Presentation of Karl Mielke, CEO K+S North America Salt Holdings ...

Capital Markets Day
Salt Perspectives
Karl Mielke
CEO K+S North America Salt Holdings LLC
Berlin, 8 December 2010
Experience growth.

Salt
Content
A. Salt Market Environment
B. The K+S Salt Business
C. K+S’ Position in Competitive Environment
D. Growth Perspectives & Strategy
December 2010 K+S Group 1

No Life without Salt!
Salt is…
… a fundamental component of our life
These are the following main production methods of salt:
Rock Salt
Sea-/Solar Salt
Evaporated Salt
Brine
Conventional
mining
Crystallisation
from sea water
Recrystallisation
of purified brine
Controlled
borehole-brining
December 2010 K+S Group 2

Salt
Details of the Market for Salt for Chemical Use
• Largest salt product market with global
chemical industry consuming approx. 150 Mt
per year as feedstock
• Main applications:
• chlor-alkali industry (→ PVC)
• synthetic soda ash production (→ glass)
Electrolysis
facility
• Key demand drivers:
• GDP growth
• urbanization
• Success factors:
• efficient sourcing and logistics network
• reliant delivery capacity
December 2010 K+S Group 3

Salt
Details of the De-icing Salt Market
• Clients are mainly municipalities and other public
authorities
• Contract award is mainly based on public bidding
process
• Main application:
• salt used as de-icing agent for highway safety
• Key demand drivers:
• winter weather conditions
• infrastructure development
• Success factors:
• efficient sourcing and logistics network
• delivery capacity
December 2010 K+S Group 4

Salt
Details of De-icing Salt Bidding Processes
defined by
Details specified in typical
bid document
volume
destination
delivery
product and service
specifications
guaranteed minimum
purchase requirement
maximum delivery
requirement
price
vendor purchaser
• Government de-icing contracts are awarded in
Europe, the US and Canada in the form of public
bids
• Government purchaser issues bid documents in
late spring/early summer
• Vendors hand in sealed bids, which will be
opened at date and time specified in the bid
documents
• Lowest priced bid that satisfies all requirements
will be awarded
• In the US, Canada and most parts of Europe, all
vendor’s bids will become public
• In the US most bids are valid for one year/season
• In Canada and some parts of Europe contracts
might be awarded for a duration of up to 4 years
December 2010 K+S Group 5

Salt
Details of the Food Grade Salt Market
• Main applications:
• table salt (Consumer)
• food processing
• Key demand drivers:
• population growth
• eating habit
• Success factors:
• high quality standards
• marketing/branding
(especially in North and South America)
• supply chain efficiency to fulfil customer
requirements
• Current situation:
Within the US and some European countries
increasing political pressure to reduce the
consumption of sodium
December 2010 K+S Group 6

Salt
Industrial/Other Applications of Salt
The industrial salt market comprises different
high-value applications:
• Pharmaceutical
• Highly regulated, high-margin segment
• Main use in infusion and dialysis solutions, as
well as cosmetics and drugs
• Water softening
• Used in municipal and private household
water treatment
• Oil and gas drilling
• Salt used as drilling agent in oil and gas
exploration
• Animal feed
• Animal feed salts serve as raw ingredient to
industrially assembled feed mixes
December 2010 K+S Group K+S Group 7

Salt
Main End Uses for Salt
• Salt has more than 14,000 different applications
• Salt prices vary from approx. 40 US$/t (certain chemical salts) to approx. 1,000 US$/t
(pharma salt)
• Main applications of salt are: input for chemical processes, food grade and de-icing
North America
(Consumption 2007: 69 million tonnes)
Global
(Consumption 2007: 259 million tonnes)
Industrial/Others
10.0%
De-icing
Salt
14.0%
Asia
(Consumption 2007: 94 million tonnes)
Europe
(Consumption 2007: 72 million tonnes)
Food
Grade
Salt
17.5%
Sources: Roskill 2007, K+S
Salt for
Chemical
Processes
58.5%
South America
(Consumption 2007: 14 million tonnes)
December 2010 K+S Group 8

