use ratios. This ratio relates available<br />
stocks to estimated demand of one year and therefore can be translated into the number of days the stocks<br />
would last without any new harvests. A stocks-to-use ratio of 20% can be translated into 73 days.<br />
• The production level for the agricultural year 2012/13 expected by the USDA will not be efficient to meet<br />
consumption, so that stocks-to-use ratio will remain very low (18.4% or 66 days).<br />
June 2013<br />
Source: USDA; as of 12 June 2013<br />
<strong>K+S</strong> Group<br />
14
Potash and Magnesium Products<br />
Prices for Agricultural Products – Spot vs. Future<br />
Prices for Agricultural Products – spot<br />
Prices for Agricultural Products – future<br />
2005 2006 2007 2008 2009 2010 2011 2012 July ’13 Sep. ‘14<br />
March ’14<br />
2013<br />
Corn<br />
Wheat<br />
Soybeans<br />
Palmoil<br />
• High price level for agricultural products in<br />
2012, despite slight decreases towards<br />
the end of the year<br />
Source: Bloomberg; as of 11 June 2013<br />
• Future prices of agricultural products<br />
show that capital markets expect price<br />
levels to be attractive for the next two<br />
years<br />
June 2013 <strong>K+S</strong> Group 15
Potash and Magnesium Products<br />
Profitability of Winter Wheat in Europe<br />
2009<br />
2010<br />
2011<br />
2012<br />
2013e<br />
2.000<br />
Costs Sales<br />
1,213 964<br />
Costs Sales<br />
1,067 1,595<br />
Costs Sales<br />
1,116 1,405<br />
Costs Sales<br />
1,205 1,909<br />
Costs Sales<br />
1,196 1,632<br />
1.500<br />
1.000<br />
500<br />
0<br />
Risk of<br />
loss:<br />
-249 €<br />
Profit<br />
potential:<br />
528 €<br />
Profit<br />
potential:<br />
289 €<br />
Profit<br />
potential:<br />
704 €<br />
326<br />
248 242<br />
175 225<br />
82 82<br />
69 75 75<br />
101 101 101<br />
121 121<br />
189 157<br />
157 162 162<br />
513 541 541 567 567<br />
Profit<br />
potential:<br />
436 €<br />
Wheat price: 123 €/t Wheat price: 220 €/t Wheat price: 199 €/t Wheat price: 258 €/t Wheat price: 220 €/t<br />
2009 2010 2011 2012 2013e<br />
Yield: 7.84 t/ha Yield: 7.25 t/ha Yield: 7.06 t/ha Yield: 7.40 t/ha Yield: 7.42 t/ha<br />
Year<br />
2009<br />
2010<br />
2011<br />
2012<br />
2013e<br />
Fertilizer share of total costs<br />
27% fertilizer costs (4% K)<br />
16% fertilizer costs (3% K)<br />
20% fertilizer costs (2% K)<br />
21% fertilizer costs (3% K)<br />
20% fertilizer costs (3% K)<br />
Fertilization<br />
Other costs<br />
(e.g. insurance, water)<br />
Seeds/plants<br />
Plant protection agents<br />
Variable costs<br />
Fixed costs (inkl. lease)<br />
June 2013<br />
The current future curve of the wheat price should enable the farmer to realize a profit potential of around<br />
€ 700 per hectare (excl. subsidies) in 2012 and around € 440 in 2013e. This is a high level compared to the<br />
last years; the application of fertilizers is profitable.<br />
Assumptions: without agricultural subsidies, incl. interest expenses for pre-financing costs, 100% use of mineral fertilizers (no organic fertilizing), straw stays in the field (straw fertilizing); fertilizer<br />
use for 8 t/ha yield: 80 kg/ha MOP, 536 kg/ha KAS and 139 kg/ha TSP; for lower yields, lower fertilizer requirement adjusted accordingly; Sources: costs (20 ha) according to Kuratorium für<br />
Technik und Bauwesen in der Landwirtschaft e. V. (KTBL) for winter wheat – bread quality, rotating crop growing system; yield according to statistical year book for food nutrition, agriculture and<br />
forestry 2011 and 2012, 2013e: 10-year average; nutrient extractions according to Guidelines for Fertilizer Use in Germany; fertilizer prices taken from LAND & Forst at the point of the upcoming<br />
fertilization (general fertilization with potash and phosphate in September; nitrogen fertilization in September, February, April and June); wheat price (bread quality B) according to LAND & Forst<br />
(average delivery from the yard from July to February), 2012e and 2013e: Euronext price less transportation cost assumption.<br />
<strong>K+S</strong> Group<br />
16
130<br />
Potash and Magnesium Products<br />
120<br />
110<br />
Yields of Cereals in Selected Regions<br />
100<br />
90 dt/ha<br />
80<br />
70<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
Northern<br />
America<br />
South America Western Europe Eastern Europe Asia Africa<br />
Source: FAO 2010<br />
1980 1985 1990 1995 2000 2005 2010<br />
• Highest yields of cereals per hectare worldwide to be found in Western Europe and in North<br />
America thanks to a balanced fertilization tradition and professional agricultural systems as<br />
well as favourable climatic conditions<br />
• Assuming an increasing application of balanced fertilization, emerging market countries<br />
possess significant catching-up potential<br />
June 2013 <strong>K+S</strong> Group 17
Potash and Magnesium Products<br />
Meat consumption per Capita<br />
kg / person<br />
150<br />
North America<br />
100<br />
Europe<br />
South America<br />
50<br />
Asia<br />
Africa<br />
0<br />
1961 1970 1980 1990 2000 2007<br />
Source: Food and Agriculture Organization of the United Nations (FAO)<br />
• Rising prosperity goes along with rising meat consumption<br />
• Production of 1 kilogram of meat requires multiple kilograms of animal feed<br />
• We believe there is significant potential for rising fertilizer demand in emerging<br />
market countries<br />
June 2013 <strong>K+S</strong> Group 18
Potash and Magnesium Products<br />
Potash Fertilization and Yields for Corn<br />
Potash use by crop<br />
in 2007/08<br />
Potash use and yield for corn<br />
in 2007/08<br />
Wheat 6%<br />
Cotton<br />
2%<br />
Other cereals<br />
3%<br />
Fruits & Vegetables<br />
22%<br />
Potash use<br />
kg/ha<br />
60<br />
Yield<br />
t/ha<br />
10<br />
Soybeans 8%<br />
8<br />
Oil palm and<br />
other oil seed 8%<br />
40<br />
6<br />
Sugar crops 9%<br />
Corn 15%<br />
20<br />
4<br />
2<br />
Rice 13%<br />
Other crops 14%<br />
0<br />
USA China India<br />
Potash use in kg/ha<br />
Balanced fertilizer use which is suited to plants results in higher yields<br />
and a lessening of the effects of negative factors (e.g. temperature, rainfall)<br />
Yield in t/ha<br />
0<br />
Sources: USDA, FAO, IFA, <strong>K+S</strong>, 2007-09<br />
Other crops: roots, tubers, pulses, nuts, coffee, tea, tobacco, ornamentals, turf etc.<br />
Other oilseed: rapeseed, mustard, sunflower, groundnut etc.; Other cereals: barley, oat, rye, triticale, sorghum etc.<br />
June 2013 <strong>K+S</strong> Group 19
Potash and Magnesium Products<br />
Potash Use by Crop<br />
7<br />
Million tonnes K 2 O<br />
6<br />
5<br />
Potash use by crop EU-27<br />
Fruits & Vegetables<br />
14.4%<br />
Other crops 31.2%<br />
Other Coarse Grains<br />
13.7%<br />
4<br />
3<br />
Sugar crops 5.9%<br />
Oil seed 10.2%<br />
Wheat 12.7%<br />
Corn 11.9%<br />
2<br />
1<br />
0<br />
China India USA EU-27 Brazil Indonesia &<br />
Malaysia<br />
Wheat Rice Corn Soybeans<br />
Oil palm and other oil seed Sugar crops Fruits & Vegetables Cotton<br />
Other coarse grains<br />
Other crops<br />
Source: IFA 2007/08, published 2009<br />
Other crops: roots, tubers, pulses, nuts, coffee, tea, tobacco, ornamentals, turf etc.<br />
Other oil seed: rapeseed, mustard, sunflower, groundnut etc.<br />
Other coarse grains: barley, oat, rye, triticale, sorghum etc.<br />
June 2013 <strong>K+S</strong> Group 20
Potash and Magnesium Products<br />
Effect of Potash Fertilization on Yield<br />
t/ha<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
Winter wheat – Series of experiments<br />
(Germany)<br />
Additional yield<br />
t/ha<br />
1,5<br />
1978 1981 1984 1987 1990 1993 1996 1999<br />
K 2 O = 0 kg K 2 O = 100 kg Linear (addit. yield, rhs.)<br />
1,0<br />
0,5<br />
0,0<br />
Functional and sustainable<br />
potassium fertilization results in:<br />
• Mitigation of the effects of<br />
negative factors on yield<br />
• Increasing additional yields<br />
in the course of time<br />
• A potash-cost/proceeds<br />
ratio of 1:2<br />
(taking into account the<br />
current price level)<br />
Technical progress, plant<br />
protection and progress in cultivation<br />
enhance the potential of the plant<br />
over time. The exploitation of this<br />
potential depends on a balanced<br />
supply of nutrients!<br />
Series of experiments in Niestetal, Germany, Kassel, average annual precipitation: 647 mm, average annual temperature: 8.7°C:<br />
The geological starting material is a soil texture of silty loam. In agricultural practice, this soil has the reputation of supplying all nutrients particularly well, so that<br />
even reduced potassium fertilization need not necessarily result in corresponding declines in yield. The soil had a high supply class (E) prior to the start of the<br />
experiment. In contrast to nitrogen, the effect of potassium fertilization can only be assessed accurately in the long term. Only long-term field trials also identify the<br />
reciprocal effects (e.g. weather conditions) of all location factors.<br />
June 2013 <strong>K+S</strong> Group 21
1.000 t K 2 O<br />
1.000 t K 2 O<br />
1.000 t K 2 O<br />
1.000 t K 2 O<br />
Potash and Magnesium Products<br />
Agricultural Potash Consumption by Region<br />
World<br />
Developed markets<br />
40.000<br />
32.000<br />
20.000<br />
16.000<br />
North America, Western/Central Europe, Oceania<br />
24.000<br />
12.000<br />
16.000<br />
8.000<br />
8.000<br />
4.000<br />
0<br />
80/81 84/ 88/ 92/ 96/ 00/ 04/ 08/ 12/f<br />
0<br />
80/81 84/ 88/ 92/ 96/ 00/ 04/ 08/ 12/f<br />
Transitional markets<br />
Emerging markets<br />
10.000<br />
Eastern Europe and Central Asia<br />
24.000<br />
Latin America, Asia, Africa<br />
8.000<br />
20.000<br />
6.000<br />
4.000<br />
2.000<br />
16.000<br />
12.000<br />
8.000<br />
4.000<br />
0<br />
0<br />
80/81 84/ 88/ 92/ 96/ 00/ 04/ 08/ 12/f<br />
80/81 84/ 88/ 92/ 96/ 00/ 04/ 08/ 12/f<br />
Source: IFA<br />
June 2013 <strong>K+S</strong> Group 22
Potash and Magnesium Products<br />
Strong Impact on Soybean Yield<br />
under Continued Elimination of Potash<br />
Grain yield (kg/ha)<br />
3500<br />
3000<br />
• Regular potash application of<br />
approx. 80 kg/ha of K 2 O in 5<br />
years before trial in Brazil<br />
2500<br />
2000<br />
• Climate conditions can cause<br />
volatility in yield<br />
1500<br />
1000<br />
500<br />
3,135 2,965 2,223 2,214<br />
(-5%) (-29%) (-29%)<br />
last yield<br />
with K<br />
Year 1<br />
without K<br />
Year 2<br />
without K<br />
Year 3<br />
without K<br />
772 (-75%)<br />
Year 4<br />
without K<br />
Year 5<br />
without K<br />
830 (-74%)<br />
Years of cultivation under declining K effect<br />
Source: Borkert, C.M., et al. 2005, Potash in soybean crop. In: Potassium in Brazilian agriculture, eds. T. Yamada and T.L. Roberts, 671-722. Piracicaba,<br />
Brazil: Potafos. (In Portugese); Embrapa Soybean, IPNI, personal correspondence with Paul E. Fixen, Ph.D., Dr. Adilson de Oliveira Junior, Dr. Luís I.<br />
Prochnow; The experiment took place in Ponta Grossa, Paraná, Brasil; Soil classification: Oxysol, clayed texture (clay content = 38%)<br />
June 2013 <strong>K+S</strong> Group 23
Potash and Magnesium Products<br />
World Potash Sales Volume by Region<br />
