Potash - K+S Aktiengesellschaft
Potash - K+S Aktiengesellschaft
Potash - K+S Aktiengesellschaft
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Commerzbank<br />
Sector Conference Week<br />
Frankfurt, 30 August 2011<br />
Experience growth.<br />
August 2011 <strong>K+S</strong> Group 0
<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 15,000 employees<br />
display their commitment towards this goal day by<br />
day – by applying their knowledge and experience.<br />
August 2011 <strong>K+S</strong> Group 1
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy<br />
B. Core Business Sector Fertilizers<br />
C. Core Business Sector Salt<br />
D. Complementary Business Segments<br />
E. Financial Data and Outlook<br />
F. <strong>K+S</strong> Share<br />
Appendix<br />
August 2011 <strong>K+S</strong> Group 2
<strong>K+S</strong> Group<br />
Corporate Structure<br />
<strong>K+S</strong> Group<br />
Group revenues 2010: € 4.6 billion (2009: € 3.2 billion)<br />
Core Business Sector Fertilizers<br />
<strong>Potash</strong> and<br />
Magnesium Products<br />
Nitrogen<br />
Fertilizers<br />
Core Business<br />
Sector Salt<br />
Salt<br />
Complementary<br />
Business Segments<br />
Waste Mgmt. &<br />
Recycling<br />
Animal hygiene<br />
products<br />
<strong>K+S</strong> Transport<br />
GmbH<br />
Trading<br />
business (CFK)<br />
Revenue development in € bn<br />
2.4<br />
1.9 2.0<br />
1.4<br />
Revenue development in € bn Revenue development in € bn Revenue development in € bn<br />
1.7 1.8<br />
0.9 0.9 1.0<br />
1.0<br />
0.7<br />
0.6<br />
0.13 0.12 0.13 0.14<br />
2008 2009 2010 LTM* 2008 2009 2010 LTM* 2008 2009 2010 LTM* 2008 2009 2010 LTM*<br />
August 2011 * LTM=Last twelve months as of 30 June 2010<br />
<strong>K+S</strong> Group 3
<strong>K+S</strong> Group<br />
<strong>K+S</strong> is the Leading Player in its Markets<br />
Fertilizers<br />
<strong>Potash</strong><br />
Sulphate of potash and<br />
magnesium sulphate<br />
Nitrogen<br />
One of the leading suppliers worldwide<br />
• Leader in Europe<br />
• Fifth-largest producer worldwide<br />
• Leading position worldwide<br />
• <strong>K+S</strong> Nitrogen is one of the leading suppliers in<br />
Europe<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 />
August 2011 <strong>K+S</strong> Group 4
<strong>K+S</strong> Group<br />
Worldwide Presence<br />
Production Sites and Sales Offices<br />
Kassel<br />
Revenues by Region 2010<br />
Overseas<br />
50%<br />
Germany<br />
17%<br />
Production<br />
Sales<br />
Rest of Europe<br />
33%<br />
August 2011 <strong>K+S</strong> Group 5
<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 />
August 2011 <strong>K+S</strong> Group 6
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy<br />
B. Core Business Sector Fertilizers<br />
- <strong>Potash</strong> and Magnesium Products<br />
- Nitrogen Fertilizers<br />
C. Core Business Sector Salt<br />
D. Complementary Business Segments<br />
E. Financial Data and Outlook<br />
F. <strong>K+S</strong> Share<br />
Appendix<br />
August 2011 <strong>K+S</strong> Group 7
<strong>K+S</strong> Group<br />
<strong>Potash</strong> and Magnesium Products<br />
Revenues (€ billion) EBIT (€ million)<br />
Highlights H1/11<br />
0.47<br />
0.50<br />
1.9<br />
0.97<br />
1.08<br />
Q2/10 Q2/11 H1/10 H1/11<br />
1.4<br />
2.0<br />
119<br />
184<br />
476<br />
270<br />
387<br />
Q2/10 Q2/11 H1/10 H1/11<br />
214<br />
593<br />
2009 2010 LTM* 2009 2010 LTM*<br />
• Strong demand for potash and magnesium fertilizers<br />
• Sales volumes in the first half 2011 with 3.67 million<br />
tonnes at about the same level of the previous year<br />
(H1/10: 3.71 million tonnes)<br />
• For most potash producers, the utilisation of capacity<br />
reached a very high level against the backdrop of<br />
strong demand<br />
• Higher average prices with lower cost increases led<br />
to strong increase in earnings<br />
Revenue split 2010 Outlook 2011<br />
Industrial<br />
products<br />
14%<br />
By product group<br />
Fertilizer<br />
specialities 39%<br />
Potassium<br />
chloride 47%<br />
Overseas<br />
44%<br />
By region<br />
Germany 16%<br />
Rest of<br />
Europe 40%<br />
• Sales volume forecast of 7.0 million tonnes (2010:<br />
7.06 million tonnes)<br />
• Significantly higher average price level expected<br />
compared to the previous year<br />
• Significant increase in revenues should more<br />
than make up for expected rise in costs<br />
=> strong earnings growth<br />
August 2011 * LTM=Last twelve months as of 30 June 2011<br />
<strong>K+S</strong> Group 8
<strong>Potash</strong> and Magnesium Products<br />
Product Portfolio 2010 (Sales volumes in million tonnes)<br />
Non-potash-containing products<br />
2010: 1.26 million tonnes<br />
(2009: 0.90)<br />
● Fertilizer specialities<br />
- ESTA ® Kieserite<br />
- EPSO ® Product family<br />
● Industrial products<br />
- Magnesium sulphate<br />
- Magnesium chloride<br />
Fertilizer<br />
specialities<br />
3.11<br />
Industrial<br />
products<br />
0.85<br />
Potassium<br />
chloride<br />
3.10<br />
<strong>Potash</strong>-containing products<br />
2010: 5.80 million tonnes<br />
2009: 3.45)<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 />
- Thomaskali ®<br />
-NPK<br />
● Industrial products<br />
- Potassium chloride, 97% - 99% KCl<br />
- Potassium sulphate, > 95% K 2<br />
SO 4<br />
- High purity salts<br />
Broad and less cyclical product portfolio allows flexible reaction on fluctuation in demand<br />
August 2011 <strong>K+S</strong> Group 9
<strong>Potash</strong> and Magnesium Products<br />
Development of Selected Cost Types<br />
2005 2006 2007 2008 2009 2010<br />
CAGR<br />
05-10 2011e*<br />
÷<br />
–<br />
=<br />
=<br />
Revenues (€ million) 1,198.2 1,238.9 1,408.9 2,397.4 1,421.7 1,867.0 + 9% +++<br />
EBIT (€ million) 151.8 158.6 177.9 1,203.2 231.7 475.9 + 26% +++<br />
Costs (€ million) 1,046.4 1,080.3 1,231.0 1,194.2 1,190.0 1,391.1 + 6% +<br />
therof personnel (€ million) 427 426 435 465 440 506 + 3% +<br />
thereof freight (€ million) 216 236 250 227 155 264 + 4% +<br />
thereof freight (€/t) 28 30 30 33 36 37 + 6% +<br />
thereof material (€ million) 193 202 210 265 183 229 + 3% ++<br />
thereof energy (€ million) 118 155 141 186 144 172 + 8% +++<br />
thereof depreciation (€ million) 85 80 80 85 88 89 + 1% ++<br />
Sales Volumes (million t) 7.86 7.99 8.22 6.99 4.35 7.06 (2%) 7.0<br />
Total Unit Costs (€/t) 133.0 135.2 149.6 170.8 273.6 197.0 + 8% ≥ 200<br />
• Rising energy, personnel and freight costs as well as lower sales volumes lead to a compound annual growth<br />
rate in total unit costs of approx. 8% between 2005 and 2010.<br />
• With the exception of energy, material costs and depreciation, major costs types are expected to rise moderately<br />
while sales volumes are forecast on a stable level => Unit costs are expected slightly above 200 €/t in 2011.<br />
August 2011 * Change 2011e vs. 2010: -/+: slight to moderate; --/++: tangible; ---/+++: significant to strong<br />
<strong>K+S</strong> Group 10
<strong>Potash</strong> and Magnesium Products<br />
Delivered Costs to Brazil - Cost Comparison<br />
USD pmt<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
KCl Production costs Plant-to-port transportation Ocean freight<br />
<strong>K+S</strong><br />
Site Zielitz<br />
Ø North America Ø FSU Ø West Asia / oth.<br />
Western Europe<br />
<strong>K+S</strong> Zielitz Site<br />
very competitive on Overseas markets<br />
• No doubt, the average of<br />
the production costs of all<br />
<strong>K+S</strong> sites in Germany is<br />
relatively high. BUT…<br />
• … there are differences<br />
among the individual sites<br />
that allow for an optimized<br />
allocation with respect to<br />
regional and product mix<br />
• … the other mines have<br />
less K 2 O grades indeed, but<br />
offer additional nutrients<br />
(Mg + S). These stem from<br />
the same rock salt and<br />
provide attractive margins.<br />
Sources: <strong>K+S</strong> Basis 2008, British Sulphur Consultants estimates at full production incl. royalties, <strong>K+S</strong> freight estimates, 2008 average 1.47 USD/EUR<br />
August 2011 <strong>K+S</strong> Group 11
<strong>Potash</strong> and Magnesium Products<br />
Major Markets <strong>Potash</strong> and Magnesium Products<br />
> 1%<br />
Sales volumes > 5%<br />
Revenues by region<br />
2010 2009 2008<br />
Germany: 16% 12% 14%<br />
Rest of Europe: 40% 32% 49%<br />
Overseas: 44% 56% 37%<br />
August 2011 <strong>K+S</strong> Group 12
<strong>Potash</strong> 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:<br />
<strong>K+S</strong> offers its worldwide customers all nutrients<br />
in a market-oriented specialised product range<br />
August 2011 <strong>K+S</strong> Group 13
<strong>Potash</strong> and Magnesium Products<br />
World <strong>Potash</strong> Production and Sales by Region<br />
Million tonnes<br />
17,9<br />
18,9<br />
25,4<br />
10,7<br />
7,0 8,0<br />
3,6<br />
10,1<br />