Salt
Main Salt Suppliers Worldwide
Capacity in million tonnes (crystallised salt and salt in brine; excl. captive use)
3.5
13.1
14.4
14.0
9.7
18.7
Compass
Cargill
7.5
Artyomsol
5.3
4.1
Südsalz
Salins
3.6
Akzo
China National Salt
7.0
ESSA
9.0
7.0
Dampier
3.8
Mitsui
Sources: Roskill 2007, K+S
December 2010 K+S Group 9

Salt
Content
A. Salt Market Environment
B. The K+S Salt Business
C. K+S’ Position in Competitive Environment
C. Growth Perspectives & Strategy
December 2010 K+S Group 10

Salt
Steps in Developing the K+S Salt Business
5
Acquired Morton Salt,
the largest salt producer
in North America
K+S
4
Morton
Salt
Acquired No.1 salt
producer in South
America through SPL
acquisition
- Market entry into U.S.
and Latin America
SPL
1
2
3
Originally, salt
business with high
exposure to de-icing
and industrial salt in
Europe
Added salt for chemical
use through the acquisition
of Frisia Zout (NL)
Created No.1 salt
producer in Europe
through the acquisition
of Solvay salt business
December 2010 K+S Group 11

Salt
Strong presence in attractive de-icing regions
Great Lakes
• Continental climate with
a distinctly stable winter
• High population density
• Very stable de-icing
business with high
quantities
US – East Coast
• Atlantic climate
• Relatively volatile, to
some extent severe
winters
• Very high population
density
• Stable de-icing
business
Eastern Canada
• Atlantic climate
• Relatively stable winters
• Low population density
• Stable de-icing business
• Long-term contracts
Western Europe
• Atlantic climate
• Rather mild winters with
cyclic upward swings
• Very high population
density
• Relatively cyclic deicing
business
Scandinavia
• In comparison to
Western Europe,
stable winters
• Relatively low
population density
• Relatively stable
de-icing business
December 2010 K+S Group 12

Salt
Balanced Product and Regional Portfolio
Revenues by product group
De-icing salt
40%
Other
4%
2005
Food grade salt
18%
Industrial salt
31%
Salt for chemical use
7%
De-icing salt
39%
Other
5%
9M/2010
Food grade salt
20%
Industrial salt
31%
Salt for chemical use
5%
Product mix:
The very balanced
product mix could be
maintained over the
years, even after
acquiring SPL and
Morton Salt.
2005
Overseas 1%
Rest
of Europe
54%
Revenues by region
Germany
45%
Overseas 72%
9M/2010
Germany
13%
Rest
of Europe
15%
Regional mix:
The strong dependence
on Europe could be
diversified towards a
more balanced regional
mix with overseas sales
in particular in the US,
Canada, Chile and
Brazil.
December 2010 K+S Group 13

Salt
Mitigation of Volatility in De-icing Business
Sales Volume De-icing Salt ISCO*:
Sales Volume De-icing Salt Morton*:
Sales Volume De-icing Salt esco*:
5,000
8,000
4,000
4,000
6,000
3,000
1.000 t
3,000
2,000
1.000 t
4,000
1.000 t
2,000
1,000
2,000
1,000
-
2006 2007 2008 2009 2010e
-
2006 2007 2008 2009 2010e
0
2006 2007 2008 2009 2010e
10 year average sales volume (2000 – 2009) * before consolidation of intersegment sales volumes
1.000 t
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2006 2007 2008 2009 2010e
esco Morton SPL
The worldwide de-icing salt market
exhibits varying volatility
Access to the largest de-icing world
markets mitigates the overall degree
of fluctuation in the de-icing salt
business
Unique, interregional production
network (including access to salt
production from potash facilities)
allows benefiting from strong demand
surges at short notice
December 2010 K+S Group 14

Salt
Morton Salt Reduces Earnings Volatility
Million €
500
400
300
EBITDA of Salt Business Segment
(without Morton Salt) ≙ esco + SPL
EBITDA of Morton Salt
EBITDA of Salt Business Segment
Standard deviation
Salt Business Segment (without
Morton Salt): 42.4%
Salt Business Segment
(including Morton Salt): 20.5%
%
25
20
15
200
10
100
5
EBITDA-Margin of Salt Business Segment
(without Morton Salt) ≙ esco + SPL
EBITDA-Margin of Salt Business Segment
(including Morton Salt)
0
2000 2001 2002 2003 2004 2005
0
2006 2007 2008 2009LTM*
2011e** 2008 2000 2009 2001 2002 2003 2004 2005 2006 2007 2008 2009 LTM*
• With the acquisition of Morton Salt, standard deviation of EBITDA more than halved to approx. 20%
• In addition, Morton Salt reduces volatility in EBITDA margins significantly
• Furthermore, the level of EBITDA margin is also positively impacted by the acquisition of Morton Salt
* LTM=Last twelve months as of 30 September 2010; ** Middle of corridor between € 175 to 190 million, the current EBIT potential of the whole Salt business
segment assuming normal de-icing salt sales at their multi-year average level
December 2010 K+S Group 15