Million tonnes<br />
2013e<br />
2012<br />
2011<br />
2010<br />
2009<br />
2008<br />
Western Europe<br />
5.8<br />
5.6<br />
5.9<br />
6.7<br />
2.7<br />
6.3<br />
Central Europe / FSU<br />
5.2<br />
5.1<br />
4.4<br />
4.9<br />
3.1<br />
5.0<br />
Africa<br />
0.8<br />
0.7<br />
0.7<br />
0.8<br />
0.3<br />
0.6<br />
North America<br />
10.3<br />
9.0<br />
10.2<br />
10.8<br />
4.1<br />
10.2<br />
Latin America<br />
10.8<br />
10.6<br />
10.5<br />
9.7<br />
6.0<br />
8.6<br />
Asia<br />
25.5<br />
23.5<br />
28.0<br />
24.9<br />
14.6<br />
23.2<br />
- thereof China<br />
~ 13<br />
12.2<br />
12.7<br />
10.2<br />
5.4<br />
8.8<br />
- thereof India<br />
~ 4<br />
2.8<br />
5.0<br />
6.1<br />
5.5<br />
6.2<br />
Oceania<br />
0.6<br />
0.4<br />
0.5<br />
0.5<br />
0.2<br />
0.6<br />
World total<br />
~ 59<br />
54.9<br />
60.2<br />
58.3<br />
31.0<br />
54.5<br />
● In 2012, worldwide potash sales volumes amounted to around 55 million tonnes with declines<br />
especially in China, India and the US.<br />
● In 2013, we expect worldwide potash sales volumes of about 59 million tonnes.<br />
Incl. potassium sulphate and potash grades with lower K 2 O content of around 3 million tonnes eff;<br />
Sources: IFA, <strong>K+S</strong><br />
June 2013 <strong>K+S</strong> Group 24
Potash and Magnesium Products<br />
Potash Market Europe (EU 27)<br />
Structure<br />
Products<br />
Market Structure<br />
Private trade with countryspecific<br />
regulations<br />
MOP standard, gran. and<br />
specialities through spot<br />
and contracts<br />
Agricultural Potash Consumption ***<br />
Other<br />
crops**<br />
31%<br />
Sugar Crops<br />
6%<br />
Potash Use by Crop *<br />
Oil Seed<br />
10%<br />
Fruits &<br />
Vegetables<br />
14%<br />
Corn<br />
12%<br />
Other<br />
Coarse<br />
Grains<br />
14%<br />
Wheat<br />
13%<br />
Cultivated Crops ****<br />
kt K 2 O<br />
8.000<br />
6.000<br />
4.000<br />
2.000<br />
0<br />
1979/80 1990/91 2001/02 2012/13F<br />
Sugar Crops<br />
1%<br />
Fruits &<br />
Vegetables<br />
8%<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption, % of total K 2 O, Source: IFA 2007/08, published 2009 ** incl.<br />
potatoes, pastures and forestry *** Fertilizer years Western and Central Europe, Source: IFA December 2011 **** % of arable land,<br />
Source: FAO 2009/2010<br />
June 2013 <strong>K+S</strong> Group 25<br />
Other<br />
crops**<br />
24%<br />
Corn<br />
7%<br />
Oil Seed<br />
15%<br />
Wheat<br />
24%<br />
Other<br />
Coarse<br />
Grains<br />
21%
Potash and Magnesium Products<br />
Potash Market Brazil<br />
Market Structure<br />
Potash Use by Crop *<br />
Structure<br />
Products<br />
Private trade<br />
MOP gran. through spot<br />
and contracts<br />
Cotton<br />
4%<br />
Fruits &<br />
Vegetables<br />
5%<br />
Rice<br />
4%<br />
Other crops<br />
14%<br />
Soybeans<br />
35%<br />
Corn<br />
17%<br />
Sugar Crops<br />
21%<br />
Agricultural Potash Consumption **<br />
Cultivated Crops ***<br />
kt K 2 O<br />
5.000<br />
4.000<br />
3.000<br />
Rice<br />
5%<br />
Fruits &<br />
Vegetables<br />
5%<br />
Cotton<br />
2%<br />
Other crops<br />
6%<br />
Soybeans<br />
42%<br />
2.000<br />
Sugar Crops<br />
17%<br />
1.000<br />
0<br />
1979/80 1990/91 2001/02 2012/13F<br />
Corn<br />
23%<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption, % of total K 2 O, Source: IFA 2007/08, published 2009<br />
** Fertilizer years Brazil, Source: IFA December 2011 *** % of total area harvested, Source: FAO 2010<br />
June 2013 <strong>K+S</strong> Group 26
Potash and Magnesium Products<br />
Potash Market Southeast Asia<br />
Market Structure<br />
Potash Use by Crop *<br />
Structure<br />
Products<br />
Private trade<br />
MOP standard and<br />
specialities through spot<br />
and contracts<br />
Other crops<br />
10%<br />
Sugar Crops<br />
6%<br />
Corn<br />
6%<br />
Fruits &<br />
Vegetables<br />
12%<br />
Oil Seed<br />
49%<br />
Rice<br />
17%<br />
Agricultural Potash Consumption **<br />
Cultivated Crops ***<br />
kt K 2 O<br />
4.000<br />
3.000<br />
2.000<br />
Other crops<br />
Sugar Crops 6%<br />
3%<br />
Fruits &<br />
Vegetables<br />
8%<br />
Corn<br />
11%<br />
Rice<br />
47%<br />
1.000<br />
0<br />
1979/80 1990/91 2001/02 2012/13F<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption, % of total K 2 O, Source: IFA 2007/08, published 2009<br />
** Fertilizer years East Asia excl. China, Japan, Source: IFA December 2011 *** % of total area harvested, Source: FAO 2010<br />
June 2013 <strong>K+S</strong> Group 27<br />
Oil Seed<br />
25%
Potash and Magnesium Products<br />
Potash Market India<br />
Market Structure<br />
Potash Use by Crop *<br />
Structure<br />
Products<br />
Predominantly centralised,<br />
subsidised<br />
MOP standard through<br />
contracts<br />
-<br />
Cotton<br />
5%<br />
Oil Seeds<br />
6%<br />
Corn<br />
Other 1%<br />
Coarse<br />
Grains<br />
2%<br />
Other crops<br />
11%<br />
Rice<br />
35%<br />
Agricultural Potash Consumption **<br />
Sugar Crops<br />
10%<br />
Wheat<br />
8%<br />
Fruits &<br />
Vegetables<br />
22%<br />
Cultivated Crops ***<br />
kt K 2 O<br />
4.000<br />
3.000<br />
2.000<br />
1.000<br />
0<br />
1979/80 1990/91 2001/02 2012/13F<br />
Other crops<br />
15%<br />
Sugar Crops<br />
2%<br />
Corn<br />
4%<br />
Cotton<br />
6%<br />
Fruits &<br />
Vegetables<br />
8%<br />
Other<br />
Coarse<br />
Grains<br />
11%<br />
Oil Seeds<br />
19%<br />
Wheat<br />
15%<br />
Rice<br />
20%<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption, % of total K 2 O, Source: IFA 2007/08, published 2009<br />
** Fertilizer years India, Source: IFA December 2011 *** % of total area harvested, Source: FAO 2010<br />
June 2013 <strong>K+S</strong> Group 28
Potash and Magnesium Products<br />
Potash Market China<br />
Market Structure<br />
Potash Use by Crop *<br />
Structure<br />
Products<br />
Predominantly centralised<br />
MOP standard through<br />
long-term contracts<br />
Sugar Crops<br />
5%<br />
Corn<br />
2%<br />
Oil Seeds<br />
3%<br />
Wheat<br />
4%<br />
Other crops<br />
7%<br />
Fruits &<br />
Vegetables<br />
51%<br />
Rice<br />
28%<br />
Agricultural Potash Consumption **<br />
Cultivated Crops ***<br />
kt K 2 O<br />
7.000<br />
6.000<br />
Sugar Crops<br />
1%<br />
Other crops<br />
12%<br />
Corn<br />
20%<br />
5.000<br />
4.000<br />
3.000<br />
2.000<br />
1.000<br />
0<br />
1979/80 1990/91 2001/02 2012/13F<br />
Wheat<br />
14%<br />
Oil Seeds<br />
16%<br />
Rice<br />
18%<br />
Fruits &<br />
Vegetables<br />
19%<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption, % of total K 2 O, Source: IFA 2007/08, published 2009<br />
** Fertilizer years China, Source: IFA December 2011 *** % of total area harvested, Source: FAO 2010<br />
June 2013 <strong>K+S</strong> Group 29
Potash and Magnesium Products<br />
Potash Market North America<br />
Market Structure<br />
Potash Use by Crop *<br />
Structure<br />
Private Trade<br />
Other crops<br />
24%<br />
Products<br />
MOP gran. and<br />
specialities through<br />
spot and contracts<br />
Sugar Crops<br />
3%<br />
Cotton<br />
3%<br />
Wheat<br />
5%<br />
Fruits &<br />
Vegetables<br />
6%<br />
Soybeans<br />
11%<br />
Corn<br />
48%<br />
Agricultural Potash Consumption ** Cultivated Crops ***<br />
kt K 2 O<br />
7.000<br />
6.000<br />
5.000<br />
4.000<br />
3.000<br />
2.000<br />
1.000<br />
0<br />
1979/80 1990/91 2001/02 2012/13F<br />
Other crops<br />
15%<br />
Fruits &<br />
Vegetables<br />
2%<br />
Cotton<br />
3%<br />
Other<br />
Coarse<br />
Grains<br />
7%<br />
Wheat<br />
21%<br />
Corn<br />
27%<br />
Soybeans<br />
25%<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption, % of total K 2 O, Sources: IFA 2007/08, published 2009<br />
** Fertilizer years North America, Source: IFA December 2011 *** % of total area harvested, Source: FAO 2010<br />
June 2013 <strong>K+S</strong> Group 30
Potash and Magnesium Products<br />
Fertilizer Business - Gene Technology<br />
• Objectives of gene technology:<br />
• improved crop resistance against broad-band herbicides as well as pests and diseases<br />
• breeding of plants with elevated use value for the customer<br />
• Cultivation of genetically modified crops (GMO) mainly in the USA, in Argentina, Canada,<br />
Brazil, China and South Africa<br />
• In Europe, the use is ethically disputed and does virtually not exist<br />
• Genetically modified crops are usually soybeans, corn, cotton and oilseed rape<br />
• The use of GMOs increases the yield per unit of cultivated area<br />
• Due to the genetic modification, the plant’s nutrient needs become similar to those of a ‘top<br />
athletes. The increased removal of mineral nutrients from the soil has to be supplemented<br />
in form of fertilizers<br />
As long as the demand for food of the increasing world population is larger than<br />
the supply, the use of GMOs leads to an increased demand for fertilizers<br />
June 2013 <strong>K+S</strong> Group 31
Potash and Magnesium Products<br />
MOP Price Development<br />
US$/t<br />
Northwest-Europe (standard, fob)<br />
US$/t<br />
Overseas (cfr)<br />
Brazil<br />
(granular)<br />
*<br />
South-East Asia<br />
(SEA, standard)<br />
405<br />
SEA: 435-470<br />
BRA: 440-450<br />
2003 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 2013 2003 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 2013<br />
● Due to the tight demand-supply-situation, potash prices more than doubled between 2004 and 2007<br />
● The strong and in part speculatively driven raw materials boom which was observable worldwide until mid-2008<br />
also had an effect in significant price increases to over 800 US$/tonne of granulated potassium chloride<br />
● The collapse in agricultural prices as a consequence of the financial crisis also led to a decrease in potash prices;<br />
a price level of approximately 400 US$/tonne of granulated potassium chloride was established at the beginning of<br />
2010. This increased gradually as part of an improving agricultural environment and thus took into account the fact<br />
that time-consuming and capital-intensive greenfield projects for the creation of new capacities can only be realised<br />
economically with a reasonable potash price level<br />
● Pricing pressure at the end of 2012 due to the lack of contracts with China and India, followed by a stabilisation at<br />
the beginning of 2013 after the conclusion of new contracts<br />
June 2013<br />
* Until end of September 2010 MOP standard; Source: FMB<br />
<strong>K+S</strong> Group<br />
32
Potash and Magnesium Products<br />
World Potash Production and Sales by Region<br />
Million tonnes<br />
17.4<br />
17.2<br />
23.9<br />
9.0<br />
7.1 5.6<br />
5.1<br />
12.2<br />
10.6<br />
2.4<br />
Incl. sulphate of potash<br />
and low-grade potash<br />
Sources: IFA, <strong>K+S</strong><br />
World potash production:<br />
2012: 56.3 million t<br />
2011: 59.9 million t<br />
2010: 55.5 million t<br />
World potash sales:<br />
2012: 54.9 million t<br />
2011: 60.2 million t<br />
2010: 58.3 million t<br />
June 2013 <strong>K+S</strong> Group 33
Potash and Magnesium Products<br />
Supplier Structure on the World Potash Market<br />
Figures in %<br />
32.9<br />
32.0<br />
30.9<br />
30.7 30.4<br />
27.9<br />
2010 2011 2012<br />