1,9<br />
9,8<br />
0,8<br />
Incl. sulphate of potash<br />
and low-grade potash<br />
Sources: IFA, <strong>K+S</strong><br />
World potash production:<br />
2010e: 55.5 million t<br />
2009: 33.7 million t<br />
2008: 56.0 million t<br />
2007: 57.8 million t<br />
World potash sales:<br />
2010e: 58.3 million t<br />
2009: 31.0 million t<br />
2008: 54.5 million t<br />
2007: 58.7 million t<br />
August 2011 <strong>K+S</strong> Group 14
<strong>Potash</strong> and Magnesium Products<br />
Supplier Structure on the World <strong>Potash</strong> Market<br />
Figures in %<br />
33.5<br />
32.8<br />
32.0<br />
32.9<br />
31.4<br />
2008 2009 2010 (prel.)<br />
23.0<br />
13.9<br />
10.7 11.2<br />
9.9<br />
8.5<br />
8.6<br />
9.5<br />
3.4<br />
3.1<br />
3.6<br />
1.6<br />
2.7<br />
1.8<br />
6.3<br />
8.5<br />
3.1<br />
4.7<br />
3.3<br />
BPC<br />
• Belaruskali<br />
• Uralkali/<br />
Silvinit<br />
Canpotex<br />
• <strong>Potash</strong><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 <strong>Potash</strong><br />
Sources: IFA, <strong>K+S</strong><br />
Corp. in ICL<br />
August 2011 <strong>K+S</strong> Group 15<br />
APC<br />
participation<br />
of <strong>Potash</strong><br />
Corp.<br />
SQM<br />
participation<br />
of <strong>Potash</strong><br />
Corp.<br />
China<br />
• more<br />
than 20<br />
producers<br />
Others<br />
• Intrepid<br />
• Vale<br />
• Compass
<strong>Potash</strong> and Magnesium Products<br />
World <strong>Potash</strong> Capacity, Production and Sales<br />
Million tonnes<br />
100<br />
90<br />
80<br />
70<br />
60<br />
50<br />
Greenfield projects<br />
Brownfield projects<br />
Available capacity<br />
Production<br />
Sales<br />
52.6<br />
Soviet Union<br />
49.1<br />
43.9 45.5<br />
China<br />
58.7<br />
54.4<br />
54.2<br />
50.7<br />
Financial<br />
crisis<br />
54.5<br />
58.3<br />
60<br />
58<br />
Ø +5%<br />
Ø +3%<br />
72<br />
66<br />
● As of 2011, long-term growth<br />
rates expected to range<br />
between 3 and 5% p.a.<br />
● Based on IFA data and<br />
“announced” capacity<br />
expansions, utilisation<br />
rates are estimated to<br />
slightly decrease.<br />
40<br />
30<br />
20<br />
10<br />
0<br />
36.2<br />
31.0<br />
55.0 35.2 45.1 46.0 48.5 53.9 56.5 50.9 57.8 56.0 33.7 55.5<br />
1988 ’93 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ‘13 ‘14 ‘15<br />
(prel.) (e)<br />
Incl. sulphate of potash and low-grade potash<br />
Capacity development 2010-2015 based on IFA supply capability data.<br />
● As the future world potash<br />
supply increasingly depends<br />
on the realisation of capitalintensive<br />
greenfield projects,<br />
the connected and elevated<br />
risk of project delays reduces<br />
the forecast quality.<br />
Sources: IFA, <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 16
<strong>Potash</strong> and Magnesium Products<br />
World <strong>Potash</strong> Sales Volume by Region<br />
Million tonnes<br />
2011e 2010 *<br />
2009<br />
2008<br />
2007<br />
Western Europe<br />
6.9 – 7.3<br />
6.7<br />
2.7<br />
6.3<br />
7.4<br />
Central Europe / FSU<br />
4.8 – 5.1<br />
4.9<br />
3.1<br />
5.0<br />
4.7<br />
Africa<br />
0.7 – 0.8<br />
0.8<br />
0.3<br />
0.6<br />
0.7<br />
North America<br />
10.5 – 10.8<br />
10.7<br />
4.1<br />
10.2<br />
10.8<br />
Latin America<br />
10.6 – 10.9<br />
9.8<br />
6.0<br />
8.6<br />
10.4<br />
Asia<br />
24.0 – 24.5<br />
24.9<br />
14.6<br />
23.2<br />
24.2<br />
- thereof China<br />
~11.0<br />
10.2<br />
5.4<br />
8.8<br />
12.6<br />
- thereof India<br />
~4.3<br />
6.1<br />
5.5<br />
6.2<br />
3.9<br />
Oceania<br />
0.5 – 0.6<br />
0.5<br />
0.2<br />
0.6<br />
0.5<br />
World total<br />
58 – 60<br />
58.3<br />
31.0<br />
54.5<br />
58.7<br />
● In 2011, we expect worldwide potash sales volumes to range between 58 and 60 million tonnes<br />
with demand increases in Latin America and Europe.<br />
Incl. sulphate of potash and low grade potash; * Preliminary<br />
Sources: IFA, <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 17
<strong>Potash</strong> and Magnesium Products<br />
Agricultural <strong>Potash</strong> 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 />
1.000 t K 2 O<br />
24.000<br />
16.000<br />
1.000 t K 2 O<br />
12.000<br />
8.000<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 />
Transitional markets<br />
Emerging markets<br />
10000<br />
Eastern Europe and Central Asia<br />
24.000<br />
Latin America, Asia, Africa<br />
8000<br />
20.000<br />
1.000 t K 2 O<br />
6000<br />
4000<br />
2000<br />
1.000 t K 2 O<br />
16.000<br />
12.000<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 />
Source: IFA<br />
August 2011 <strong>K+S</strong> Group 18
<strong>Potash</strong> and Magnesium Products<br />
MOP Price Development<br />
US$/t<br />
1000<br />
800<br />
600<br />
400<br />
200<br />
0<br />
US$/t<br />
1000<br />
800<br />
600<br />
400<br />
200<br />
0<br />
Northwest-Europe (standard, fob)<br />
2003 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 2011<br />
Brazil<br />
(granular) *<br />
South-East Asia<br />
(SEA, standard)<br />
Overseas (cfr)<br />
463<br />
540 Brazil<br />
510 SEA<br />
End of May 2011:<br />
BPC announced the price of granulated MOP<br />
at US$ 550/t in Brazil; an increase of US$ 30/t.<br />
Mid June 2011:<br />
<strong>K+S</strong> announced the price for granulated MOP<br />
at € 363/t in Europe; an increase of € 10/t.<br />
End of June 2011:<br />
Contracts with Chinese importers and<br />
BPC/Canpotex fixed at US$ 470/t for standard<br />
MOP; an increase of US$ 70/t.<br />
Beginning of August 2011:<br />
Contracts with Indian importers and BPC fixed<br />
at US$ 490/t until the end of Q1/12 and<br />
Canpotex fixed at US$ 470/t for Q4/11 and<br />
US$ 530/t for Q1/12 for the delivery of<br />
standard MOP (former contract US$ 370/t)<br />
Mid August 2011:<br />
BPC announced the price of standard MOP at<br />
US$ 535/t in Asia; an increase of US$ 35/t.<br />
2003 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 2011<br />
* Until end of September 2010 MOP standard<br />
August 2011 Source: FMB; as of 18 August 2011<br />
<strong>K+S</strong> Group 19
<strong>Potash</strong> and Magnesium Products<br />
Price Development of Different Product Groups<br />
<strong>K+S</strong> Ø-Portfolio-Price vs. MOP gran. Europe<br />
SOP Ø-Price vs. MOP gran. Europe<br />
€/t<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<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 Europe<br />
MOP gran. Europe<br />
Δ ~50€<br />
100<br />
2006 2007 2008 2009 2010<br />
100<br />
H1/11 2006 2007 2008 2009 2010 H1/11<br />
€/t<br />
700<br />
600<br />
<strong>K+S</strong> Industrial Ø-Price vs. MOP gran. Europe<br />
<strong>K+S</strong> Ø Industrial Portfolio Price<br />
MOP gran. Europe<br />
<strong>K+S</strong> non potash specialities Industr. vs. Fertiliz.<br />
€/t<br />
450<br />
400<br />
350<br />
Industrial Magnesium Comp.<br />
Fertilizer Magnesium Comp.<br />
500<br />
400<br />
300<br />
200<br />
100<br />
2006 2007 2008 2009 2010 H1/11 2006 2007 2008 2009 2010 H1/11<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
August 2011 Sources: <strong>K+S</strong>, FMB International Price Guide, Green Markets, Fertilizer Europe<br />
<strong>K+S</strong> Group 20
<strong>Potash</strong> and Magnesium Products<br />
<strong>Potash</strong> Use by Crop<br />
7<br />
Million tonnes K 2 O<br />
6<br />
5<br />
<strong>Potash</strong> use by crop EU-27<br />
Wheat 14.3%<br />
Other crops 30.4%<br />
Other cereals<br />
13.9%<br />
4<br />
3<br />
Sugar crops 5.3%<br />
Oil seed 10.1%<br />
Fruits & Vegetables<br />
13.8%<br />
2<br />
Corn 12.2%<br />
1<br />
0<br />
China India USA EU-27 Brazil Indonesia &<br />
Malaysia<br />
Wheat Rice Corn Soybeans<br />
Oil palm and Oil seed Sugar crops Fruits & Vegetables Cotton<br />
Other cereals<br />
Other crops<br />
Source: IFA 2007/08<br />
Other crops: roots, tubers, pulses, nuts, coffee, tea, tobacco, ornamentals, turf etc.<br />
Oil seed: rapeseed, mustard, sunflower, groundnut, soybean etc.<br />
Other cereals: barley, oat, rye, triticale, sorghum etc.<br />
August 2011 <strong>K+S</strong> Group 21
<strong>K+S</strong> Group<br />
Low Stocks-to-use Ratios of Agricultural Products<br />
Production and consumption development vs. stocks-to-use ratio (Wheat and coarse grains)<br />
1.900 ,<br />
1.800 ,<br />
Production Consumption Stocks-to-use<br />
45.0 45,0<br />
40.0 40,0<br />
1.700 ,<br />
35.0 35,0<br />
in million tonnes<br />
1.600 ,<br />
1.500 ,<br />
1.400 ,<br />
1.300 ,<br />
1.200 ,<br />
1.100 ,<br />
1.000 ,<br />
Critical Level<br />
1981/82<br />
1986/87<br />
1991/92<br />
1996/97<br />
2001/02<br />
2006/07<br />
2010/11e<br />
2011/12e<br />
30.0 30,0<br />
25.0 25,0<br />
20.0 20,0<br />
15.0 15,0<br />
10.0 10,0<br />
5.0 5,0<br />
0.0 0,0<br />
Stocks-to-use ratio<br />
Source: USDA; as of 11 August 2011<br />