Salt
Historical and Recent Volume and Price Development
Million tonnes Morton Salt (as of
€
25
1 October 2009)
SPL (as of
70
20
1 July 2006)
22
21
60
55.5
53.4*
9
49.1
48.7
50
45.0 45.5
9
9
15
14.81
40
10
5
0
6.07
2.82
3.25
8.02
3.90
4.12
8.77
4.73
4.04
5.85 9.47
5.00
4.47
5.85
8.96
2005 2006 2007 2008 2009 2010e
13
• Sales volumes increased over the past years mainly due to external growth, while the de-icing salt share
remained rather stable
• The price level for de-icing salt was tending upwards over the past years - a trend that might pause in 2010
• Sales volume 2010e: 22 million tonnes (of which de-icing salt: 13 million tonnes)
• Sales volume 2011e based on long-term average volumes: 21 million tonnes (of which de-icing salt: 12 million
tonnes)
* Average selling price in 9M/10
December 2010 K+S Group 16
12
2011e
30
20
10
0
De-icing salt sales volume
Sales volume of industrial salt,
salt for chemical use and food grade salt
Yearly average price of de-icing salt

Salt
Cost Situation
• Personnel
• Annual work-time accounts in Germany make high degree of flexibility possible
• Performance-related salary component, in Germany applicable to all employees
• Personnel exchange with Potash and Magnesium Business Segment possible
• Seasonal adjustment of workforce in America possible
• Energy
• One site in the Netherlands will switch to using steam from a substitute fuel heating plant
in 2011
• Continuous technical improvements and investments
Outlook: energy cost increases will be mitigated in the medium-term perspective due
to the above-mentioned measures
• Freight/Logistics Salt Supply
• Own shipping company with global market knowledge and six own vessels
• Medium-term sea freight contracts and freight hedging
• Determination of group-wide most efficient sourcing
Outlook: lower sea freight and synergies in ground freight expected
December 2010 K+S Group 17

Salt
Capex/Depreciation History and Outlook (2013)
Million € %
150
200
125
175
150
100
125
75
100
50
25
0
2004
2005 2006 2007 2008 2009 2010e 2011e 2012e 2013e
75
50
25
0
Capex (lhs)
Capex/depreciation incl.
ppa depreciation (rhs)
Capex/depreciation excl.
ppa depreciation (rhs)
• Capex increased following the acquisitions of SPL in 2006 and Morton Salt in 2009
• Temporary increase in capex/depreciation ratio caused by investments in ships and harbour facility in Chile
• PPA depreciation lowers capex/depreciation ratio. Without PPA, the ratio will fluctuate around 100%
December 2010 K+S Group 18

Salt
Content
A. Salt Market Environment
B. The K+S Salt Business
C. K+S’ Position in Competitive Environment
D. Growth Perspectives & Strategy
December 2010 K+S Group 19

Salt
Competitive advantage
Production
network and
Know-how
Logistics
network
Product
portfolio
• Geographical diversification of production facilities within a region and
across continents
• Access to multitude of technical and geological experts within the
K+S Group
• Mixture of own ships, medium-term sea freight contracts and
freight hedging
• Utilisation of global logistic knowledge of K+S Group
• Close supply chain cooperation for most efficient group-wide
sourcing
• Balanced and less cyclical product portfolio
• Product innovations through access to group-wide
R&D network
December 2010 K+S Group 20

Salt
Unique Production Network / Excellence in Logistics
December 2010 K+S Group 21