9.9<br />
9.5<br />
10.4<br />
9.5<br />
8.6<br />
8.4<br />
8.5<br />
9.3<br />
12.6<br />
2.6<br />
2.6<br />
3.3<br />
3.6<br />
3.7<br />
3.0<br />
3.2<br />
3.0<br />
3.5<br />
BPC<br />
• Belaruskali<br />
• Uralkali/<br />
Silvinit<br />
Canpotex<br />
• Potash<br />
Corp<br />
• Mosaic<br />
• Agrium<br />
<strong>K+S</strong><br />
ICL<br />
• DSW<br />
• CPL<br />
• Iberpotash<br />
participation<br />
Sales volumes in metric tonnes<br />
of Potash<br />
Sources: IFA, <strong>K+S</strong><br />
Corp. in ICL<br />
June 2013 <strong>K+S</strong> Group 34<br />
SQM<br />
participation<br />
of Potash<br />
Corp.<br />
APC<br />
participation<br />
of Potash<br />
Corp.<br />
China<br />
• more<br />
than 20<br />
producers<br />
Others<br />
• Intrepid<br />
• Vale<br />
• Compass
Potash and Magnesium Products<br />
New Potash Capacities are Needed<br />
Million tonnes<br />
Greenfield projects<br />
Brownfield projects<br />
Available capacity<br />
Production<br />
Sales<br />
China<br />
Financial<br />
crisis<br />
Reliability of forecast<br />
quality questionable<br />
India<br />
68<br />
● Long-term demand growth<br />
of 3 to 5% p.a.<br />
● The available capacities<br />
will not be sufficient.<br />
Soviet Union<br />
~59<br />
64<br />
● IFA data (basis for capacity<br />
expansion forecast) showed<br />
poor forecast quality in the<br />
past (due to project<br />
postponements and delays).<br />
● Brownfield projects shown<br />
are all in the hands of existing<br />
producers, who proved to<br />
consistently match supply with<br />
market demand.<br />
1988 ’93 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ‘13<br />
‘14 ‘15 ‘16<br />
(e)<br />
Incl. potassium sulphate and potash grades with lower K 2 O content of around 3 million tonnes eff;<br />
Capacity development 2011-2016 based on IFA supply capability data.<br />
Sources: IFA, <strong>K+S</strong><br />
June 2013 <strong>K+S</strong> Group 35
Potash and Magnesium Products<br />
Market Forecast Quality: Capacity Estimates<br />
Significantly Lower as Time Approaches<br />
Million tonnes<br />
85<br />
IFA Supply Capability Data 2009<br />
IFA Supply Capability Data 2012<br />
80<br />
Year 2013<br />
Forecast 2009 vs.<br />
2012:<br />
estimate reduction of<br />
> 6 million tonnes<br />
75<br />
70<br />
65<br />
Year 2012<br />
Forecast 2009 vs.<br />
2012:<br />
estimate reduction of<br />
> 7 million tonnes<br />
60<br />
2011 2012 2013 2014 2015<br />
Incl. potassium sulphate and potash grades with lower K 2 O content of around 3 million tonnes eff;<br />
Capacity development 2011-2015 based on IFA supply capability data.<br />
Sources: IFA, <strong>K+S</strong><br />
June 2013<br />
<strong>K+S</strong> Group<br />
36
Potash and Magnesium Products<br />
Why Potash?<br />
Profiting from megatrends<br />
• Steadily increasing world population<br />
• Changing diets toward higher meat consumption with rising income in developing countries<br />
(e.g. 1 kg beef = up to 8 kg animal feed)<br />
• Increasing importance of renewable raw materials for the production of bio energy<br />
Due to these megatrends, global production of agricultural products has to be increased while the availability of<br />
arable farm land per capita decreases. Therefore, the efficiency of the world’s farmland has to be improved by an<br />
optimized and balanced use of fertilizers. The key nutrients nitrogen, phosphate and potash cannot be<br />
substituted and a balanced fertilization of all nutrients is necessary to achieve optimal yields. Emerging<br />
countries, in particular, can significantly reduce the yield gap by increasing the potash proportion of their total<br />
fertilizer application.<br />
Attractive supply structure in the potash market<br />
• Consolidated potash market with the 5 biggest producers supplying more than two thirds of the world market<br />
• High barriers to entry in the potash market: Viable deposits are limited worldwide, development costs are<br />
considerable, lead times of seven years or more starting from the scratch and sufficient potash mining and<br />
marketing know-how are required<br />
• Rising potash demand cannot be met by currently installed capacities and calls for the investment in new<br />
capacities<br />
June 2013<br />
<strong>K+S</strong> Group<br />
37
Potash and Magnesium Products<br />
Loader (up to 20 tonnes)<br />
June 2013 <strong>K+S</strong> Group 38
Potash and Magnesium Products<br />
Production Sites in Germany<br />
Potash mining in the Werra Fulda Region<br />
6<br />
7<br />
4<br />
Kassel<br />
1<br />
5 3 2<br />
Potash<br />
Seam Hesse<br />
Share of production capacity (in %)<br />
1. Wintershall<br />
2. Unterbreizbach Integrated Werra Plant 44<br />
3. Hattorf<br />
4. Zielitz 24<br />
5. Neuhof-Ellers 16<br />
6. Sigmundshall 11<br />
7. Bergmannssegen-Hugo 5<br />
(pure production site, no mining)<br />
Potash Seam<br />
Thuringia<br />
Source: Mainova AG<br />
June 2013 <strong>K+S</strong> Group 39
Potash and Magnesium Products<br />
Extraction Cycle Underground<br />
0<br />
Blasting after<br />
shift end<br />
4<br />
Auger drilling<br />
1<br />
Muck pile load and dump<br />
5<br />
Cleaning<br />
2<br />
Roof scaling<br />
6<br />
Drilling<br />
3<br />
Roof bolting<br />
7<br />
Loading with explosives<br />
0<br />
June 2013 <strong>K+S</strong> Group 40
Potash and Magnesium Products<br />
Potash Processing above Ground<br />
Thermal<br />
dissolution<br />
Flotation<br />
Electrostatic<br />
separation<br />
(ESTA ® )<br />
heating<br />
25 °C 110 °C<br />
mother brine<br />
undissolved<br />
residue<br />
+ dissolved<br />
KCl<br />
95 °C<br />
finely<br />
ground<br />
crude salt<br />
filtering<br />
flotation<br />
agent<br />
air<br />
bubbles<br />
flotation<br />
brine<br />
finely<br />
ground<br />
crude salt<br />
triboelectric<br />
charging<br />
finely ground<br />
crude salt<br />
-<br />
conditioning<br />
+<br />
filtering<br />
cooling<br />
filtering<br />
and<br />
drying<br />
separation<br />
in a free<br />
fall separator<br />
Potassium chloride<br />
(KCl) and Kieserite<br />
Residue<br />
(NaCl)<br />
Residue<br />
(NaCl)<br />
Potassium chloride<br />
(KCl) and Kieserite<br />
Residue<br />
(NaCl)<br />
Potassium chloride<br />
(KCl) and Kieserite<br />
June 2013 <strong>K+S</strong> Group 41
Potash and Magnesium Products<br />
Business Unit Performance<br />
Revenues (€ billion) EBIT (€ million)<br />
Highlights Q1/13<br />
2.29 2.33<br />
771 772<br />
0.58 0.63<br />
208 209<br />
Q1/12 Q1/13 FY/12 LTM Q1/12 Q1/13 FY/12 LTM<br />
1.9<br />
2.1<br />
2.3<br />
740 771<br />
476<br />
• The conclusion of contracts by Potash producers with<br />
Chinese and Indian customers at the beginning of the<br />
year caused demand to rise significantly again – in<br />
time with the start of the spring season in Europe and<br />
North America as well as in South America and South<br />
East Asia.<br />
• Q1/13 sales volumes achieved 2.03 million tonnes<br />
(Q1/12: 1.78). It proved possible to increase EBIT I to<br />
€ 209 million. This was the best result ever achieved in<br />
a Q1.<br />
2010 2011 2012<br />
2010 2011 2012<br />
Revenue split 2012 Outlook 2013*<br />
Industrial<br />
products<br />
12%<br />
Fertilizer<br />
specialities 37%<br />
By product group<br />
Potassium<br />
chloride 51%<br />
Asia<br />
19%<br />
By region<br />
South<br />
America<br />
18%<br />
North America<br />
3%<br />
Africa, Oceania<br />
3%<br />
Europe<br />
57%<br />
• Sales volumes expected at about 7 million t<br />
(2012: 6.95 million t)<br />
• Average price level expected below that of 2012<br />
• On this basis, revenues should decrease. With<br />
costs expected to be stable, operating earnings<br />
should also be below the level of 2012.<br />
June 2013 *<br />
Outlook as of 07 May 2013<br />
<strong>K+S</strong> Group 42
Potash and Magnesium Products<br />
Revenues, Earnings and Cost Position<br />
670<br />
670<br />
• In the first quarter, it was possible to<br />
achieve a mainly volume-related increase<br />
in revenues by 7.5% to € 626 million.<br />
Revenues 2)<br />
(€ million)<br />
EBIT I<br />
(€ million)<br />
• The increase in operating earnings EBIT I<br />
is particularly attributable to higher<br />
revenues, price related cost reductions as<br />
well as positive currency effects; these<br />
could overcompensate the effect of the<br />
change in inventories and higher<br />
depreciation and amortisation.<br />
1.78<br />
1.96<br />
1.69<br />
1.52<br />
2.03<br />
1.96<br />
1.69<br />
1.52<br />
Sales volumes<br />
(million tonnes)<br />
Total unit costs 1)<br />
(€)<br />
• Compared to one year ago, average<br />
prices in Q1/13 increased to 308 €/t<br />
(Q1/12: 327 €/t). Average unit costs<br />
decreased to a level of € 205 (Q1/12: €<br />
210).<br />
Average price 2)<br />
(€)<br />
1)<br />
Total unit costs are defined as revenues minus EBIT I divided by sales volumes.<br />
2)<br />
Revenues include prices both inclusive and exclusive of freight costs, and in the case of overseas revenues are based on the respective USD/EUR spot rates. For most of these revenues,<br />
hedging transactions have been concluded. The price information is also affected by the respective product mix and is therefore to be understood as providing a rough indication only.<br />
June 2013<br />
<strong>K+S</strong> Group<br />
43
Potash and Magnesium Products<br />
Product Portfolio 2012 (Sales volumes in million tonnes)<br />
Non-potash-containing products<br />
2012: 1.21 million tonnes<br />
(2011: 1.24)<br />
● Fertilizer specialities<br />
- ESTA ® Kieserite<br />
- EPSO ® Product family<br />
● Industrial products<br />
- Magnesium sulphate<br />
- Magnesium chloride<br />
Fertilizer<br />
specialities<br />
2.96<br />
Industrial<br />
products<br />
0.74<br />
Potassium<br />
chloride<br />
3.25<br />
Potash-containing products<br />
2012: 5.75 million tonnes<br />
(2011: 5.70)<br />
● Potassium chloride<br />
- MOP - Standard<br />
- MOP - Granular<br />
● Fertilizer specialities<br />
- Potassium sulphate<br />
- Patentkali ®<br />
- Korn-Kali ® products<br />
- Magnesia-Kainit ®<br />
● Industrial products<br />
- Potassium chloride, 97% - 99% KCl<br />
- Potassium sulphate, > 95% K 2 SO 4<br />
- High purity salts<br />
Broad and less cyclical product portfolio allows flexible reaction on fluctuation in demand<br />
June 2013 <strong>K+S</strong> Group 44
Potash and Magnesium Products<br />
Well Positioned in all Product Segments<br />
MOP<br />
• Market leader in Europe<br />
• Higher production costs counterbalanced by logistical advantages to regions<br />
such as Europe or Latin America<br />
• Strategic presence in the most important overseas markets<br />
SOP<br />
• World market leader for standard and granular products (approx. 20% market share)<br />
Fertilizer<br />
Specialities<br />
• Unique advantage for sophisticated markets with demand for high-quality end<br />
products (cash crops like fruits and vegetable)<br />
Magnesium<br />
Sulphate<br />
• World market leader (approx. 45% market share)<br />
• Unique position through Kieserite resources<br />
Industrial<br />
Products<br />
• Market leader in Europe<br />
• Niche products with attractive margins and premium to MOP<br />
June 2013 <strong>K+S</strong> Group 45