• Over the past thirty years, annual global production of cereals 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 low stocks-to-use ratios on a historical basis<br />
• Although USDA expects a record production level for the agricultural year 2011/12, the stocks-to-use<br />
ratio declines further<br />
August 2011 <strong>K+S</strong> Group 22
<strong>K+S</strong> Group<br />
Crop Prices: Key Fertilizer Demand Driver<br />
Risk for potential global cereals* shortfall in 2011/12<br />
1850<br />
1,817<br />
• Risk of a significant production<br />
gap not unlikely<br />
1800<br />
1750<br />
1700<br />
1,726<br />
91<br />
High<br />
production<br />
deficit<br />
Stocks-to-use<br />
ratio to decline<br />
from 18%<br />
to 14%****<br />
• Consecutive years with aboveaverage<br />
yield unlikely (weather<br />
conditions driven)<br />
• Surplus/deficit in crop production<br />
key price trigger for soft<br />
commodities<br />
1650<br />
Production<br />
2011/12 **<br />
Consumption<br />
2011/12***<br />
Possible shortfall<br />
2011/12<br />
• High crop prices enable and<br />
incentivise farmers to apply<br />
fertilizers<br />
- Yield and quality game<br />
* Wheat and coarse grains<br />
** Based on last 5 years average of harvested area multiplied by last 5 years’ average yield (533 million hectares x 3.2 tonnes per hectare)<br />
*** Based on 2010/11 consumption (1,782 mt) multiplied by last 5 years’ annual average demand growth rate of 2.0%<br />
**** Implied stocks-to-use ratio: ending stock 2010/11 (353 mt) less potential shortfall (91 mt) divided by potential consumption 2011/12 (1,817 mt)<br />
Source: USDA, <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 23
<strong>K+S</strong> Group<br />
Prices for Agricultural Products – Spot vs. Future<br />
Prices for Agricultural Products – spot<br />
Prices for Agricultural Products – future<br />
450%<br />
140%<br />
400%<br />
130%<br />
350%<br />
120%<br />
300%<br />
250%<br />
200%<br />
110%<br />
100%<br />
150%<br />
90%<br />
100%<br />
80%<br />
50%<br />
Dec.<br />
‘04<br />
Dec.<br />
‘05<br />
Dec.<br />
‘06<br />
Dec.<br />
‘07<br />
Dec.<br />
‘08<br />
Dec.<br />
‘09<br />
Dec.<br />
‘10<br />
70%<br />
Sep.<br />
‘11<br />
March<br />
‘12<br />
March<br />
‘13<br />
Wheat Soybeans Corn Palmoil<br />
• Strong increase in prices for agricultural<br />
products since the middle of 2010<br />
Source: Bloomberg; as of 25 August 2011<br />
• Future prices of agricultural products<br />
show that capital markets expect the<br />
current high price level to be rather<br />
sustainable for the next two years<br />
August 2011 <strong>K+S</strong> Group 24
<strong>Potash</strong> and Magnesium Products<br />
Profitability of Winter Wheat in Europe<br />
2,000 2.000<br />
1,800 1.800<br />
2008<br />
Costs Sales<br />
1,087 1,260<br />
2009<br />
Costs Sales<br />
1,213 964<br />
2010<br />
Costs Sales<br />
1,067 1,599<br />
2011e<br />
Costs Sales<br />
1,115 1,262<br />
2012e<br />
Costs Sales<br />
1,130 1,395<br />
1,600 1.600<br />
1,400 1.400<br />
1,200 1.200<br />
1,000 1.000<br />
800 800<br />
600 600<br />
400 400<br />
200 200<br />
0 0<br />
201<br />
Profit<br />
potential:<br />
€ 173<br />
326<br />
Risk<br />
of loss:<br />
€ -249<br />
Profit<br />
potential:<br />
€ 532<br />
Profit<br />
potential:<br />
175 225 € 146 239<br />
69 69 75 75 75<br />
101 101 101 101 101<br />
189 189<br />
157 157 157<br />
513 513 541 541 541<br />
Profit<br />
potential:<br />
€ 265<br />
Wheat price: 155 €/t Wheat price: 123 €/t Wheat price: 220 €/t Wheat price: 195 €/t Wheat price: 187 €/t<br />
2008 2009 2010 2011 2012<br />
Yield: 8.13 t/ha Yield: 7.84 t/ha Yield: 7.27 t/ha Yield: 6.47 t/ha Yield: 7.46 t/ha<br />
Year<br />
2008<br />
2009<br />
2010<br />
2011e<br />
2012e<br />
Fertilizer share of total costs<br />
18% fertilizer costs (1% K)<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 />
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 />
The current future curve of the wheat price should enable the farmer to realize a profit potential of € 265 per<br />
hectare (excl. subsidies) in 2012e. This is an attractive level compared to the last years; the application of<br />
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);<br />
fertilizer 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<br />
Kuratorium für 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<br />
nutrition, agriculture and forestry 2010, 2011e: <strong>K+S</strong> forecast, 2012e: 10-year average; nutrient extractions according to Guidelines for Fertilizer Use in Germany; fertilizer prices taken<br />
from LAND & Forst at the point of the upcoming fertilization (general fertilization with potash and phosphate in September; nitrogen fertilization in September, February, April and June);<br />
wheat price (bread quality B) according to LAND & Forst (average delivery from the yard from July to February), 2011e and 2012e Euronext price less transportation cost assumption.<br />
August 2011 <strong>K+S</strong> Group 25
<strong>K+S</strong> Group<br />
Nitrogen Fertilizers 1)<br />
Revenues (€ billion) EBIT (€ million)<br />
Highlights H1/11<br />
0.56<br />
44<br />
0.42<br />
0.23<br />
0.17<br />
16<br />
9 10<br />
Q2/10 Q2/11 H1/10 H1/11<br />
Q2/10 Q2/11 H1/10 H1/11<br />
71<br />
0.9<br />
1.0<br />
43<br />
0.7<br />
-51<br />
2009 2010<br />
2)<br />
LTM 2009 2010<br />
2)<br />
LTM<br />
• The positive demand trend for nitrogen fertilizers<br />
was accompanied by a significant increase in<br />
prices<br />
• European production facilities for nitrogen fertilizers<br />
were operating with a very high level of utilisation in<br />
the first half of the year<br />
• The significantly higher revenues due to price<br />
factors were able to more than make up for higher<br />
input costs<br />
Ammonium<br />
sulphate 20%<br />
Straight nitrogen<br />
fertilizers 39%<br />
By product group<br />
Revenue split 2010 Outlook 2011<br />
Complex<br />
fertilizers 41%<br />
Overseas<br />
29%<br />
By region<br />
Germany 16%<br />
Rest of<br />
Europe 55%<br />
• Significant, price-related, increase in revenues<br />
expected<br />
• A high level of capacity utilisation and attractive<br />
price prospects should, despite increasing input<br />
costs, facilitate a strong increase in operating<br />
earnings year on year<br />
1) Information refers to the continued operations of the <strong>K+S</strong> Group<br />
August 2011 2)<br />
LTM=Last twelve months as of 30 June 2011<br />
<strong>K+S</strong> Group 26
<strong>K+S</strong> Group<br />
Nitrogen Fertilizers<br />
Cooperation with BASF<br />
• BASF produces fertilizers on an exclusive basis for <strong>K+S</strong> Nitrogen;<br />
<strong>K+S</strong> Nitrogen controls production volumes and product mix<br />
• <strong>K+S</strong> Nitrogen uses technologically leading production facilities of BASF at<br />
competitive costs (economies of scale)<br />
• The contract is at least valid until the end of 2014; delivery arrangements with BASF<br />
remain unchanged despite BASF’s intended sale of fertilizer assets<br />
• Fixed corridor for earnings contribution from the original Fertiva trading business: 50% split<br />
between <strong>K+S</strong> and BASF within a corridor of € +/- 10 million; above € + 10 million, at least<br />
25% additional profit share for <strong>K+S</strong><br />
Sales volumes of nitrogen fertilizers in 2010<br />
• Complex fertilizers: 1.14 million tonnes (2009: 0.77 million tonnes)<br />
• Straight nitrogen fertilizers: 1.85 million tonnes (2009: 1.56 million tonnes)<br />
• Ammonium sulphate: 1.64 million tonnes (2009: 1.53 million tonnes)<br />
August 2011 <strong>K+S</strong> Group 27
Nitrogen Fertilizers<br />
<strong>K+S</strong> sells COMPO<br />
• COMPO is a leading provider in a market that<br />
requires consolidation<br />
• In compliance with its growth strategy, <strong>K+S</strong><br />
will focus its financial and management<br />
resources in particular on the <strong>Potash</strong> and<br />
Magnesium Products and Salt business<br />
segments<br />
Therefore, on 20 June 2011, <strong>K+S</strong> announced<br />
the sale of Compo to the investment company<br />
Triton<br />
The closing of the transaction, with an<br />
enterprise value of € 205 million, is expected<br />
to take place at the end of the third quarter.<br />
August 2011 <strong>K+S</strong> Group 28
<strong>K+S</strong> Group<br />
COMPO Reported as Discontinued Operations<br />
• In accordance with IFRS, due to its sale, COMPO is stated as a<br />
“discontinued operation”. The income statement and the cash flow<br />
statement of the previous year were restated accordingly, while<br />
the balance sheet was not restated and also includes discontinued<br />
operations.<br />
• Discontinued operations only included in earnings after taxes:<br />
Q2/11 H1/11<br />
Group earnings from continued operations, adj. € 126.8 m € 388.4 m<br />
- Earnings after taxes from discontinued operations € (97.6) m € (87.3) m<br />
Group earnings* after taxes, adjusted € 29.2 m € 301.1 m<br />