Salt
Comparison of Portfolios with Competitors
K+S
China National
Salt
Compass
Minerals
Dampier
Salt
Number of production sites
of which
34
14
8
3
Rock salt
10
3
Solar evaporation salt
7
4
1
3
Vacuum salt
17
10
4
Product portfolio (% of sales volume, K+S: LTM as of 30 September 2010)
De-icing salt
Industrial salt
Salt for chemical use
Food grade salt
Other
A diversified production network reduces the risk of dependence on a single production centre
and sales region
Geographical diversification of production centres makes regional production close to
customers possible and helps to optimize logistical costs
A broad product portfolio reduces the volatility of revenues and earnings
Source: company information, own estimates
December 2010 K+S Group 22

Salt
Content
A. Salt Market Environment
B. The K+S Salt Business
C. K+S’ Position in Competitive Environment
D. Growth Perspectives & Strategy
December 2010 K+S Group 23

Salt
Regional Growth Perspectives – North America
Overall stable growth prospects
• Chemical:
• New construction of chlor-alkali facilities in progress in the US
• Recently established chlorine transportation regulation will lead to smaller plants close to
sea ports and point of demand, easily accessible by vessels
K+S will benefit through its extensive production network
• De-icing:
• Ongoing infrastructure development
Through its presence in major de-icing regions, Morton and ISCO are well
positioned to capture additional demand
• Food:
• Sodium intake debate will spur demand for innovative low sodium products and sea salts
K+S is the only salt producer that can offer a wide range of sea salts as well as an
in-house solution to consumers and clients, which is a blend of Salt and KCl
December 2010 K+S Group 24

Salt
Regional Growth Perspectives – Europe
• Chemical:
• Limited market growth
esco will commit more capacity to strongly growing salt specialities
• De-icing:
• Ongoing infrastructure investment in Europe
esco mine Bernburg well located to capture strong growth in selected markets
in Eastern Europe
• Industrial:
Market growth mainly within salt specialities segment
• Strong market growth in industrial speciality segments
Redirection of vacuum salt capacity to capture growth in high-margin salt
specialities
December 2010 K+S Group 25

Salt
Regional Growth Perspectives – South America
Overall strong market growth prospects
• Chemical:
• New chlor-alkali projects in Central and South America
• Food:
• Market growth in line with population development
• Industrial:
• Strong market growth in industrial specialty segments
Production facilities in Chile and Brazil are optimally located to deliver growth
markets in South America
December 2010 K+S Group 26

Salt
Regional Growth Perspectives – Asia
Overall very strong growth prospects
• Chemical:
• Local chlor-alkali capacities to grow at estimated 2 million tonnes per year
• De-icing:
• Infrastructure development and road safety concerns will foster development of local
de-icing market
• Food:
• Change of eating habits is driving strong growth in processed food
K+S is studying long-term options of how to participate in selected, attractive segments
December 2010 K+S Group 27

Salt
Current and Medium-term EBIT Potential
Million €
250
Reasons for profitability growth:
200
150
100
175 - 190
• Growth in high-margin
specialities
• Growth in adjacent markets
• Improvements in energy
efficiency
• Logistics flow optimizations
• Other business synergies
50
0
Current EBIT potential assuming
normal de-icing salt sales at their
multi-year average level
Medium-term EBIT potential
December 2010 K+S Group 28

Salt
Strategy of the Salt Business Segment
Growth
Market
Optimisation
Optimisation of current
business
Strategic Focus
Entry into new regional markets
Strengthening of positions in existing
and adjacent markets
Optimal resource utilisation by
constantly optimising the current
network and structures
Short-term mid/long-term
December 2010 K+S Group 29

K+S Group
Forward-Looking Statements
This presentation contains facts and forecasts that relate to the future development of the K+S
Group and its companies. The forecasts are estimates that we have made on the basis of all the
information available to us at this moment in time. Should the assumptions underlying these forecasts
prove not to be correct or should certain risks – such as those referred to in the recent Risk
Report – materialise, actual developments and events may deviate from current expectations. The
Company assumes no obligation to update the statements contained in this presentation, save for
the making of such disclosures as are required by the provisions of statute.
December 2010 K+S Group K+S Group 30

K+S Aktiengesellschaft
Bertha-von-Suttner-Straße 7
34131 Kassel | Germany
phone: +49 (0)561 / 9301-0
fax: +49 (0)561 / 9301-1753
Investor Relations
phone: +49 (0)561 / 9301-1100
fax: +49 (0)561 / 9301-2425
email:
investor-relations@k-plus-s.com
Internet: www.k-plus-s.com
Experience growth.