Potash and Magnesium Products<br />
<strong>K+S</strong> fertilizer Portfolio – More than just potash<br />
Product Nutrients (%)<br />
K 2 O MgO S Na<br />
60<br />
B<br />
Mn; Zn<br />
50<br />
18<br />
30<br />
10<br />
17<br />
40<br />
6<br />
4<br />
3<br />
0-0,25<br />
11<br />
5<br />
4<br />
20<br />
25-27<br />
20-22<br />
16<br />
13<br />
13-15<br />
12-13<br />
0-0,9<br />
1-4; 0-1<br />
June 2013 <strong>K+S</strong> Group 46
Potash and Magnesium Products<br />
Leading Position in Fertilizer Specialities<br />
SOP<br />
capacities worldwide<br />
(~6.7 million tonnes)<br />
Potash Specialities<br />
capacities worldwide<br />
(~3.7 million tonnes without SOP)<br />
Magnesium Sulphate<br />
capacities worldwide<br />
(~3.0 million tonnes)<br />
~80%<br />
~20%<br />
~60%<br />
~40%<br />
~60%<br />
~40%<br />
<strong>K+S</strong><br />
Competitors<br />
Source: CRU, <strong>K+S</strong> (2011)<br />
Source: Ifa, CRU <strong>K+S</strong> (2011)<br />
Source: <strong>K+S</strong> estimates<br />
June 2013 <strong>K+S</strong> Group 47
Potash and Magnesium Products<br />
Non-fertilizer Products<br />
High-quality raw materials for industrial purposes<br />
Magnesium Sulphate<br />
Pulp and Paper<br />
Detergents<br />
Potassium Chloride<br />
Chlor-Alkali Electrolysis<br />
Oil Drilling Muds<br />
Potassium Sulphate<br />
Construction Materials<br />
Plasterboard Production<br />
Epsom Salt<br />
ABS/EPS Plastic Production<br />
Detergents<br />
High purity salts for health care and food<br />
June 2013<br />
Epsom salt<br />
chem. pure, FCC<br />
Food Additive<br />
Potassium Chloride<br />
99.9 % KCl, Ph. Eur., USP<br />
Insulin Production<br />
Production of Infusions and<br />
Haemodialysis Solutions<br />
Potassium Sulphate<br />
99.9 % K 2 SO 4 ,<br />
Ph. Eur., DAC, FCC, E 515<br />
Pharmaceutical Industry<br />
Potassium Chloride FCC<br />
Food Industry<br />
<strong>K+S</strong> Group<br />
48
Potash and Magnesium Products<br />
Price Development of Different Product Groups<br />
€/t<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<br />
<strong>K+S</strong> Ø-Portfolio-Price vs. MOP gran. Europe<br />
<strong>K+S</strong> Ø-Portfolio Price<br />
MOP gran. Europe<br />
Δ<br />
~10-20%<br />
€/t<br />
900<br />
800<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<br />
SOP Ø-Price vs. MOP gran. Europe<br />
SOP Ø-Price Europe (std. and gran.)<br />
MOP gran.<br />
Europe<br />
100<br />
2006 2007 2008 2009 2010 2011 2012 Q1/13 2006 2007 2008 2009 2010 2011 2012 Q1/13<br />
100<br />
<strong>K+S</strong> Ø-Portfolio-Price vs. <strong>K+S</strong> Industrial Ø-Price<br />
€/t<br />
<strong>K+S</strong> Ø-Portfolio Price<br />
<strong>K+S</strong> Ø Industrial Portfolio Price<br />
€/t<br />
450<br />
400<br />
350<br />
<strong>K+S</strong> non potash specialities Industr. vs. Fertiliz.<br />
Industrial Magnesium Comp.<br />
Fertilizer Magnesium Comp.<br />
2006 2007 2008 2009 2010 2011 2012 Q1/13 2006 2007 2008 2009 2010 2011 2012 Q1/13<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
June 2013<br />
Sources: <strong>K+S</strong>, FMB International Price Guide, Green Markets, Fertilizer Europe<br />
<strong>K+S</strong> Group<br />
49
Potash and Magnesium Products<br />
Development of Selected Cost Types<br />
2008 2009 2010 2011 2012 2013e<br />
÷<br />
–<br />
=<br />
=<br />
Revenues (€ million) 2,397.4 1,421.7 1,867.0 2,133.6 2,290.6 -<br />
EBIT (€ million) 1,203.2 231.7 475.9 739.5 773.9 -<br />
Costs (€ million) 1,194.2 1,190.0 1,391.1 1,394.1 1,516.7 ○<br />
thereof personnel (€ million) 465 440 506 535 550 ○<br />
thereof freight (€ million) 227 155 264 268 280 ○<br />
thereof freight (€/t) 33 36 37 39 40 ○<br />
thereof material (€ million) 265 183 229 249 257 ○<br />
thereof energy (€ million) 186 144 172 195 230 -<br />
thereof depreciation (€ million) 83 86 91 94 96 +<br />
thereof other (€ million) (32) 182 129 53 104 ○<br />
Sales Volumes (million t) 6.99 4.35 7.06 6.94 6.95 ○<br />
Total Unit Costs (€/t) 170.8 273.6 197.0 200.9 218.2 ○<br />
• In 2012, average unit costs rose tangibly. In 2013 in total, we expect a largely stable cost level.<br />
June 2013 <strong>K+S</strong> Group 50
Potash and Magnesium Products<br />
Major Markets<br />
> 1%<br />
Sales volumes > 5%<br />
Sales volumes by region<br />
2012 2011<br />
Europe 51% 54%<br />
- of which: Germany 15% 16%<br />
North America 2% 2%<br />
South America 21% 18%<br />
Asia 22% 22%<br />
Africa, Oceania 4% 4%<br />
June 2013 <strong>K+S</strong> Group 51
Potash and Magnesium Products<br />
Currency Management<br />
US dollar<br />
• USD revenues are hedged after the deduction of overseas freight costs, capital expenditure<br />
for the Legacy Project and<br />
a safety margin<br />
• Use of options or futures, which<br />
prescribe a worst-case scenario,<br />
but provide the opportunity to<br />
share in any possible appreciation<br />
of the US dollar<br />
„worst case“ for the fiscal year 2012:<br />
USD/EUR 1.32 after premiums<br />
„worst case“ for the fiscal year 2013<br />
(for ~60% of expected USD net exposure):<br />
USD/EUR 1.29 after premiums<br />
Canadian dollar<br />
• Capital expenditure in Canadian dollar for the Legacy Project expected with sufficient certainty<br />
are also hedged with the use of options<br />
or futures, which prescribe a worstcase<br />
scenario, but provide the<br />
opportunity to share in any possible<br />
depreciation of the Canadian Dollar<br />
„worst case“ for the fiscal year 2013<br />
(for ~80% of expected capex in Canadian dollar):<br />
CAD/EUR 1.30 after premiums<br />
June 2013 <strong>K+S</strong> Group 52
Legacy Project<br />
Potash One and the Legacy Project<br />
• With Potash One, <strong>K+S</strong> has acquired<br />
several potash exploration permits in<br />
Saskatchewan/Canada (incl. the<br />
Legacy Project and its feasibility<br />
study).<br />
Southern area of the potash belt of Saskatchewan<br />
Located in the Heart of (Schematic Saskatchewan’s Diagram) Potash-Rich Basin<br />
• The total purchase price was<br />
€ 322.5 million (CAD 4.50 per share).<br />
• The Legacy Project is an advanced<br />
greenfield project for which an<br />
environmental permit has been granted.<br />
• Potash One is now fully incorporated<br />
in <strong>K+S</strong> Potash Canada GP.<br />
Regina<br />
Two more potash exploration licences close to Esterhazy<br />
Two additional potash permit areas in the Esterhazy potash region<br />
Reserves and Resources<br />
in mln. t KCl % KCl % K 2<br />
O<br />
Reserves (Proven and Probable Reserves) Legacy Project area 160 29 18<br />
Resources (Inferred and Indicated Resources) Legacy Project area + KLSA 009 981 27 17<br />
The reserves figures were determined in accordance with the requirements of the Canadian standard Nl 43-101 of the “Canadian Securities Regulators”.<br />
June 2013 <strong>K+S</strong> Group 53
Legacy Project<br />
Expansion of Global Presence of <strong>K+S</strong><br />
Strengthen global presence!<br />
• Expansion of our existing production network by a North<br />
American production site Potash supplier with<br />
production on two continents<br />
China<br />
India<br />
South East Asia<br />
North America<br />
• Increasing diversification of the country portfolio of the<br />
<strong>K+S</strong> Group:<br />
- North and South America<br />
- China, India and South East Asia<br />
South America<br />
• Sale and distribution via existing distribution structures of<br />
the <strong>K+S</strong> Group<br />
• Flexible multi-product strategy:<br />
- MOP standard pink<br />
- MOP granulated pink<br />
- KCl 99 granulated<br />
June 2013<br />
<strong>K+S</strong> Group<br />
54
Legacy Project<br />
Why is the Legacy Project an important<br />
strategic step?<br />
Growth<br />
Production Costs<br />
Capacity and<br />
Mine Life<br />
Diversification<br />
Specialisation<br />
Flexibility /<br />
Expansion Potential<br />
• Adding substantial new capacities to the Potash and Magnesium Products<br />
business unit in a relatively short timeframe to be able to participate in the growth<br />
of the world potash market<br />
• Improvement and flexibilisation of average cash costs of production in the Potash<br />
and Magnesium Products business unit<br />
• Substantial addition of annual capacity by up to 4 million tonnes in the long run<br />
• Substantial extension of average mine life<br />
• <strong>K+S</strong> will be the potash producer with the widest product portfolio as well as one of<br />
the most diversified production networks and regional mix; share of sales volumes in<br />
the growth markets South America and Asia will increase<br />
• Continuation of the specialisation strategy by offering high-quality industrial<br />
products from Canada<br />
• Good scalability of capacity utilisation according to market development<br />
• Improved flexibility due to higher share of variable costs<br />
• Further expansion potential beyond the Legacy Project<br />
June 2013 <strong>K+S</strong> Group 55
Legacy Project<br />
Ramp-up Curve<br />
Production capacity<br />
in mln. t KCl/a<br />
4,0<br />
3,5<br />
3,0<br />
2,5<br />
2,0<br />
1,5<br />
1,0<br />
0,5<br />
Phase 2 – Development of secondary mining<br />
Phase 1 – Primary mining<br />
Outlook for Phase 3 –<br />
Expansion of secondary mining<br />
0,0<br />
2011'12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35<br />
1.14<br />
0.86<br />
2.00<br />
Phase 1<br />
(Implementation: 2011 to 2017)<br />
Phase 2<br />
(Implementation: 2016 to 2023)<br />
Outlook for Phase 3<br />
(Implementation: 2023 to 2034)<br />
● Development of infrastructure mainly for Phases 1 + 2, preparations for Phase 3<br />
● Capacity development + ramp-up of production to 2.0 mln. t KCl/a through primary mining<br />
● Capacity expansion and ramp-up of production by 0.86 to 2.86 mln. t KCl/a<br />
through secondary mining (share of secondary mining in total capacity: 30%)<br />
● Increase in share of secondary mining in total capacity to 50%<br />
● Potential expansion of annual capacity by 1.14 to 4.0 mln. t KCl/a<br />
June 2013<br />
<strong>K+S</strong> Group<br />
56
Legacy Project<br />
Course of Capex<br />
Phase 1<br />
Phase 2<br />
Phase 3<br />
Activity<br />
Primary mining: Development of<br />
first caverns and construction<br />
of production and<br />
infrastructure facilities<br />
Development of secondary mining,<br />
expansion of production and<br />
logistics facilities<br />
Further expansion of secondary<br />
mining, construction of necessary<br />
additional production and logistics<br />
facilities<br />
Production<br />
capacity after<br />
implementation<br />
as of 2017:<br />
2.00 million tonnes KCl/a<br />
as of 2023:<br />
2.86 million tonnes KCl/a<br />
probably as of 2034:<br />
4.00 million tonnes KCl/a<br />
Capex 2011 to 2022: CAD 4.10 billion* 2023 to 2034: ~ CAD 0.70 billion<br />
Indicative<br />
course of<br />
investment<br />
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022<br />
June 2013 * Approved by the Supervisory Board<br />
<strong>K+S</strong> Group 57
Legacy Project<br />
Specific Cash Costs* Lower Than Previously Expected<br />
CAD<br />
per tonne -10<br />
~ 165<br />
Average<br />
logistic<br />
costs:<br />
~ 70 CAD<br />
per tonne<br />
Production:<br />