• € (87.3) million in H1/11 consist of the impairment loss as at 30 June 2011<br />
in the amount of € 104.0 million (completely attributable to Q2/11 and<br />
including taxes and costs to sell) and the net result of COMPO of<br />
€ 16.7 million in H1/11 (thereof € 6.4 million attributable to Q2/11).<br />
• Under the assumption of the closing at the end of Q3/11, earnings after<br />
taxes from discontinued operations can be expected at about € (90) million<br />
for FY 2011.<br />
* Earnings from continued and discontinued operations<br />
August 2011 <strong>K+S</strong> Group 29
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy<br />
B. Core Business Sector Fertilizers<br />
C. Core Business Sector Salt<br />
D. Complementary Business Segments<br />
E. Financial Data and Outlook<br />
F. <strong>K+S</strong> Share<br />
Appendix<br />
August 2011 <strong>K+S</strong> Group 30
<strong>K+S</strong> Group<br />
Salt<br />
Revenues (€ billion) EBIT (€ million)<br />
Highlights H1/11<br />
0.89 0.96<br />
150<br />
130<br />
0.28 0.28<br />
22 11<br />
Q2/10 Q2/11 H1/10 H1/11<br />
Q2/10 Q2/11 H1/10 H1/11<br />
1.7 1.8<br />
238<br />
259<br />
1.0<br />
140<br />
• Europe: Above-average demand for de-icing salt,<br />
although this was significantly below the record<br />
level seen in the previous year, led to a tangible<br />
increase in the price level.<br />
• North-America: Above-average demand for<br />
de-icing at the East coast and average demand in<br />
Canada. Overall stable price level in the first half<br />
year.<br />
2009 2010 LTM* 2009 2010 LTM*<br />
De-icing salt<br />
43%<br />
Revenue split 2010 Outlook 2011<br />
By product group By region • Expectation of stable revenues at a high level in<br />
Other<br />
5% Food grade<br />
Germany 15% comparison to the record year 2010 under the<br />
salt 19%<br />
assumption of an average de-icing salt business in<br />
the fourth quarter 2011.<br />
Industrial salt<br />
28%<br />
Rest of<br />
Europe 15%<br />
• Sales volume forecast of about 23 million tonnes of<br />
crystallised salt (2010: 22.5 million tonnes).<br />
Salt for<br />
Overseas<br />
chemical use 5% 70%<br />
• Operating earnings should decline moderately on<br />
* LTM=Last twelve months as of 30 June 2011; including above average the basis of a lower building-up of stocks.<br />
August 2011 de-icing salt business in Q4/10<br />
<strong>K+S</strong> Group 31
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 />
August 2011 <strong>K+S</strong> Group 32
Salt<br />
Mitigation of Volatility in De-icing Business<br />
Sales Volume De-icing Salt ISCO*: Sales Volume De-icing Salt Morton*: Sales Volume De-icing Salt esco*:<br />
1.000 t<br />
5000<br />
4000<br />
3000<br />
2000<br />
1000<br />
0<br />
2006 2007 2008 2009 2010<br />
1.000 t<br />
9000<br />
8000<br />
7000<br />
6000<br />
5000<br />
4000<br />
3000<br />
2000<br />
1000<br />
0<br />
2006 2007 2008 2009 2010<br />
1.000 t<br />
5000<br />
4000<br />
3000<br />
2000<br />
1000<br />
0<br />
2006 2007 2008 2009 2010<br />
10 year average sales volume (2001 – 2010) * before consolidation of intersegment sales volumes<br />
1.000 t<br />
14.000<br />
12.000<br />
10.000<br />
8.000<br />
6.000<br />
4.000<br />
2.000<br />
0<br />
2006 2007 2008 2009 2010<br />
esco Morton SPL<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 demand<br />
surges at short notice<br />
August 2011 <strong>K+S</strong> Group 33
Salt<br />
Morton Salt Reduces Earnings Volatility<br />
Million €<br />
500<br />
400<br />
300<br />
EBITDA of Salt Business Segment<br />
(without Morton Salt) ≙ esco + SPL<br />
EBITDA of Morton Salt<br />
EBITDA of Salt Business Segment<br />
Standard deviation<br />
Salt Business Segment (without<br />
Morton Salt): 45.1%<br />
Salt Business Segment<br />
(including Morton Salt): 22.7%<br />
%<br />
25<br />
20<br />
15<br />
200<br />
10<br />
100<br />
5<br />
EBITDA-Margin of Salt Business Segment<br />
(without Morton Salt) ≙ esco + SPL<br />
EBITDA-Margin of Salt Business Segment<br />
(including Morton Salt)<br />
0<br />
2000 2001 2002 2003 2004 2005<br />
0<br />
2006 2007 2008 2009 2010<br />
2008 2000 2009 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010<br />
• With the acquisition of Morton Salt, standard deviation of EBITDA more than halved to a good 20%<br />
• In addition, Morton Salt reduces volatility in EBITDA margins significantly<br />
• Furthermore, the level of EBITDA margin is also positively impacted by the acquisition of Morton Salt<br />
August 2011 <strong>K+S</strong> Group 34
Salt<br />
Historic and Recent Volume and Price Development<br />
Million tonnes Morton Salt (as of<br />
€<br />
1 October 2009)<br />
25<br />
70<br />
SPL (as of<br />
23.0<br />
1 July 2006)<br />
22.53<br />
20<br />
15<br />
49.1<br />
45.0 45.5<br />
48.7<br />
9<br />
55.5<br />
14.81<br />
54.8<br />
9.04<br />
55.8*<br />
9.0<br />
60<br />
50<br />
40<br />
10<br />
8.02<br />
8.77<br />
5.85 9.47<br />
5.85<br />
30<br />
5<br />
0<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 />
14.0<br />
20<br />
10<br />
0<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 />
2011e<br />
• Sales volumes increased over the past years mainly due to external growth, while the de-icing salt share<br />
remained rather stable<br />
• Sales volume 2011e based on good start into the year caused by the weather as well as long-term average<br />
volumes in the course of the year: about 23 million tonnes (of which de-icing salt: about 14 million tonnes)<br />
* LTM = Last twelve months as of 30 June 2011<br />
August 2011 <strong>K+S</strong> Group 35
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 />
August 2011 <strong>K+S</strong> Group 36
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 />
August 2011 <strong>K+S</strong> Group 37
Salt<br />
Development of Salt Production and Consumption<br />
Million tonnes<br />
Europe<br />
Asia<br />
108<br />
North America<br />
67 68 70<br />
65<br />
70<br />
60 63<br />
74<br />
Ø 1.6% Ø 1.6%<br />
Ø 0.1% Ø 0.7%<br />
Production Consumption<br />
Latin America<br />
Ø 3.2% Ø 2.9%<br />
16<br />
22<br />
12<br />
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%<br />
Production<br />
Ø 2.9% Ø 7.2%<br />
9<br />
12<br />
Production<br />
Ø 4.1%<br />
Consumption<br />
Oceania<br />
1 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 />
August 2011 <strong>K+S</strong> Group 38
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 />
Cargill<br />
Compass<br />
7.5<br />
Artyomsol<br />
5.1<br />
Salins<br />
Südsalz<br />
4.1<br />
Akzo<br />
3.7<br />
China National Salt<br />
7.0<br />
ESSA<br />
10.3<br />
7.0<br />
Dampier<br />
3.8<br />
Mitsui<br />
Sources: Roskill 2011, <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 39
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy<br />
B. Core Business Sector Fertilizers<br />
C. Core Business Sector Salt<br />
D. Complementary Business Segments<br />
E. Financial Data and Outlook<br />
F. <strong>K+S</strong> Share<br />
Appendix<br />
August 2011 <strong>K+S</strong> Group 40
<strong>K+S</strong> Group<br />
Complementary Business Segments<br />
Revenues (€ million)<br />
EBIT (€ million)<br />
Brief description<br />
32<br />
36<br />
66<br />
75<br />
6<br />
5<br />
13<br />
13<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 />
Q2/10 Q2/11 H1/10 H1/11<br />
134 143<br />
121<br />
Q2/10 Q2/11 H1/10 H1/11<br />
21 21<br />
15<br />
Logistics activities being essential for <strong>K+S</strong> are also<br />
bundled in this business segment. Another important<br />
activity is the granulation of CATSAN ® (cat litter).<br />
2009 2010 LTM* 2009 2010 LTM*<br />
Revenue split 2010 Outlook 2010<br />
Animal hygiene<br />
products<br />
26%<br />
Logistics 10%<br />
By product group<br />
Trade<br />
9%<br />
Waste Mgmt.<br />
and Recycling<br />
55%<br />
By region<br />
Rest of<br />
Europe 20%<br />
Germany 80%<br />
In the “Complementary Business Segments“ we<br />
expect from today’s perspective a moderate rise in<br />
revenues and a tangible increase in earnings.<br />
August 2011 * LTM=Last twelve months as of 30 June 2011<br />
<strong>K+S</strong> Group 41
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy<br />
B. Core Business Sector Fertilizers<br />
C. Core Business Sector Salt<br />
D. Complementary Business Segments<br />
E. Financial Data and Outlook<br />
F. <strong>K+S</strong> Share<br />
Appendix<br />
August 2011 <strong>K+S</strong> Group 42
<strong>K+S</strong> Group<br />
8.000<br />
2.400<br />
Development of Revenues and Earnings<br />
€ 7.000 million<br />
6.000<br />
2.100<br />
Revenues 1) Operating earnings 1) Group earnings, adjusted 1),2)<br />
CAGR 10.4%<br />
1.800<br />
CAGR 32.3% CAGR 34.9%<br />
4,963<br />
5,000 5.000<br />
1,500 1.500<br />
4,000 4.000<br />
3,344<br />
1,200 1.200<br />
3,000 3.000<br />
900<br />
876<br />
2,000 2.000<br />
600<br />
580<br />
1,000 1.000<br />
300<br />
286<br />