~ 95 CAD<br />
per tonne<br />
~ 155<br />
Average<br />
logistic<br />
costs:<br />
~ 65 CAD<br />
per tonne<br />
Production:<br />
~ 90 CAD<br />
per tonne<br />
● Sustainable cash costs of production will be<br />
CAD 10/tonne lower than previously assumed<br />
due to<br />
● Investments into own infrastructure and<br />
● Modifications and optimization of plant<br />
components<br />
● Mining taxes/royalties of approx.<br />
CAD 60/tonne on the basis of an exemplary<br />
potash price of US$ 400/tonne ex works<br />
● Over the long term, D&A of about<br />
CAD 40/tonne after initially higher values at the<br />
start of production<br />
* At full utilisation of 2.86 million tonnes KCl/a (Phases 1+2)<br />
No increase in prices and costs after the construction phase<br />
June 2013 <strong>K+S</strong> Group 58
Legacy Project<br />
What Potash Price is required as a Minimum for the<br />
Profitability of the Legacy Project?<br />
• We generally want to earn a premium of 15% on the cost of capital of <strong>K+S</strong> Group.<br />
• The Legacy project will achieve this target!<br />
Basis for the calculation of profitability are:<br />
- Capex (Phases 1 + 2): CAD 4.1 billion<br />
- Gas price (Henry Hub Natural Gas Price): CAD 4.00/MMBtu<br />
- Average freight rates: ~ CAD 65/tonne<br />
Even if gas prices would change by ± 50% or average freight rates by ± 30%, we would<br />
still earn the targeted premium on our costs of capital at a price of USD 420 or 460/tonne<br />
MOP gran. including freight, respectively.<br />
June 2013 <strong>K+S</strong> Group 59
Legacy Project<br />
Project Progress<br />
• Further infrastructure measures in the areas of<br />
water supply, electricity and road construction, as<br />
well as the completion of first drilling activities, were<br />
undertaken in 2012.<br />
• About 130 employees from different countries are<br />
currently working at <strong>K+S</strong> Potash Canada GP on the<br />
construction of the new site. By 2023, more than<br />
300 jobs should be created.<br />
• In 2012, we spent an investment volume of € 143<br />
million, which was used for infrastructure measures<br />
and water supply, as well as engineering work and<br />
drilling.<br />
• In 2013, the investment level should reach<br />
CAD 500 million* and be used for drilling and the<br />
start of the factory’s construction.<br />
June 2013 * There may still be considerable shifts in the allocation of expenditure to the investment periods<br />
<strong>K+S</strong> Group 60
Legacy Project<br />
Geological Overview<br />
Legacy Project<br />
Patience Lake<br />
Belle Plaine<br />
Esterhazy<br />
Mining technique<br />
Reserves / Resources<br />
Depth<br />
Thickness<br />
K 2 O / KCl content<br />
Environmental<br />
Impact Statement<br />
Solution mining<br />
160 / 982 mln. t KCl product<br />
1,500 metres<br />
33 metres<br />
18% / 29%<br />
approved for up to<br />
4 mln. t KCl/a<br />
June 2013<br />
<strong>K+S</strong> Group<br />
61
Legacy Project<br />
Primary and Secondary Mining<br />
Patience Lake Seam<br />
Belle Plaine Seam<br />
Esterhazy Seam<br />
Primary Mining (Freshwater mining / Vacuum cooling crystallisation)<br />
• Primary mining uses freshwater. The connection of two boreholes to a<br />
cavern with the corresponding creation of a surface is initially created by NaCl<br />
solution mining below the KCl-rich Esterhazy Seam. The deposit is gradually<br />
solution-mined in up to 3 m thick horizontal layers through the three potash<br />
seams. This process is controlled vertically by an oil barrier (a thin layer on the<br />
surface of the brine).<br />
• During the primary mining process, the cavern expands to create an<br />
ideal form for commencing secondary mining.<br />
Secondary Mining (NaCl brine mining / Crystallisation in the crystallisation pond)<br />
• Secondary mining exclusively uses a NaCl-saturated brine in order to<br />
dissolve selectively KCl from the walls and roof of the existing caverns.<br />
• Along with a lower energy intensity, secondary mining – in comparison to<br />
primary mining – is substantially more efficient with the use of water.<br />
June 2013<br />
<strong>K+S</strong> Group<br />
62
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy 2<br />
B. Potash and Magnesium Products 11<br />
C. Salt 63<br />
- Demand Drivers<br />
- Supply Situation<br />
- Business Unit Performance<br />
D. Complementary Activities 83<br />
E. Financial Data 85<br />
F. Outlook 97<br />
G. <strong>K+S</strong> Share 102<br />
June 2013 <strong>K+S</strong> Group 63
Salt<br />
Key Drivers of the Salt Business<br />
• Diverse and stable salt end uses driving continuous growth<br />
• Essential mineral without economically viable substitutes<br />
• De-icing salt is used for public safety<br />
• Consumption driven by winter weather<br />
• Most economic and environmentally most friendly alternative<br />
• Consumer / food grade salt consumption benefits from population growth and increasing<br />
standards of living<br />
• Industrial/chemical salt consumption driven by economic growth and industrialisation<br />
• Rapidly industrialising regions experience high growth rates<br />
• Salt products typically represent only a small portion of costs of production<br />
• Regional markets due to high portion of logistics costs<br />
June 2013 <strong>K+S</strong> Group 64
Salt<br />
Development of Salt Production and Consumption<br />
Million tonnes<br />
North America<br />
67 68 70<br />
65<br />
Europe<br />
70<br />
60 63<br />
74<br />
58<br />
92<br />
Asia<br />
72<br />
108<br />
Ø 1.6% Ø 1.6%<br />
Ø 0.1% Ø 0.7%<br />
Production<br />
Latin America<br />
Consumption<br />
Ø 3.2% Ø 2.9%<br />
22<br />
16 12 16<br />
Production Consumption<br />
Production<br />
Ø 4.1% Ø 7.2%<br />
4 6 4 8<br />
Production<br />
Africa<br />
Consumption<br />
Consumption<br />
7.2% 8.8%<br />
3 6 3 7<br />
Production<br />
Middle East<br />
Consumption<br />
Ø 4.7% Ø 4.1%<br />
Production<br />
Ø 2.9% Ø 7.2%<br />
9<br />
12<br />
Production<br />
Consumption<br />
Oceania<br />
1<br />
2<br />
Consumption<br />
Source: <strong>K+S</strong>, USGS, Roskill 2011<br />
Global Salt Production:<br />
(Ø 2.4% p.a.)<br />
2010: 276 million t<br />
2000: 217 million t<br />
Global Salt Consumption<br />
(Ø 2.6% p.a.)<br />
2010: 285 million t<br />
2000: 220 million t<br />
June 2013 <strong>K+S</strong> Group 65
Salt<br />
Salt is a fundamental component of our life<br />
These are the following main production methods of salt:<br />
Rock Salt<br />
Sea-/Solar Salt<br />
Evaporated Salt<br />
Brine<br />
Conventional<br />
mining<br />
Crystallisation<br />
from sea water<br />
Recrystallisation<br />
of purified brine<br />
Controlled<br />
borehole-brining<br />
June 2013 <strong>K+S</strong> Group 66
ESSA<br />
Cargill<br />
Compass<br />
Artyomsol<br />
Südsalz<br />
Akzo<br />
Salins<br />
China National Salt<br />
Dampier<br />
Salt<br />
Main Salt Suppliers Worldwide<br />
Capacity in million tonnes (crystallised salt and salt in brine; excl. captive use)<br />
3.5<br />
13.1<br />
14.0<br />
13.4<br />
9.7<br />
15.0<br />
7.5<br />
5.1<br />
4.1<br />
3.7<br />
7.0<br />
10.3<br />
7.0<br />
3.8<br />
Mitsui<br />
Sources: Roskill 2011, <strong>K+S</strong><br />
June 2013 <strong>K+S</strong> Group 67
Salt<br />
Executing Our Salt Strategy<br />
5<br />
Acquired Morton Salt,<br />
the largest salt producer<br />
in North America<br />
<strong>K+S</strong><br />
4<br />
Morton<br />
Salt<br />
Acquired No.1 salt<br />
producer in South<br />
America through SPL<br />
acquisition<br />
- Market entry into U.S.<br />
and Latin America<br />
- Expansion potential<br />
to Asia<br />
SPL<br />
1<br />
2<br />
3<br />
Originally, salt<br />
business with high<br />
exposure to de-icing<br />
and industrial salt in<br />
Europe<br />
Added salt for chemical<br />
use through the acquisition<br />
of Frisia Zout (NL)<br />
Created No.1 salt<br />
producer in Europe<br />
through the acquisition<br />
of Solvay salt business<br />
June 2013 <strong>K+S</strong> Group 68
Salt<br />
Mitigation of Volatility in De-icing Business<br />
Sales Volume De-icing Salt SPL/ISCO*:<br />
Sales Volume De-icing Salt Morton*:<br />
Sales Volume De-icing Salt esco*:<br />
10 year average sales volume (2003 – 2012) * before consolidation of intersegment sales volumes<br />
The worldwide de-icing salt market<br />
exhibits varying volatility<br />
Access to the largest de-icing world<br />
markets mitigates the overall degree<br />
of fluctuation in the de-icing salt<br />
business<br />
Unique, interregional production<br />
network (including access to salt<br />
production from potash facilities)<br />
allows benefiting from strong<br />
demand surges at short notice<br />
June 2013 <strong>K+S</strong> Group 69
Salt<br />
Presence in the most attractive de-icing salt<br />
markets of the world<br />
Great Lakes<br />
• Continental climate with<br />
distinctly stable winters<br />
• High population density<br />
• Stable de-icing salt<br />
business with high<br />
volumes<br />
US East Coast<br />
• Atlantic climate<br />
• Relatively volatile,<br />
partly very harsh<br />
winters<br />
• Very high population<br />
density<br />
• Relatively stable<br />
de-icing salt business<br />
Eastern Canada<br />
• Atlantic climate<br />
• Relatively stable winters<br />
• Lower population density<br />
• Relatively stable<br />
de-icing salt business<br />
• Long-term contracts<br />
Central Europe<br />
• Atlantic climate<br />
• Milder winters with<br />
occasional upward<br />
fluctuations<br />
• Very high population<br />
density<br />
• Relatively fluctuating<br />
de-icing salt business<br />
Scandinavia<br />
• More stable winters in<br />
comparison with<br />
Western Europe<br />
• Relatively low<br />
population density<br />
• Relatively stable deicing<br />
salt business<br />
June 2013 <strong>K+S</strong> Group 70
Salt<br />
Business Unit Performance<br />
Revenues (€ billion) EBIT (€ million)<br />
Highlights Q1/13<br />
1.48 1.64<br />
0.46<br />
0.61<br />
73<br />
89<br />
45<br />
62<br />
Q1/12 Q1/13 FY/12 LTM Q1/12 Q1/13 FY/12 LTM<br />
1.7 1.7<br />
1.5<br />
238<br />
211<br />
62<br />
2010 2011 2012 2010 2011 2012<br />
• Europe: On the Western European de-icing salt<br />
market, continued wintry weather at the start of the<br />
year resulted in above-average demand, which was<br />
significantly above the low level of the same period<br />
a year ago.<br />
• North-America: Demand in the de-icing salt<br />
regions of the United States and Canada<br />
normalised following an extraordinarily mild winter<br />
in the same quarter a year ago.<br />
De-icing salt<br />
58%<br />
Revenue split 2012 Outlook 2013*<br />
By product group By region • As a result of the normalisation of the de-icing salt<br />
Other Food grade South America Asia<br />
3%<br />
business, a significant increase of sales volumes is<br />
salt 13%<br />
5% 2%<br />
expected.<br />
Industrial salt<br />
21%<br />
Salt for<br />
chemical use 5%<br />
North America<br />
67%<br />
Europe<br />
26%<br />
• Sales volume forecast of a good 22 million tonnes of<br />
crystallised salt (2012: 17.6 million tonnes).<br />
• Increase in revenues and operating earnings<br />
compared to below-average 2012 expected.<br />
June 2013 * Outlook statement as of 07 May 2013<br />
<strong>K+S</strong> Group 71
Salt<br />
Revenues, Earnings and Sales Volumes<br />
683<br />
615<br />
De-icing salt business seasonality<br />
459<br />
45<br />
288<br />
-12<br />
319<br />
5<br />
420<br />
23<br />
73<br />
Revenues<br />
(€ million)<br />
EBIT I<br />
(€ million)<br />
• De-icing salt seasonality clearly<br />
observable in the development of total<br />
salt revenues, sales volumes and<br />
operating earnings.<br />
• Revenues and EBIT I rose in first quarter<br />
2013 due to the normalisation of de-icing<br />
salt business.<br />
6.2<br />
5.1<br />
8.9<br />
• Sales volumes increased by 44% in<br />
Q1/13 compared to the below-average<br />
level for the same period a year ago.<br />
3.0 3.3<br />
Sales<br />
volumes<br />
(million<br />
tonnes)<br />
June 2013<br />
<strong>K+S</strong> Group<br />
72
Salt<br />
Historic and Recent Volume and Price Development<br />
Million tonnes Morton Salt (as of<br />
€<br />
1 October 2009)<br />
SPL (as of<br />
1 July 2006)<br />
22.53 22.73<br />
49.1<br />
45.0 45.5<br />
48.7<br />
55.5<br />
14.81<br />
54.8<br />
9.04<br />
55.6<br />
9.42<br />
54.7<br />
17.56<br />
9.23<br />
5.85<br />
8.02<br />
8.77<br />
9.47<br />
6.07<br />
2.82<br />
3.25<br />
3.90<br />
4.12<br />
4.73<br />
4.04<br />
5.00<br />
4.47<br />
8.96<br />
13.49<br />
13.31<br />
8.33<br />
De-icing salt sales volume<br />
Sales volume of industrial salt,<br />
salt for chemical use and food grade salt<br />
Yearly average price of de-icing salt<br />
2005 2006 2007 2008 2009 2010<br />
2011<br />
2012<br />
• Total sales volumes increased over the past years mainly due to external growth, while the de-icing salt share<br />
remained rather stable<br />
• Sales volumes declined in 2012 caused by weaker de-icing salt demand due to unusually mild winter weather<br />
June 2013 <strong>K+S</strong> Group 73
Salt<br />
Seasonality of the De-icing Salt Business<br />
Million tonnes<br />
€<br />
8.88<br />
55.1<br />
51.5<br />
2.38<br />
52.2<br />
55.0<br />
56.6<br />
6.18<br />
5.82<br />
2.16<br />
7,94<br />
6.50<br />
3.21<br />
3.52<br />
2.54<br />
4.02<br />
2.47<br />
0.74<br />
0,60<br />
2.17<br />
1.35<br />
1,11<br />
3.28<br />
2,60<br />
De-icing salt sales volume<br />
Sales volume of industrial salt,<br />
salt for chemical use and food grade salt<br />
De-icing salt average price 2013<br />
De-icing salt average price 2012<br />
Q1/12 Q1/13<br />
Q2/12 Q2/13 Q3/12 Q3/13 Q4/12 Q4/13<br />
• Quarterly volumes and prices are affected by seasonal de-icing salt business which are in<br />
general strongest in the Q1 and Q4<br />
June 2013 <strong>K+S</strong> Group 74
Salt<br />
Main Application Areas<br />
Food Grade Salt<br />
Industrial Salts<br />
Salt for Chemical Use<br />
De-icing Agents<br />
• Main Applications:<br />
• Table Salt<br />
(Consumer)<br />
• Food Processing<br />
• Main Applications:<br />
• Pharmaceutical<br />
• Water Treatment<br />
• Oil and Gas<br />
Drilling<br />
• Animal Feed<br />
• Main Applications:<br />
• Chlor-Alkali<br />
(→ PVC)<br />
• Synthetic Soda Ash<br />
Production<br />
(→ Glass)<br />
• Main Application:<br />
• Salt used as Deicing<br />
Agent for<br />
Highway Safety<br />
• Key Demand Drivers:<br />
• Population Growth<br />
• Eating Habit<br />
• Key Demand Drivers:<br />
• GDP Growth<br />
• Key Demand Drivers:<br />
• GDP Growth<br />
• Urbanization<br />
• Key Demand Drivers:<br />
• Winter Weather<br />
Conditions<br />
• Infrastructure<br />
Development<br />
June 2013<br />
<strong>K+S</strong> Group<br />
75
Salt<br />
Mining Chamber in Germany<br />
June 2013 <strong>K+S</strong> Group 76
Salt<br />
SPL: Salt Extraction in the Atacama Desert<br />
June 2013 <strong>K+S</strong> Group 77
Salt<br />
<strong>K+S</strong> Production Sites in Europe as well as<br />
Winter Regions relevant for <strong>K+S</strong><br />
Production method<br />
Rock salt<br />
Solar evaporation salt<br />
Vacuum salt<br />
Production of de-icing salt<br />
<strong>K+S</strong> winter regions<br />
(…) Ø extraction 2003-2012 in t million<br />
*<br />
Processing<br />
Frisia, NL (1.0 million t)<br />
Borth, D (1.55 million t)<br />
Dombasle, F*<br />
Braunschweig-<br />
Lüneburg, D (0.67 million t)<br />
Bernburg, D (2.10 million t)<br />
Torrelavega, E*<br />
Povoa, P*<br />
Olhao, P*<br />
June 2013<br />
<strong>K+S</strong> Group<br />
78
Salt<br />
<strong>K+S</strong> Production Sites in North and South America<br />
and Winter Regions in North America relevant for <strong>K+S</strong><br />
Lindbergh, AB (0.13 million t)<br />
Regina, SK*<br />
Grantsville, UT<br />
(0.57 million t)<br />
Newark, CA*<br />
Manistee, MI (0.28 million t)<br />
Ojibway, ON (2.63 million t)<br />
Windsor, ON (0.23 million t)<br />
Great Lakes/<br />
Ontario<br />
River<br />
System<br />
Quebec/<br />
Maritime<br />
New<br />
York<br />
Silver Springs, NY (0.34 million t)<br />
Perth Amboy, NJ*<br />
Fairport,OH (1.12 million t)<br />
Rittman, OH (0.50 million t)<br />
Mines Seleine, QC<br />
(1.53 million t)<br />
Pugwash, NS (1.12 million t)<br />
Long Beach, CA*<br />
US East Coast<br />
Glendale, AZ (0.12 million t)<br />
Production method<br />
Hutchinson, KS (0.32 million t)<br />
Natal, Brasilien<br />
(0.50 million t)<br />
Rock salt<br />
Grand Saline, TX (0.36 million t)<br />
Port Canaveral, FL*<br />
Solar evaporation salt<br />
Weeks Island, LA (1.41 million t)<br />
Vacuum salt<br />
Inagua, BH<br />
Production of de-icing salt<br />
(0.88 million t)<br />
Salar Grande<br />
de Tarapacá,<br />
<strong>K+S</strong> winter regions<br />
Chile (6.80 million t)<br />
(…) Ø extraction 2003-2012 in t million<br />
* Processing<br />
June 2013 <strong>K+S</strong> Group 79
purchaser<br />
vendor<br />
Salt<br />
Details of De-icing Salt Bidding Processes<br />
defined by<br />
Details specified in typical<br />
bid document<br />
volume<br />
destination<br />
delivery<br />
product and service<br />
specifications<br />
guaranteed minimum<br />
purchase requirement<br />
maximum delivery<br />
requirement<br />
price<br />
• Government de-icing contracts are awarded in<br />
Europe, the US and Canada in the form of public<br />
bids<br />
• Government purchaser issues bid documents in<br />
late spring/early summer<br />
• Vendors hand in sealed bids, which will be<br />
opened at date and time specified in the bid<br />
documents<br />
• Lowest priced bid that satisfies all requirements<br />
will be awarded<br />
• In the US, Canada and most parts of Europe, all<br />
vendor’s bids will become public<br />
• In the US most bids are valid for one year/season<br />
• In Canada and some parts of Europe contracts<br />
might be awarded for a duration of up to 4 years<br />
June 2013 <strong>K+S</strong> Group 80
Salt<br />
Governmental De-icing Market – North America<br />
The public safety and economic benefits of road salt use are clear.<br />
• Winter weather congestion affects 70% of U.S. roadways.<br />
• Roadway de-icing reduces crash frequency by 88.3 percent.<br />
• De-icing decreases the average cost of each crash by 10 percent.<br />
• During the first four hours after salt is applied, the direct road users’ benefits<br />
(i.e. increased mobility, productivity & hourly worker compensation) are $6.50<br />
for every $1.00 spent.<br />
• A one-day major snowstorm can cost a state $300-$700 million in both direct<br />
and indirect costs (i.e. reduction in commerce & associated tax revenue).<br />
Morton/ISCO – Even distribution of<br />
volume between three key markets.<br />
Midwest<br />
Canada<br />
USEC<br />
35%<br />
37%<br />
28%<br />
Sources: Marquette University and Global Insight Studies / Salt Institute<br />
June 2013 <strong>K+S</strong> Group 81
Salt<br />
Comparison of portfolios with competitors<br />
<strong>K+S</strong><br />
China National<br />
Salt<br />
Compass<br />
Minerals<br />
Dampier<br />
Salt<br />
Number of production sites<br />
of which<br />
34<br />
14<br />
8<br />
3<br />
Rock salt<br />
10<br />
-<br />
3<br />
-<br />
Solar evaporation salt<br />
7<br />
4<br />
1<br />
3<br />
Vacuum salt<br />
17<br />
10<br />
4<br />
-<br />
Product portfolio (% of revenues)<br />
De-icing salt<br />
Industrial salt<br />
Salt for chemical use<br />
Food grade salt<br />
Other<br />
<strong>K+S</strong>‘ competitive advantages:<br />
<br />
<br />
<br />
A diversified production network reduces the risk of dependency on a single production centre<br />
Geographic dispersal of production centres makes regional production close to customers with advantages<br />
in transport costs possible<br />
A broad product portfolio reduces the volatility of sales<br />
Source: company information, own estimates<br />
June 2013 <strong>K+S</strong> Group 82
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy 2<br />
B. Potash and Magnesium Products 11<br />
C. Salt 63<br />
D. Complementary Activities 83<br />
E. Financial Data 85<br />
F. Outlook 97<br />
G. <strong>K+S</strong> Share 102<br />
June 2013 <strong>K+S</strong> Group 83
<strong>K+S</strong> Group<br />
Complementary Activities<br />
Revenues (€ million)<br />
EBIT (€ million)<br />
Summary<br />
39<br />
40<br />
154<br />
154<br />
7<br />
7<br />
21<br />
21<br />
<strong>K+S</strong> is the leading provider for underground waste<br />
management in Europe ensuring safety over long<br />
periods of time. In addition, we offer tailor-made<br />
solutions for recycling requirements of our customers.<br />
Q1/12 Q1/13 FY/12 LTM Q1/12 Q1/13 FY/12 LTM<br />
150 154<br />
134<br />
21<br />
18<br />
21<br />
Logistics activities being essential for <strong>K+S</strong> are also<br />
bundled in this unit. Another important activity is the<br />
granulation of CATSAN ® (cat litter).<br />
2010 2011 2012 2010 2011 2012<br />
Revenue split 2012 Outlook 2013 *<br />
By product group<br />
Trade<br />
11%<br />
Rest of<br />
Europe 17%<br />
By region<br />
In the “Complementary Activities“ we expect from<br />
today’s perspective stable revenues and earnings.<br />
Animal hygiene<br />
products<br />
25%<br />
Logistics 8%<br />
Waste Mgmt.<br />
and Recycling<br />
56%<br />
Germany 83%<br />
June 2013 * Outlook statement as of 07 May 2013<br />
<strong>K+S</strong> Group 84
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy 2<br />
B. Potash and Magnesium Products 11<br />
C. Salt 63<br />
D. Complementary Activities 83<br />
E. Financial Data 85<br />
F. Outlook 97<br />
G. <strong>K+S</strong> Share 102<br />
June 2013 <strong>K+S</strong> Group 85
<strong>K+S</strong> Group<br />
Development of Revenues and Earnings<br />
€ million<br />
Revenues Operating earnings Group earnings, adjusted 1),2)<br />
5,000<br />
CAGR 61.7% CAGR 141.1% CAGR 498.3%<br />
1,500<br />
4,000<br />
1,200<br />
3,000<br />
900<br />
2,000<br />
600<br />
1,000<br />
300<br />
‘09 ‘10 ‘11 ‘12 LTM ‘09 ‘10 ‘11 ‘12 LTM ‘09 ‘10 ‘11 ‘12 LTM<br />
1)<br />
2008 and 2009 include the discontinued operations of COMPO and <strong>K+S</strong> Nitrogen. 2010 still including <strong>K+S</strong> Nitrogen<br />
2)<br />
The adjusted figures only include the realised result from operating forecast forecast hedges of the respective reporting period. The changes in the market<br />