175<br />
0<br />
0<br />
‘07 ‘08 ‘09 ‘10 LTM<br />
‘07 ‘08 ‘09 ‘10 LTM ‘07 ‘08 ‘09 ‘10 LTM<br />
1)<br />
2007 to 2009 include the discontinued operations of COMPO.<br />
2)<br />
The adjusted figures unalteredly 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 />
August 2011 <strong>K+S</strong> Group 43
<strong>K+S</strong> Group<br />
Operating EBIT Margins<br />
LTM 1)<br />
2010<br />
2009<br />
2008<br />
2007<br />
<strong>Potash</strong> and Magnesium Products<br />
30.0%<br />
25.5%<br />
16.3%<br />
50.2%<br />
12.6%<br />
Nitrogen Fertilizers 2)<br />
6.8%<br />
4.8%<br />
-<br />
7.4%<br />
4.5%<br />
Salt<br />
14.3%<br />
13.8%<br />
13.8%<br />
7.3%<br />
8.8%<br />
Complementary Business Segments<br />
14.9%<br />
15.8%<br />
12.6%<br />
20.0%<br />
30.1%<br />
Reconciliation<br />
-<br />
-<br />
-<br />
-<br />
-<br />
<strong>K+S</strong> Group 2)<br />
17.7%<br />
15.4%<br />
6.7%<br />
28.0%<br />
8.5%<br />
1)<br />
LTM=Last twelve months as of 30 June 2011<br />
2)<br />
2007 to 2009 include the discontinued operations of COMPO.<br />
August 2011 <strong>K+S</strong> Group 44
<strong>K+S</strong> Group<br />
Capital Expenditure and Depreciation 1)<br />
€ million<br />
350<br />
300<br />
Expansion capex 2)<br />
Maintenance capex<br />
Depreciation<br />
280<br />
310<br />
~20%<br />
250<br />
6~20%0<br />
200<br />
150<br />
100<br />
50<br />
131<br />
22<br />
109 123<br />
172<br />
77<br />
95<br />
128<br />
198<br />
178<br />
90 58<br />
108<br />
142<br />
120<br />
174<br />
189<br />
~30%<br />
~70%<br />
~80%<br />
239 230 240<br />
~80%<br />
0<br />
2006 2007 2008 2009 2010 2011e 2012e<br />
1)<br />
2006 to 2009 include the discontinued operations of COMPO<br />
2)<br />
Capex in the Legacy Project not yet included here<br />
August 2011 <strong>K+S</strong> Group 45
<strong>K+S</strong> Group<br />
Net Indebtedness and Rating<br />
€ million<br />
2.000<br />
1.600<br />
1.200<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 />
125.8<br />
1,085.1<br />
194.3<br />
419.2<br />
1,351.3<br />
184.8<br />
528.4<br />
97.7<br />
535.0<br />
800<br />
400<br />
0<br />
-400<br />
128.2<br />
338.2<br />
283.4<br />
(31.5)<br />
718.3<br />
357.6<br />
146.3<br />
455.5<br />
93.1<br />
378.3<br />
265.9<br />
(167.3)<br />
570.0<br />
1,266.9<br />
(529.1)<br />
786.6<br />
(767.3)<br />
732.5 768.6<br />
770.1<br />
(634.2)<br />
-800<br />
2006 2007 2008 2009 2010<br />
H1/11<br />
Gearing ratio (%) 63.9 116.4 33.2 64.5 27.6<br />
29.3<br />
• The international rating agencies Standard & Poor’s and Moody’s have given <strong>K+S</strong> <strong>Aktiengesellschaft</strong> an<br />
"investment grade" rating. Standard & Poor’s rates <strong>K+S</strong> as "BBB" (outlook: positive), while Moody’s rates it<br />
as "Baa2" (outlook: stable).<br />
August 2011 <strong>K+S</strong> Group 46
<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 Figure H1/11 Figure 2010 Figure 2009<br />
Net indebtedness / EBITDA 1.0x – 1.5x 0.7x 0.8x 2.4x<br />
Net indebtedness / Equity 50% – 100% 29.3% 27.6% 64.5%<br />
Equity ratio 35% – 45% 47.3% 47.6% 40.1%<br />
August 2011 <strong>K+S</strong> Group 47
<strong>K+S</strong> Group<br />
Maturity Profile<br />
€ million<br />
1000<br />
800<br />
Bond due 09/2014; Coupon: 5%<br />
Revolving credit facility due 07/2015<br />
600<br />
400<br />
750<br />
800<br />
200<br />
0<br />
2010 2011 2012 2013 2014 2015<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 of about € 200 million,<br />
which can be terminated at any time.<br />
August 2011 <strong>K+S</strong> Group 48
<strong>K+S</strong> Group<br />
Our Aim is to keep our Investment Grade Rating<br />
Moody’s<br />
Date Rating Outlook<br />
November 2010 Baa2 stable<br />
March 2010 Baa2 stable<br />
September 2009 Baa2 negative<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 solid investment<br />
grade rating<br />
• Current financial ratios support<br />
our rating strongly<br />
January 2011 BBB positive<br />
October 2010 BBB stable<br />
November 2009 BBB stable<br />
August 2011 <strong>K+S</strong> Group 49
<strong>K+S</strong> Group<br />
Value Creation, Cash Generation, strong Balance<br />
Sheet and high Dividend Distribution<br />
Mio. €<br />
ROCE, EBIT-Margin and Value Added<br />
Operating and Free Cash Flow<br />
€je Aktie<br />
€ million 1,124<br />
% € million € million<br />
800<br />
80<br />
700<br />
ROCE (rhs)<br />
H1 Operating cash flow<br />
1200<br />
1200<br />
EBIT-margin (rhs)<br />
70<br />
H2 Operating cash flow<br />
600<br />
Value added<br />
60 1000<br />
Free cash flow<br />
1000<br />
500<br />
* LTM (Last twelve months)<br />
50 800<br />
* LTM (Last twelve months)<br />
800<br />
400<br />
40<br />
600<br />
600<br />
300<br />
200<br />
30<br />
20<br />
400<br />
400<br />
100<br />
10<br />
200<br />
200<br />
0<br />
0<br />
0<br />
0<br />
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LTM*<br />
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LTM*<br />
Gearing and Equity Ratio<br />
Capex and Dividends<br />
%<br />
120<br />
%<br />
60<br />
€ million<br />
600<br />
%<br />
250<br />
Gearing<br />
Capex<br />
100<br />
Equity ratio (rhs)<br />
50 500<br />
Dividends<br />
200<br />
80<br />
40<br />
400<br />
Capex/Depreciation (rhs)<br />
* LTM (Last twelve months)<br />
150<br />
60<br />
30<br />
300<br />
40<br />
20<br />
200<br />
100<br />
20<br />
10<br />
100<br />
50<br />
0<br />
0<br />
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 H1/11<br />
0<br />
0<br />
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e<br />
August 2011 <strong>K+S</strong> Group 50
<strong>K+S</strong> Group<br />
USD Currency Management<br />
<strong>Potash</strong> and Magnesium Products Business Segment<br />
• USD revenues are hedged after the deduction of overseas freight costs and a safety margin<br />
• Use of options, 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 />
Ø Exchange rate for the fiscal year 2010:<br />
USD/EUR 1.35 after premiums<br />
„worst case“ for the fiscal year 2011:<br />
USD/EUR 1.36 after premiums<br />
Salt Business Segment<br />
• USD translation hedging with<br />
similar hedging transactions<br />
„worst case“ for the fiscal year 2010:<br />
USD/EUR 1.39 after premiums<br />
„worst case“ for the fiscal year 2011:<br />
USD/EUR 1.37 after premiums<br />
August 2011 <strong>K+S</strong> Group 51
<strong>K+S</strong> Group<br />
Earnings Sensitivities to USD volatility in 2011<br />
1.32 USD/EUR 1.42 USD/EUR* 1.52 USD/EUR<br />
Ø USD/EUR exchange rate changes from<br />
1.32 to 1.42 USD/EUR<br />
• Based on the expected USD net<br />
exposure of the <strong>K+S</strong> Group, the total<br />
positive effect on earnings of <strong>K+S</strong><br />
Group in 2011 would be around<br />
€ 8 million. Thanks to the use of<br />
options, we could still participate in the<br />
possible appreciation of the US dollar<br />
(less the amount we paid for the<br />
premiums).<br />
Ø USD/EUR exchange rate changes from<br />
1.42 to 1.52 USD/EUR<br />
• Based on the expected USD net<br />
exposure of <strong>K+S</strong> Group, the total<br />
negative effect on earnings of the <strong>K+S</strong><br />
Group in 2011 would be a good<br />
€ 32 million without hedging.<br />
• As options in place cover our expected<br />
net exposure from today’s perspective, the<br />
above- mentioned risk would be fully<br />
eliminated in 2011.<br />
• For 2012, around 40% of the expected<br />
USD net position hedged so far.<br />
* underlying assumption of outlook 2011<br />
August 2011 <strong>K+S</strong> Group 52
<strong>K+S</strong> Group<br />
Revenues and Earnings Expectations for 2011 1)<br />
Outlook for the entire year of <strong>K+S</strong> Group:<br />
- Revenues: € 5.0 - 5.3 billion (2010: € 4.63 bn )<br />
- EBITDA: € 1,150 - 1,300 million (2010: € 953.0 m )<br />
- Operating earnings (EBIT I): € 950 - 1,050 million (2010: € 714.5 m )<br />
- Group earnings from continued operations, adj. € 650 - 720 million (2010: € 447.8 m )<br />
- Earnings per share from continued operations, adj. € 3.40 - 3.75 (2010: € 2.34 )<br />
- Earnings per share, adjusted 2) : € 2.95 - 3.30 (2010: € 2.33 )<br />
Underlying assumptions<br />
Fertilizers Business Sector<br />
<strong>Potash</strong> and Magnesium Products<br />
Significant rise in revenues and strong growth in<br />
operating earnings<br />
• Sales volume of 7.0 million tonnes of goods<br />
• On the basis of the currently achieved potash price<br />
level, significant rise in FY average prices<br />
• Moderate rise in total costs<br />
• Continued attractive agricultural prices<br />
Nitrogen Fertilizers<br />
Strong increase in revenues and strong EBIT rise<br />
• Revenue increase due to price factors<br />
• Increase in operating earnings despite higher<br />
input costs<br />
• Continued attractive agricultural prices<br />
Salt Business Sector<br />
Stable revenues at a high level and moderate decline<br />
in operating earnings<br />