value of operating forecast hedges still outstanding, however, are not taken into account in the adjusted earnings. Related effects on deferred and cash<br />
taxes are also eliminated.<br />
June 2013 <strong>K+S</strong> Group 86
<strong>K+S</strong> Group<br />
Development of Earnings per Share, Adjusted<br />
€<br />
2.00<br />
1.50<br />
1.00<br />
0.50<br />
0.00<br />
FY * 2.34 € 3.27 €<br />
-<br />
* Information refers to the continued operations of <strong>K+S</strong> Group. The adjusted figures unalteredly only include the realised result from<br />
operating forecast forecast hedges of the respective reporting period. The changes in the market value of operating forecast hedges still outstanding,<br />
however, are not taken into account in the adjusted earnings. Related effects on deferred and cash taxes are also eliminated.<br />
June 2013 <strong>K+S</strong> Group 87
<strong>K+S</strong> Group<br />
Operating EBIT Margins<br />
2012 2011 2010<br />
2009<br />
2008<br />
Potash and Magnesium Products<br />
33.8%<br />
34.7%<br />
25.5%<br />
16.3%<br />
50.2%<br />
Salt<br />
4.2%<br />
12.4%<br />
13.8%<br />
13.8%<br />
7.3%<br />
Complementary Activities<br />
13.7%<br />
11.9%<br />
15.8%<br />
12.6%<br />
20.0%<br />
<strong>K+S</strong> Group 1)<br />
20.5%<br />
22.7%<br />
15.4%<br />
6.7%<br />
28.0%<br />
1)<br />
2008 and 2009 include the discontinued operations of COMPO.<br />
June 2013<br />
<strong>K+S</strong> Group<br />
88
<strong>K+S</strong> Group<br />
Cash Flow Development 2012<br />
Cash flow from<br />
operating activities 1,2)<br />
Cash flow for<br />
investing activities 1,3) Free cash flow 1,2,3)<br />
+744<br />
+651<br />
+249<br />
+243<br />
(495)<br />
(408)<br />
2012 (€ million)<br />
2011 (€ million)<br />
• Cash flow from<br />
operating activities in line<br />
with EBIT development<br />
• 2011 includes the acquisition of<br />
Potash One (€ 242.8 million)<br />
• Higher capex in 2012<br />
2012 free cash flow<br />
almost on last years level<br />
June 2013<br />
1)<br />
Information refers to the continued operations. 2) Without out-financing of pension obligations in the amount of € (43.4)<br />
million in 2012 (2011: € (110.0) million)<br />
3)<br />
Without investments in/sales of securities and other financial investments in the amount of € (558.5) million in 2012<br />
(2011: € (372.4) million)<br />
<strong>K+S</strong> Group<br />
89
<strong>K+S</strong> Group<br />
Capital Expenditure and Depreciation 1)<br />
€ million<br />
1,200<br />
Expansion capex<br />
1,000<br />
800<br />
Maintenance capex<br />
Depreciation<br />
~820<br />
600<br />
466<br />
400<br />
294<br />
200<br />
172<br />
198<br />
178<br />
189<br />
63<br />
2007 2008 2009 2010 2011 2012<br />
2013e<br />
• In 2013, of the expected capex volume of a good € 800 million, CAD 500 million 2) (€ 375 million) should be<br />
accounted for by the Legacy Project.<br />
1)<br />
2008 and 2009 include the discontinued operations of COMPO. 2010 still including <strong>K+S</strong> Nitrogen. 2) There may still be<br />
considerable shifts regarding the allocation of the capex for the Legacy Project to the investment periods.<br />
June 2013 <strong>K+S</strong> Group 90
<strong>K+S</strong> Group<br />
Net Indebtedness<br />
€ million<br />
Provisions for pensions<br />
Provisions for mining obligations<br />
Non-current liabilities - non-current securities<br />
Current liabilities - cash - current securities<br />
Total net debt<br />
2008 2009 2010 2011<br />
Gearing ratio (%) 33.2 64.5 27.6 19.8<br />
2012<br />
21.7<br />
June 2013 * Including reimbursement claim for the Morton Salt bond (2012: €18,9 million; 2011: €19.4 million; 2010: €18.9 million) <strong>K+S</strong> Group 91
<strong>K+S</strong> Group<br />
Value Creation, Cash Generation, Strong Balance<br />
Sheet and High Dividend Distribution<br />
Mio. ROCE, € EBIT-Margin and Value Added<br />
Operating and Free Cash € Flow je Aktie<br />
€ million % € million € million<br />
ROCE (rhs)<br />
EBIT-margin (rhs)<br />
Value added<br />
H1 Operating cash flow<br />
H2 Operating cash flow<br />
Free cash flow before acqusitions/divestments<br />
Gearing and Equity Ratio<br />
Capex and Dividends<br />
% % € million %<br />
Gearing<br />
Equity ratio (rhs)<br />
Capex<br />
Dividends<br />
Capex/Depreciation (rhs)<br />
June 2013 <strong>K+S</strong> Group 92
<strong>K+S</strong> Group<br />
Balance Sheet<br />
€ million<br />
Non-current assets<br />
of which Intangible assets<br />
Property, plant and equipment<br />
Deferred tax assets<br />
Securities and other financial investments<br />
Current assets<br />
of which Inventories<br />
Accounts receivable - trade<br />
Cash, securities and other financial investments<br />
Equity<br />
Non-current debt<br />
of which Financial liabilities<br />
Provisions (pensions and mining obligations)<br />
Deferred tax liabilities<br />
Current debt<br />
of which Financial liabilities<br />
Balance sheet total<br />
31.12.12<br />
4,190.9<br />
1,000.8<br />
2,527.4<br />
48.3<br />
499.5<br />
2,448.1<br />
687.9<br />
770.3<br />
786.8<br />
3,477.3<br />
2,514.3<br />
1,264.9<br />
795.4<br />
304.7<br />
647.4<br />
0.9<br />
6,639.0<br />
31.12.11<br />
3,448.5<br />
1,020.9<br />
2,227.0<br />
55.3<br />
58.5<br />
2,608.4<br />
730.0<br />
928.8<br />
757.8<br />
3,084.6<br />
1,953.6<br />
769.8<br />
675.9<br />
342.3<br />
1,018.7<br />
0.8<br />
6,056.9<br />
June 2013 <strong>K+S</strong> Group 93
<strong>K+S</strong> Group<br />
Key Figures for the Management<br />
of the Capital Structure<br />
In order to assure and optimise the financial capacity of the <strong>K+S</strong> Group, we aim to achieve a<br />
situation where the <strong>K+S</strong> Group has a capital structure in the long term, which is oriented to<br />
the usual criteria and indicators for an "investment grade" rating. The management of the<br />
capital structure is undertaken on the basis of the following key figures:<br />
Target corridor Q1/13 2012 2011<br />
Net indebtedness / EBITDA 1.0x – 1.5x 0.6x 0.8x 0.5x<br />
Net indebtedness / Equity 50% – 100% 17.0% 24.4% 21.8%<br />
Equity ratio 40% – 50% 53.1% 51.4% 50.3%<br />
June 2013 <strong>K+S</strong> Group 94
<strong>K+S</strong> Group<br />
Maturity Profile<br />
€ million<br />
1000<br />
Bonds (due 09/2014, Coupon: 5%; due 06/2022, Coupon 3%)<br />
Revolving credit facility due 07/2015<br />
800<br />
600<br />
400<br />
750<br />
800<br />
200<br />
500<br />
0<br />
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022<br />
• The revolving credit facility above shows maximum possible headroom, not the amount<br />
actually drawn.<br />
• In addition, there are uncommitted, bilateral credit lines.<br />
June 2013 <strong>K+S</strong> Group 95
<strong>K+S</strong> Group<br />
Our Aim is to maintain our Investment<br />
Grade Rating<br />
Moody’s<br />
Date Rating Outlook<br />
April 2013 Baa2 negative<br />
November 2010 Baa2 stable<br />
March 2010 Baa2 stable<br />
Standard & Poor’s<br />
Date Rating Outlook<br />
• We have shown a successful<br />
track record in credit and debt<br />
capital markets<br />
• To ensure this position we want<br />
to maintain a investment grade rating<br />
• Current financial ratios support<br />
our rating strongly<br />
April 2013 BBB+ stable<br />
September 2011 BBB+ stable<br />
January 2011 BBB positive<br />
June 2013 <strong>K+S</strong> Group 96
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy 2<br />
B. Potash and Magnesium Products 11<br />
C. Salt 63<br />
D. Complementary Activities 83<br />
E. Financial Data 85<br />
F. Outlook 97<br />
G. <strong>K+S</strong> Share 102<br />
June 2013 <strong>K+S</strong> Group 97
Attractive Prospects<br />
Potash and Magnesium Products business unit<br />
Outlook 2013:<br />
●<br />
Declining revenues<br />
• Lower average price<br />
• Stable sales volumes at about 7 million t<br />
(2012: 6.95 million t)<br />
● Operating earnings below 2012<br />
• Price related decrease in revenues<br />
• Stable overall cost level<br />
Outlook 2014:<br />
● Price and volume related rise in<br />
revenues<br />
● Higher operating earnings<br />
June 2013<br />
<strong>K+S</strong> Group<br />
98
Attractive Prospects<br />
Salt business unit<br />
Outlook 2013:<br />
●<br />
●<br />
Higher revenues<br />
Normalisation of de-icing salt sales volumes<br />
(increase to 12-13 million t; 2012: 8.33 million t)<br />
Improving operating earnings<br />
• Higher revenues due to normalisation of<br />
de-icing salt business<br />
• Significantly higher capacity utlisation and<br />
fixed cost coverage<br />
Outlook 2014:<br />
● Increasing revenues due to price factors 1)<br />
● Higher operating earnings 1)<br />
1)<br />
Assumption: Average de-icing salt business<br />
June 2013<br />
<strong>K+S</strong> Group<br />
99
Attractive Prospects<br />
Revenue and earnings outlook <strong>K+S</strong> Group<br />
100<br />
Outlook 2013:<br />
●<br />
Pricing related lower revenues and earnings in the Potash and Magnesium Products<br />
business unit should be overcompensated by volume driven increase in the Salt<br />
business unit<br />
Slightly higher revenues<br />
Operating earnings EBIT I slightly higher<br />
● Capex of a good € 800 million (Legacy: € about 375 million ≙ CAD 500 million)<br />
Outlook 2014:<br />
Slight increase in revenues and earnings<br />
June 2013<br />
<strong>K+S</strong> Group
<strong>K+S</strong> Group<br />
Earnings Sensitivities to USD volatility in 2013<br />
1.20 USD/EUR 1.30 USD/EUR* 1.40 USD/EUR<br />
Ø USD/EUR exchange rate changes from<br />
1.30 to 1.20 USD/EUR<br />
• With the use of options, we still<br />
participate in the possible appreciation<br />
of the US dollar (less the amount we<br />
paid for the premiums). Based on the<br />
expected USD net exposure of the<br />
<strong>K+S</strong> Group, the total positive effect on<br />
EBIT I earnings of <strong>K+S</strong> Group in 2013<br />
would be about € 54 million.<br />
* underlying assumption of outlook 2013<br />
Ø USD/EUR exchange rate changes from<br />
1.30 to 1.40 USD/EUR<br />
• Based on the expected USD net exposure<br />
of <strong>K+S</strong> Group, the total negative effect<br />
without hedging on EBIT I earnings of the<br />
<strong>K+S</strong> Group in 2013 would be about<br />
€ 66 million.<br />
• As options in place cover our expected<br />
net exposure from today’s perspective<br />
to a large degree, the above-mentioned<br />
risk reduces to about € 36 million in 2013<br />
(including the amount we paid for the<br />
premiums).<br />
June 2013 <strong>K+S</strong> Group 101
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy 2<br />
B. Potash and Magnesium Products 11<br />
C. Salt 63<br />
D. Complementary Activities 83<br />
E. Financial Data 84<br />
F. Outlook 97<br />
G. <strong>K+S</strong> Share 102<br />
June 2013 <strong>K+S</strong> Group 102
<strong>K+S</strong> Group<br />
<strong>K+S</strong> Share / Bond information<br />
The <strong>K+S</strong> share at a glance:<br />
• Stock identification number: KSAG88 / ISIN: DE000KSAG888<br />
• Type of shares: Registered unit shares of no-par value<br />
• Total number of shares: 191,400,000<br />
• Trading segment: Prime Standard<br />
• Prime Sector: Chemicals / Industry group: Chemicals, Commodities<br />