• Sales volume of crystallised salt of about 23 million t<br />
• Operating earnings decrease moderately on the basis<br />
of a lower building-up of stocks<br />
• Average de-icing salt business in Q4/11<br />
Effects/Assumptions on Group Level<br />
• An US dollar exchange rate of 1.42 USD/EUR<br />
• Significantly better financial result in comparison to 2010<br />
• A stable adjusted Group tax rate of 26% to 27%<br />
Earnings-based Dividend Policy<br />
• Dividend payout ratio of between 40% and 50% of adj.<br />
earnings after taxes (including discontinued operations)<br />
1)<br />
Unless stated otherwise, information refers to continued operations; Outlook statement as of 3 August 2011<br />
August 2011 2)<br />
Earnings from continued and discontinued operations<br />
<strong>K+S</strong> Group 53
<strong>K+S</strong> Group<br />
Legacy Project – Canada<br />
• <strong>K+S</strong> <strong>Potash</strong> Canada holds several<br />
potash exploration licences in<br />
Saskatchewan/Canada incl. the<br />
Legacy Project (advanced greenfield<br />
project for solution mining)<br />
Located in the Heart of Saskatchewan’s <strong>Potash</strong>-Rich Basin<br />
• Given the available resources and<br />
environmental permit, the Legacy<br />
Project offers potential for gradually<br />
increasing output to significantly in<br />
excess of 2.7 million tonnes of KCl<br />
per year<br />
Regina<br />
Two additional potash permit areas in the Esterhazy potash region<br />
Reserves and Resources – <strong>K+S</strong> <strong>Potash</strong> Canada<br />
million tonnes KCl % KCl % K 2<br />
O<br />
Mineral Reserves (Proven and Probable Reserves) 1,2) Legacy Project area 135.8 28.9 18.3<br />
Resources (Indicated and Inferred Resources) 1) Legacy Project area + KLSA 009 940 26.9 17.0<br />
1)<br />
The reserves figures were determined by Agapito Associates Inc., Grand Junction, Colorado, in cooperation with North Rim Exploration Ltd., Saskatoon, Saskatchewan.<br />
The technical reports for the determination of reserves were created in accordance with the requirements of the Canadian standard NI 43-101 of the "Canadian<br />
Securities Regulators".<br />
2)<br />
After conversion of the exploration permit (KP 289) to a mine lease (KLSA 009) an additonal 1,150 acres (approx. 4.7 km 2 ) of land with extraction rights are available,<br />
which contain further reserves in the magnitude of 24.5 million tonnes of KCl product. An official update of the determination of reserves by the above-mentioned<br />
independent experts, including these additional volumes, is planned.<br />
August 2011 <strong>K+S</strong> Group 54
<strong>K+S</strong> Group<br />
Medium-term Project Outlook<br />
Project<br />
Status<br />
Timeline<br />
N<br />
I<br />
T<br />
R<br />
O<br />
G<br />
E<br />
N<br />
Sale of COMPO<br />
Nitrogen Fertilizers<br />
Business Segment<br />
On 20 June 2011, <strong>K+S</strong> announced<br />
the sale of Compo to the investment<br />
company Triton at an enterprise<br />
value of € 205 million<br />
On 1 March 2011, BASF announced<br />
the intention to sell major parts<br />
of its fertilizer production facilities;<br />
<strong>K+S</strong> has ruled out to buy the assets<br />
Closing of the transaction expected at<br />
the end of Q3/11. After the deduction<br />
of assumed liabilities, cash inflow of<br />
probably about € 150 million expected<br />
Supply of <strong>K+S</strong> Nitrogen is not<br />
affected as existing contract with<br />
BASF is terminable no earlier than<br />
by 31 December 2014<br />
P<br />
O<br />
T<br />
A<br />
S<br />
H<br />
Reactivation<br />
Rossleben<br />
Reactivation<br />
Siegfried-Giesen<br />
Legacy Project,<br />
Canada<br />
Rossleben belongs to the<br />
German State; talks about<br />
a sale of the mine have been<br />
resumed in summer 2011<br />
Feasibility study currently<br />
in process<br />
Infrastructural work and preparations<br />
for first drillings have started;<br />
review of the existing feasibility<br />
study ongoing<br />
Open<br />
Technical results of study should be<br />
available in Q4/11 and will be evaluated<br />
and communicated afterwards<br />
Results of review will likely be<br />
communicated in autumn/winter<br />
August 2011 <strong>K+S</strong> Group 55
Core Business Sector Fertilizers<br />
Progress Legacy Project<br />
• With <strong>Potash</strong> One, we primarily bought a very<br />
attractive potash deposit and a third-party,<br />
ready-made feasibility study.<br />
• The project size requires us to review and<br />
customise the feasibility study of <strong>Potash</strong> One<br />
in detail.<br />
• Results will not be communicated before<br />
autumn/winter. Aspects like product mix, energy<br />
concept, ramp-up curve as well as a global<br />
procurement process require a thorough analysis.<br />
• This approach is not connected with postponements<br />
in the project timeline. We still envisage<br />
first production volumes from 2015 onwards.<br />
• In 2011, we assume to spend +/- € 50 million*,<br />
mainly for the following measures:<br />
water connection, site preparation, roads,<br />
drilling preparations and first drillings<br />
* exact distribution of disbursements between capex and opex under evaluation<br />
August 2011 <strong>K+S</strong> Group 56
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy<br />
B. Core Business Sector Fertilizers<br />
C. Core Business Sector Salt<br />
D. Complementary Business Segments<br />
E. Financial Data and Outlook<br />
F. <strong>K+S</strong> Share<br />
Appendix<br />
August 2011 <strong>K+S</strong> Group 57
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><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> Bond:<br />
• Stock identification number: A1A 6FV / ISIN: DE000A1A6FV5<br />
• Listings: Luxembourg Stock Exchange<br />
• Issuing volume: € 750 million<br />
• Denomination: €1,000<br />
• Issue price: 99.598%<br />
• Interest coupon: 5.000%<br />
• Maturity: 24.09.2014<br />
in %<br />
110<br />
105<br />
100<br />
Sep. 09 Feb. 10 Jul. 10 Dez. 10 Mai. 11<br />
Price:108.2%<br />
Yield: 2.255% p.a.<br />
As of 9 August 2011<br />
August 2011 <strong>K+S</strong> Group 58
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
Key Data of the <strong>K+S</strong> Share<br />
H1/11<br />
2010<br />
2009<br />
2008<br />
2007<br />
Earnings per share, adjusted (€) 1),2),3)<br />
2.03<br />
2.34<br />
0.56<br />
5.94<br />
1.06<br />
Dividend per share (€) 3)<br />
tbd<br />
1.00<br />
0.20<br />
2.40<br />
0.50<br />
Book value per share, adjusted (€) 2),3)<br />
13.72<br />
13.85<br />
10.94<br />
10.41<br />
5.65<br />
Year-end closing price (XETRA, €) 3)<br />
53.00<br />
56.36<br />
39.99<br />
39.97<br />
40.69<br />
Total stock exchange turnover (€bn)<br />
9.1<br />
16.8<br />
16.9<br />
33.4<br />
10.2<br />
Average daily turnover (€m)<br />
71.4<br />
65.7<br />
66.4<br />
131.6<br />
40.6<br />
Average number of shares (m)<br />
191.25<br />
191.34<br />
166.15<br />
164.95<br />
164.94<br />
Dividend yield (on closing price, %)<br />
-<br />
1.8<br />
0.5<br />
6.0<br />
1.2<br />
Return on equity after taxes (%) 1),2)<br />
21.3<br />
18.7<br />
8.4<br />
68.6<br />
16.1<br />
1)<br />
2007 to 2009 include the discontinued operations of COMPO.<br />
2)<br />
The adjusted figures unalteredly 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 />
August 2011 <strong>K+S</strong> Group 59
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
Dividends and Share Buybacks<br />
540<br />
3,00<br />
€ million • We pursue a dividend policy that is in principle<br />
€ per share<br />
earnings-based.<br />
450<br />
360<br />
270<br />
180<br />
90<br />
0<br />
• According to this, a dividend payout rate of between<br />
40% and 50% of the adjusted Group earnings after<br />
taxes forms the basis for future dividend<br />
recommendations.<br />
• The increase in adjusted Group earnings after<br />
taxes expected for 2011 should also have a<br />
correspondingly positive impact on future<br />
dividend payments.<br />
43.38<br />
0.25 0.25 0.25<br />
43.40 41.47 42.50<br />
66.70<br />
0.33<br />
55.25<br />
0.45<br />
74.25<br />
2.40<br />
396.00<br />
0.50 0.50<br />
82.50 82.50<br />
191,40<br />
August 2011 <strong>K+S</strong> Group 60<br />
38.30<br />
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011<br />
Dividend per share (rhs)<br />
(for the prior financial year)<br />
Share buyback (lhs)<br />
0.20<br />
1,00<br />
Total dividend payment (lhs)<br />
(for the prior financial year)<br />
2,50 2.50<br />
2,00 2.00<br />
1,50 1.50<br />
1,00 1.00<br />
0,50 0.50<br />
0,00 0.00
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
Attractive Dividend Policy<br />
<strong>K+S</strong> (EUR) 0.50<br />
(47%)<br />
2006 2007 2008 2009 2010 Dividend Policy<br />
0.50<br />
(47%)<br />
2.40<br />
(40%)<br />
0.20<br />
(41%)<br />
1.00<br />
(43%)<br />
To pay out „in principle 40-50% of<br />
the adjusted Group earnings“<br />
<strong>Potash</strong> Corp.<br />
(USD)<br />
0.07<br />
(10%)<br />
0.12<br />
(10%)<br />
0.13<br />
(3%)<br />
0.13<br />
(12%)<br />
Mosaic (USD) - - - 0.20<br />
(4%)<br />
Uralkali (RUR) 1.59<br />
(97%)<br />
ICL (USD) 0.14<br />
(48%)<br />
Compass<br />
(USD)<br />
Yara***<br />
(NOK)<br />
1.22<br />
(72%)<br />
2.50<br />
(22%)<br />
1.90<br />
(50%)<br />
0.29<br />
(68%)<br />
1.28<br />
(53%)<br />
4.00<br />
(19%)<br />
4.00<br />
(39%)<br />
0.80<br />
(51%)<br />
1.34<br />
(28%)<br />
4.50<br />
(16%)<br />
1.70<br />
(40%)<br />
0.41<br />
(69%)<br />
1.42<br />
(29%)<br />
4.50<br />
(34%)<br />
0.13<br />
(6%)<br />
1.50*<br />
(81%)<br />
Tbd<br />
0.82**<br />
(98%)<br />
1.56<br />
(35%)<br />
5.50<br />
(18%)<br />
„Cash dividends […] are conditioned<br />
upon […] available earnings.“<br />
n/a<br />
To pay out „at least 15% of net<br />
profit“<br />
To pay out a „quarterly dividend at<br />
a rate of up to 70% of […] net profit“<br />
„We intend to pay quarterly cash<br />
dividends on our common stock.“<br />
„Return 40-45% of net income measured as<br />
the sum of dividends and share buy-backs<br />
[…] averaged over the business cycle.“<br />
• <strong>K+S</strong> has communicated one of the most concrete dividend policies<br />
• Dividend payouts complied with the policy in times of boom and bust<br />
• Low volatility in payout ratios provides higher predictability for investors<br />
• <strong>K+S</strong> will continue its proven and well-acknowledged dividend policy<br />
* Special dividend of USD 1.30<br />
** incl. Special dividend of USD 0.42<br />
*** Incl. share buy-backs: 2005: 62%;<br />
2006: 27%; 2007: 26%; 2008: 19%;<br />
2009: 34%, 2010 37%<br />
Source: Bloomberg, company reports<br />
August 2011 <strong>K+S</strong> Group 61
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
<strong>K+S</strong> Share Price compared with DAX<br />
120<br />
110<br />
100<br />
90<br />
80<br />
Performance of <strong>K+S</strong> share<br />
(Index: 31 December 2010 = 100)<br />
DAX (19%)<br />
<strong>K+S</strong><br />
Market capitalisation<br />
(as of 31 December, € billion)<br />
7.7<br />
6.7 6.6<br />
3.4<br />
2.1<br />
1.7<br />
(21%) * 1.0 0.8 0.9<br />
10.8<br />
8.3<br />
70<br />
2011<br />
Jan.<br />
2011<br />
August<br />
2001 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 2011<br />
25 Aug.<br />
* Including dividends<br />
Source: Bloomberg; as of 25 August 2011<br />
August 2011 <strong>K+S</strong> Group 62
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
<strong>K+S</strong> Share Price compared with Peer Group<br />
Index: 31 December 2010 = 100<br />
140<br />
130<br />
120<br />
110<br />
100<br />
Uralkali<br />
<strong>Potash</strong>Corp<br />
+25%<br />
+6%<br />
90<br />
80<br />
70<br />
60<br />
2011<br />
Jan.<br />
2011<br />
August<br />
Mosaic<br />
Compass<br />
Yara<br />
<strong>K+S</strong><br />
(13%)<br />
(18%)<br />
(23%)<br />
(23%)<br />
Source: Bloomberg; as of 25 August 2011<br />
August 2011 <strong>K+S</strong> Group 63
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
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 />
Free float 90.12%<br />
• The free float of <strong>K+S</strong> AG amounts to approx. 90%<br />
• Investment companies, that have exceeded<br />
the 3% threshold:<br />
- BlackRock Inc.: 5.46%<br />
- Capital Research: 3.05%<br />
Meritus Trust /<br />
OJSC MCC „EuroChem“ 9.88%<br />
August 2011 <strong>K+S</strong> Group 64
<strong>K+S</strong> Group<br />
Financial Calendar<br />
10 November 2011 ‣ Quarterly Financial Report, 30 September 2011<br />
15 March 2012 ‣ Report on business 2011<br />
‣ Press and analyst conference, Frankfurt am Main<br />
9 May 2012 ‣ Annual General Meeting 2012, Kassel<br />
‣ Quarterly Financial Report, 31 March 2012<br />
10 May 2012 ‣ Dividend payment for the year 2011<br />
14 August 2012 ‣ Half-yearly Financial Report, 30 June 2012<br />
August 2011 <strong>K+S</strong> Group 65
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
Bertha-von-Suttner-Straße 7<br />
34131 Kassel | Germany<br />
phone: +49 (0)561 / 9301-0<br />
fax: +49 (0)561 / 9301-1753<br />
Investor Relations<br />
phone: +49 (0)561 / 9301-1100<br />
fax: +49 (0)561 / 9301-2425<br />
email: investor-relations@k-plus-s.com<br />
Internet: www.k-plus-s.com<br />
Experience growth.<br />
August 2011 <strong>K+S</strong> Group 66
<strong>K+S</strong> Group<br />
Content<br />
A. Corporate Structure & Strategy<br />
B. Core Business Sector Fertilizers<br />
C. Core Business Sector Salt<br />
D. Complementary Business Segments<br />
E. Financial Data and Outlook<br />
F. <strong>K+S</strong> Share<br />
Appendix<br />
August 2011 <strong>K+S</strong> Group 67
<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 />
2000/2001 <strong>K+S</strong> cancelled 10% own shares (2000); expansion of the business segments COMPO and salt<br />
by further acquisitions<br />
2002 Foundation of salt joint venture esco - european salt company (<strong>K+S</strong> stake: 62%)<br />
2003 <strong>K+S</strong> cancelled 5.6% own shares<br />
2004 Acquisition of Solvay’s 38% share in esco<br />
2005 Share buyback of 1.25 million shares; Cooperation between COMPO and Syngenta in the area<br />
of plant protection products<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 <strong>Potash</strong> One, Sale of COMPO<br />
August 2011 <strong>K+S</strong> Group 68
<strong>K+S</strong> Group<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 />
August 2011 <strong>K+S</strong> Group 69
130<br />
<strong>K+S</strong> 120 Group<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<br />
1980 1985 1990 1995 2000 2005 2007<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 />
August 2011 <strong>K+S</strong> Group 70
<strong>K+S</strong> Group<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 />
August 2011 <strong>K+S</strong> Group 71
<strong>K+S</strong> Group<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 />
August 2011 <strong>K+S</strong> Group 72
<strong>K+S</strong> Group<br />
<strong>Potash</strong> Fertilization and Yields for Corn<br />
<strong>Potash</strong> use by crop<br />
in 2007/08<br />
<strong>Potash</strong> use and yield for corn<br />
in 2007/08<br />
Other cereals<br />
3%<br />
Wheat 6%<br />
Cotton<br />
2%<br />
Fruits & Vegetables<br />
22%<br />
<strong>Potash</strong> 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 />
<strong>Potash</strong> 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>, 2007/08<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 />
August 2011 <strong>K+S</strong> Group 73
<strong>K+S</strong> Group<br />
Effect of <strong>Potash</strong> 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 1:3<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 />
August 2011 <strong>K+S</strong> Group 74
<strong>K+S</strong> Group<br />
Strong Impact on Soybean Yield<br />
under Continued Elimination of <strong>Potash</strong><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, <strong>Potash</strong> 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 />
August 2011 <strong>K+S</strong> Group 75
<strong>Potash</strong> and Magnesium Products<br />
<strong>Potash</strong> Market Western Europe (EU 27)<br />
Market Structure<br />
<strong>Potash</strong> Use by Crop *<br />
Structure<br />
Private trade with countryspecific<br />
regulations<br />
Other crops<br />
32%<br />
Wheat<br />
27%<br />
Products<br />
MOP standard, gran. and<br />
specialities through spot<br />
and contracts<br />
Sugar crops<br />
5%<br />
Oil Seed<br />
10%<br />
Corn<br />
12%<br />
Fruits &<br />
Vegetables<br />
14%<br />
kt K 2 O<br />
8.000<br />
Agricultural <strong>Potash</strong> Consumption **<br />
Cultivated Crops ***<br />
Other crops<br />
21%<br />
6.000<br />
4.000<br />
2.000<br />
Sugar crops<br />
1%<br />
Oil Seed<br />
15%<br />
Wheat<br />
47%<br />
0<br />
1980 1985 1990 1995 2000 2005 2010F<br />
Fruits &<br />
Vegetables<br />
8%<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption; Source: IFA (2007/08), <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 76<br />
** Fertilizer years Western and Central Europe, Source: IFA June 2010; *** Source: FAO (2008/2009)<br />
Corn<br />
8%
<strong>Potash</strong> and Magnesium Products<br />
<strong>Potash</strong> Market Brazil<br />
Market Structure<br />
<strong>Potash</strong> Use by Crop *<br />
Structure<br />
Private trade<br />
Other crops<br />
14%<br />
Products<br />
MOP gran. through spot<br />
and contracts<br />
Rice<br />
4%<br />
Cotton<br />
4%<br />
Fruits &<br />
Vegetables<br />
5%<br />
Soybeans<br />
34%<br />
Corn<br />
19%<br />
Sugar crops<br />
20%<br />
Agricultural <strong>Potash</strong> Consumption **<br />
Cultivated Crops ***<br />
kt K 2 O<br />
5.000<br />
4.000<br />
3.000<br />
2.000<br />
1.000<br />
0<br />
1980 1985 1990 1995 2000 2005 2010F<br />
Other crops<br />
26%<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption; Source: IFA (2007/08), <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 77<br />