• Listings: all stock exchanges in Germany<br />
• Ticker symbols: Bloomberg SDF / Reuters SDFG<br />
• ADR symbol: KPLUY<br />
• ADR CUSIP: 48265W108 / ISIN: US48265W1080<br />
• ADR listing: OTC market in the US<br />
• ADR ticker symbols:<br />
- Bloomberg: KPLUY<br />
- Reuters: KPLUY.PK<br />
• ADR depositary bank: The Bank of New York Mellon<br />
The <strong>K+S</strong> Bonds:<br />
Maturity: September 2014<br />
• Stock ID: A1A 6FV / ISIN: DE000A1A6FV5<br />
• Issuing volume: € 750 million<br />
• Issue price: 99.598%<br />
• Interest coupon: 5.000%<br />
in %<br />
Bond 09/2014<br />
Price: 105.538%<br />
Yield: 0.638% p.a.<br />
Maturity: June 2022<br />
• Stock ID: A1P GZ8 / ISIN: DE000A1PGZ82<br />
• Issuing volume: € 500 million<br />
• Issue price: 99.422%<br />
• Interest coupon: 3.000%<br />
Bond 06/2022<br />
Price: 103.769%<br />
Yield: 2.527% p.a.<br />
11.06.13<br />
As of 11 June 2013<br />
June 2013 <strong>K+S</strong> Group 103
<strong>K+S</strong> Group<br />
Key Data of the <strong>K+S</strong> Share<br />
2011<br />
2010<br />
2009<br />
2008<br />
Earnings per share, adjusted (€) 1),2),3)<br />
2.83<br />
2012<br />
3.27<br />
2.34<br />
0.56<br />
5.94<br />
Dividend per share (€) 3)<br />
1.40 4)<br />
1.30<br />
1.00<br />
0.20<br />
2.40<br />
Book value per share, adjusted (€) 2),3)<br />
18.17<br />
16.12<br />
13.85<br />
10.94<br />
10.41<br />
Year-end closing price (XETRA, €) 3)<br />
35.00<br />
34.92<br />
56.36<br />
39.99<br />
39.97<br />
Total stock exchange turnover (€bn)<br />
11.8<br />
17.7<br />
16.8<br />
16.9<br />
33.4<br />
Average daily turnover (€m)<br />
46.5<br />
68.7<br />
65.7<br />
66.4<br />
131.6<br />
Average number of shares (m)<br />
191.40<br />
191.33<br />
191.34<br />
166.15<br />
164.95<br />
Dividend yield (on closing price, %)<br />
4.0<br />
3.7<br />
1.8<br />
0.5<br />
6.0<br />
Return on equity after taxes (%) 2),4)<br />
19.4<br />
20.2<br />
18.7<br />
8.4<br />
68.6<br />
1)<br />
2008 and 2009 include the discontinued operations of COMPO and <strong>K+S</strong> Nitrogen. 2010 still including <strong>K+S</strong> Nitrogen.<br />
2)<br />
The adjusted figures only include the realised result from operating forecast forecast hedges of the respective reporting<br />
period. The changes in the market value of operating forecast hedges still outstanding, however, are not taken into account in the<br />
adjusted earnings. Related effects on deferred and cash taxes are also eliminated.<br />
3)<br />
Historical data not adjusted for the capital increase 2009<br />
4)<br />
Dividend proposal<br />
June 2013 <strong>K+S</strong> Group 104
<strong>K+S</strong> Group<br />
Analysts‘ Estimates – Consensus<br />
As of 5 June 2013<br />
2012<br />
2013e<br />
2014e<br />
Revenues<br />
(€ million)<br />
3,935.3<br />
Median<br />
Number of estimates<br />
4,071.8<br />
18<br />
4,168.0<br />
18<br />
Operating earnings<br />
EBIT I (€ million)<br />
804.1<br />
Median<br />
Number of estimates<br />
822.8<br />
18<br />
839.6<br />
18<br />
Group earnings from<br />
continued operations<br />
adjusted (€ million)<br />
538.1<br />
Median<br />
Number of estimates<br />
546.2<br />
18<br />
549.9<br />
18<br />
Earnings per share<br />
from continued<br />
operations,<br />
adjusted (€)<br />
2.81<br />
Median<br />
Number of estimates<br />
2.85<br />
18<br />
2.87<br />
18<br />
Dividend (€)<br />
1.40<br />
Median<br />
Number of estimates<br />
1.26<br />
18<br />
1.28<br />
18<br />
Target price (€)<br />
Median<br />
Number of estimates<br />
37.00<br />
18<br />
June 2013<br />
<strong>K+S</strong> Group<br />
105
<strong>K+S</strong> Group<br />
<strong>K+S</strong> Share Price compared with DAX<br />
Performance of <strong>K+S</strong> share<br />
(Index: 31 December 2012 = 100)<br />
Market capitalisation<br />
(as of 31 December, € billion)<br />
DAX<br />
+9%<br />
5.8<br />
<strong>K+S</strong><br />
(9%)<br />
2013<br />
Jan.<br />
2013<br />
June<br />
2003 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 2013<br />
10 June<br />
* Incl. dividend<br />
Source: Bloomberg; as of 10 June 2013<br />
June 2013<br />
<strong>K+S</strong> Group<br />
106
<strong>K+S</strong> Group<br />
<strong>K+S</strong> Share Price compared with Peer Group<br />
Index: 31 December 2012 = 100<br />
Compass<br />
+17%<br />
Mosaic<br />
PotashCorp<br />
+6%<br />
+2%<br />
Uralkali<br />
ICL<br />
<strong>K+S</strong><br />
(8%)<br />
(10%)<br />
(13%)<br />
2013<br />
Jan.<br />
2013<br />
June<br />
Source: Bloomberg; as of 10 June 2013<br />
June 2013<br />
<strong>K+S</strong> Group<br />
107
<strong>K+S</strong> Group<br />
<strong>K+S</strong> Share Price – Monthly Highs, Lows and Averages<br />
during the last 12 months<br />
Share price in € – development during the last 12 months<br />
´12 ´13<br />
High/Low<br />
Monthly average<br />
June 2013 <strong>K+S</strong> Group 108
<strong>K+S</strong> Group<br />
Stock Market Indices and Analysts’ coverage<br />
The <strong>K+S</strong> share is quoted in the following stock market index:<br />
• DAX<br />
• DJ STOXX 600<br />
• DJ EURO STOXX<br />
• HDAX<br />
• CDAX Gesamtindex<br />
• Prime Allshare Index<br />
• Classic Allshare Index<br />
Banks presently publishing reports on <strong>K+S</strong>:<br />
• Prime Sector Chemicals<br />
• Industry Group Chemicals / Commodity<br />
• DJ STOXX TMI<br />
• MSCI World Standard<br />
• MSCI Europe Standard<br />
• MSCI Germany Standard<br />
• ECPI Ethical Index Global<br />
• Baader Bank AG<br />
• Bank of America / Merrill Lynch<br />
• B. Metzler seel. Sohn & Co.<br />
• Bankhaus Lampe<br />
• Barclays<br />
• Berenberg Bank<br />
• BMO Bank of Montreal<br />
• CA Cheuvreux<br />
• Citigroup<br />
• Commerzbank<br />
• Deutsche Bank<br />
• DZ Bank<br />
• equinet<br />
• Equita<br />
• Exane BNP Paribas<br />
• Goldman Sachs<br />
• Hauck & Aufhäuser Institutional Research AG<br />
• HSBC Trinkaus & Burkhardt<br />
• Independent Research<br />
• J.P. Morgan Cazenove<br />
• Kepler Capital Markets<br />
• LBBW<br />
• Liberum<br />
• Macquarie<br />
• Main First Bank<br />
• M.M. Warburg<br />
• Morgan Stanley<br />
• Morningstar<br />
• Nomura<br />
• Redburn<br />
• Sanford C. Bernstein<br />
• Scotiabank<br />
• UBS Investment Research<br />
Analysts’ recommendations of the last 12 months and an always current consensus estimate you can find at<br />
http://www.k-plus-s.com/en/ks-aktie/bewertungen/analysten.html. Furthermore you can download all publications and<br />
presentations of our company from the <strong>Investor</strong> <strong>Relations</strong> section of our website (http://www.k-plus-s.com/en/investorrelations/index.html),<br />
where you also find answers to frequently asked questions.<br />
June 2013 <strong>K+S</strong> Group 109
<strong>K+S</strong> Group<br />
Dividend Policy and Outlook<br />
• We pursue a dividend policy that is in principle earnings-based. According to this, a dividend<br />
payout rate of between 40% and 50% of the adjusted Group earnings after taxes forms the<br />
basis for future dividend recommendations.<br />
• For the year 2012, a dividend of € 1.40 per share (+ 8%) was paid.<br />
Group Earnings and Payout Ratio<br />
Dividends<br />
%<br />
Payout ratio<br />
Target range payout ratio<br />
Group earnings from continued operations,<br />
adjusted (rhs)<br />
Mio. €<br />
,<br />
,<br />
,<br />
€<br />
.<br />
.<br />
.<br />
.<br />
.<br />
Dividends in €<br />
€<br />
.<br />
.<br />
.<br />
.<br />
.<br />
640<br />
.<br />
.<br />
.<br />
.<br />
.<br />
.<br />
.<br />
.<br />
June 2013 <strong>K+S</strong> Group 110
<strong>K+S</strong> Group<br />
How is the Shareholder Structure?<br />
• Meritus Trust Company Limited holds 9.88%<br />
of <strong>K+S</strong> shares via EuroChem Group SE, including<br />
OJSC MCC “EuroChem”; Meritus Trust manages<br />
industrial holdings of Andrei Melnichenko on a<br />
fiduciary basis<br />
• The free float of <strong>K+S</strong> AG amounts to approx. 90%<br />
Free float 90.1%<br />
• Investment companies, that have exceeded<br />
the 3% threshold:<br />
- BlackRock Inc.: 5.08%<br />
Meritus Trust /<br />
OJSC MCC „EuroChem“ 9.9%<br />
June 2013 <strong>K+S</strong> Group 111
<strong>K+S</strong> Group<br />
Financial Calendar<br />
13 August 2013 ‣ Half-yearly Financial Report, 30 June 2013<br />
14 November 2013 ‣ Quarterly Financial Report, 30 September 2013<br />
13 March 2014 ‣ Report on business in 2013<br />
14 May 2014 ‣ Quarterly Financial Report, 31 March 2013<br />
14 May 2014 ‣ Annual General Meeting 2013, Kassel<br />
15 May 2014 ‣ Dividend payment<br />
June 2013 <strong>K+S</strong> Group 112
<strong>K+S</strong> <strong>Investor</strong> <strong>Relations</strong><br />
Your Contact Persons<br />
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
Bertha-von-Suttner-Str. 7<br />
34131 Kassel (Germany)<br />
E-Mail: investor-relations@k-plus-s.com<br />
Homepage: www.k-plus-s.com<br />
IR-website: www.k-plus-s.com/de/ir<br />
Thorsten Boeckers<br />
Head of <strong>Investor</strong> <strong>Relations</strong><br />
Phone: +49 561 / 9301-1460<br />
Fax: +49 561 / 9301-2425<br />
thorsten.boeckers@k-plus-s.com<br />
Andrea Rach<br />
<strong>Investor</strong> <strong>Relations</strong> Assistant<br />
Phone: +49 561 / 9301-1100<br />
Fax: +49 561 / 9301-2425<br />
andrea.rach@k-plus-s.com<br />
Julia Bock, CFA<br />
Senior <strong>Investor</strong> <strong>Relations</strong> Manager<br />
currently on maternity leave<br />
Kai Kirchhoff<br />
Senior <strong>Investor</strong> <strong>Relations</strong> Manager<br />
Phone: +49 561 / 9301-1885<br />
Fax: +49 561 / 9301-2425<br />
kai.kirchhoff@k-plus-s.com<br />
Matthias Jelden<br />
<strong>Investor</strong> <strong>Relations</strong> Manager<br />
Phone.: +49 561 / 9301-2204<br />
Fax: +49 561 / 9301-2425<br />
matthias.jelden@k-plus-s.com<br />
Martin Heistermann<br />
<strong>Investor</strong> <strong>Relations</strong> Manager<br />
Phone.: +49 561 / 9301-1403<br />
Fax: +49 561 / 9301-2425<br />
martin.heistermann@k-plus-s.com<br />
June 2013 <strong>K+S</strong> Group 113
<strong>K+S</strong> Group<br />
Forward-looking Statements<br />
This presentation contains facts and forecasts that relate to the future development of the <strong>K+S</strong><br />
Group and its companies. The forecasts are estimates that we have made on the basis of all the<br />
information available to us at this moment in time. Should the assumptions underlying<br />
these forecasts prove not to be correct or should certain risks – such as those referred to in<br />
the Risk Report – materialise, actual developments and events may deviate from current<br />
expectations. The Company assumes no obligation to update the statements, save for the making<br />
of such disclosures as are required by the provisions of statute.<br />
June 2013 <strong>K+S</strong> Group 114
June 2013 <strong>K+S</strong> Group 115
<strong>K+S</strong> <strong>Aktiengesellschaft</strong> · Bertha-von-Suttner-Strasse 7 · 34131 Kassel | Germany · Internet: www.k-plus-s.com<br />
<strong>Investor</strong> <strong>Relations</strong> · phone: +49 (0)561 / 9301-1100 · fax: +49 (0)561 / 9301-2425 · email: investor-relations@k-plus-s.com<br />
June 2013<br />
Experience growth.<br />
<strong>K+S</strong> Group