** Fertilizer years Brazil, Source: IFA November 2009; *** Source: FAO (2008/2009)<br />
Cotton<br />
1%<br />
Rice<br />
4%<br />
Fruits &<br />
Vegetables<br />
4%<br />
Sugar crops<br />
13%<br />
Corn<br />
20%<br />
Soybeans<br />
32%
<strong>Potash</strong> and Magnesium Products<br />
<strong>Potash</strong> Market Southeast Asia<br />
Structure<br />
Products<br />
Market Structure<br />
Private trade<br />
MOP standard and<br />
specialities through spot<br />
and contracts<br />
Fruits &<br />
Vegetables<br />
5%<br />
<strong>Potash</strong> UsebyCrop*<br />
Sugar crops<br />
4%<br />
Corn<br />
5%<br />
Rice<br />
9%<br />
Other crops<br />
7%<br />
Oil seed<br />
70%<br />
Agricultural <strong>Potash</strong> Consumption **<br />
Cultivated Crops ***<br />
kt K 2 O<br />
2.500<br />
2.000<br />
1.500<br />
1.000<br />
Sugar crops<br />
2%<br />
Fruits &<br />
Vegetables<br />
6%<br />
Other crops<br />
20%<br />
Rice<br />
43%<br />
500<br />
0<br />
1980 1985 1990 1995 2000 2005 2010F<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption; Source: IFA (2007/08), <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 78<br />
Oil seed<br />
20%<br />
** Fertilizer years Indonesia, Malaysia, Thailand, Source: IFA November 2009; *** Source: FAO (2008/2009)<br />
Corn<br />
9%
<strong>Potash</strong> and Magnesium Products<br />
<strong>Potash</strong> Market India<br />
Market Structure<br />
<strong>Potash</strong> Use by Crop *<br />
Structure<br />
Products<br />
Predominantly centralised,<br />
subsidised<br />
MOP standard through<br />
contracts<br />
-<br />
Oil seed<br />
5%<br />
Cotton<br />
5%<br />
Other crops<br />
13%<br />
Rice<br />
35%<br />
Sugar crops<br />
10%<br />
Agricultural <strong>Potash</strong> Consumption **<br />
Wheat<br />
10%<br />
Fruits &<br />
Vegetables<br />
22%<br />
Cultivated Crops ***<br />
kt K 2 O<br />
4.000<br />
3.000<br />
2.000<br />
Other crops<br />
Sugar crops 8%<br />
3%<br />
Cotton<br />
6%<br />
Fruits &<br />
Vegetables<br />
7%<br />
Wheat<br />
27%<br />
1.000<br />
0<br />
1980 1985 1990 1995 2000 2005 2010F<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption; Source: IFA (2007/08), <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 79<br />
** Fertilizer years India, Source: IFA November 2009; *** Source: FAO (2008/2009)<br />
Oil seed<br />
23%<br />
Rice<br />
26%
<strong>Potash</strong> and Magnesium Products<br />
<strong>Potash</strong> Market China<br />
Market Structure<br />
<strong>Potash</strong> Use by Crop *<br />
Structure<br />
Products<br />
Predominantly centralised<br />
MOP standard through<br />
long-term contracts<br />
Other crops<br />
10%<br />
Oil seed<br />
2%<br />
Sugar crops<br />
5%<br />
Wheat<br />
5%<br />
Fruits &<br />
vegetables<br />
50%<br />
Rice<br />
28%<br />
Agricultural <strong>Potash</strong> Consumption **<br />
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 />
Sugar crops<br />
1%<br />
Other crops<br />
27%<br />
Fruits &<br />
Vegetables<br />
21%<br />
Rice<br />
18%<br />
1.000<br />
0<br />
Oil seed<br />
17% Wheat<br />
16%<br />
1980 1985 1990 1995 2000 2005 2010F<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption; Source: IFA (2007/08), <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 80<br />
** Fertilizer years China, Source: IFA November 2009; *** Source: FAO (2008/2009)
<strong>Potash</strong> and Magnesium Products<br />
<strong>Potash</strong> Market North America<br />
Market Structure<br />
<strong>Potash</strong> Use by Crop *<br />
Structure<br />
Private Trade<br />
Other crops<br />
21%<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 />
6%<br />
Corn<br />
45%<br />
Fruits &<br />
Vegetables<br />
7%<br />
Soybeans<br />
15%<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 />
Agricultural <strong>Potash</strong> Consumption ** Cultivated Crops ***<br />
Other crops<br />
52%<br />
Fruits & Cotton<br />
Vegetables 1%<br />
1%<br />
1980 1985 1990 1995 2000 2005 2010F<br />
* Incl. sulphate of potash and low-grade potash, apparent consumption; Sources: IFA (2007/08), <strong>K+S</strong><br />
August 2011 <strong>K+S</strong> Group 81<br />
** Fertilizer years North America, Source: IFA Juni 2010; *** Source: FAO (2008/2009)<br />
Wheat<br />
17%<br />
Corn<br />
15%<br />
Soybeans<br />
14%
<strong>Potash</strong> and Magnesium Products<br />
Loader (up to 20 tonnes)<br />
August 2011 <strong>K+S</strong> Group 82
<strong>Potash</strong> and Magnesium Products<br />
Production Sites in Germany<br />
<strong>Potash</strong> mining in the Werra Fulda Region<br />
6<br />
7 4<br />
Kassel<br />
1<br />
5 3 2<br />
<strong>Potash</strong><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 />
<strong>Potash</strong> Seam<br />
Thuringia<br />
Source: Mainova AG<br />
August 2011 <strong>K+S</strong> Group 83
<strong>Potash</strong> 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 />
August 2011 <strong>K+S</strong> Group 84
<strong>Potash</strong> and Magnesium Products<br />
<strong>Potash</strong> 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 />
August 2011 <strong>K+S</strong> Group 85
Salt<br />
Mining Chamber in Germany<br />
August 2011 <strong>K+S</strong> Group 86
Salt<br />
SPL: Salt Extraction in the Atacama Desert<br />
August 2011 <strong>K+S</strong> Group 87
Salt<br />
Seasonality of the De-icing Salt Business<br />
Million tonnes 10.18<br />
€<br />
10<br />
70<br />
9.25<br />
2.24<br />
61.0*<br />
8 2.20 54.8<br />
54.5<br />
57.3<br />
60<br />
52.8<br />
7.20<br />
53.4<br />
50<br />
6<br />
2.35<br />
40<br />
4<br />
2<br />
0<br />
7.05<br />
7.94<br />
2.75<br />
2.26<br />
0.49<br />
3.21<br />
2.47<br />
0.74<br />
0.57<br />
3.33<br />
2.23<br />
1.10<br />
4.11<br />
4.85<br />
30<br />
20<br />
10<br />
0<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 2010<br />
De-icing salt average price 2011<br />
Q1/10 Q1/11 Q2/10 Q2/11 Q3/10 Q3/11 Q4/10<br />
Q4/11<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 />
* Adjusted for claims against customers in Europe, which had exceeded their contractually agreed<br />
August 2011 volumes in Q1/11, the average price for Q2/11 would have been €52.2 and in Q1/11 €55,6 €<br />
<strong>K+S</strong> Group 88
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 />
vendor purchaser<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 />
August 2011 <strong>K+S</strong> Group 89
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 />
Frisia, NL<br />
Torrelavega, E<br />
Borth, GER<br />
Dombasle, F<br />
Bayonne, * F<br />
Braunschweig-<br />
Lüneburg, GER<br />
Bernburg, GER<br />
Povoa, P<br />
Olhao, P<br />
* Site to be closed<br />
August 2011 <strong>K+S</strong> Group 90
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<br />
Regina, SK<br />
Manistee, MI<br />
Ojibway, ON<br />
Windsor, ON<br />
Great Lakes/<br />
Ontario<br />
Quebec/<br />
Maritime<br />
New<br />
York<br />
Silver Springs, NY<br />
Mines Seleine, QC<br />
Pugwash, NS<br />
Grantsville, UT<br />
Newark, CA<br />
River<br />
System<br />
Perth Amboy, NJ<br />
Fairport,OH<br />
Rittman, OH<br />
Long Beach, CA<br />
US East Coast<br />
Production method<br />
Glendale, AZ<br />
Hutchinson, KS<br />
Natal, Brazil<br />
(SDB)<br />
Rock salt<br />
Grand Saline, TX<br />
Port Canaveral, FL<br />
Solar evaporation salt<br />
Vacuum salt<br />
Weeks Island, LA<br />
Inagua, BH<br />
Salar Grande<br />
de Tarapacá,<br />
Chile (SPL)<br />
Production of de-icing salt<br />
<strong>K+S</strong> winter regions<br />
August 2011 <strong>K+S</strong> Group 91
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; <strong>K+S</strong>: 2010)<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 />
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 />
August 2011 <strong>K+S</strong> Group 92
Salt<br />
Morton Salt, an Excellent Opportunity –<br />
Balancing Growth, Enhancing Profitability<br />
Growth<br />
Asset Quality<br />
Diversification<br />
Operational Synergies<br />
Financials Benefits<br />
Execution<br />
• Combines highly complementary operations to create the North American<br />
and global leader in salt<br />
• Offers widespread, close-to-customer production sites in the U.S. and Canada<br />
• Adds the leading salt consumer brand and a nationwide distribution network<br />
• Extends and diversifies geographic presence in the North American salt market<br />
• Enhances access to North American industrial and consumer markets<br />
• Provides access to new and less volatile de-icing regions<br />
• Strengthens <strong>K+S</strong> Group overall, in Europe and Overseas<br />
• Leverages the leading salt consumer brand to existing product portfolio<br />
• Optimizes logistics between Chile, Brazil and North America<br />
• EPS will be clearly accretive from 2010 onwards; consistent with acquisition criteria<br />
• Benefits from profitable salt business with strong cash flow generation<br />
• Maintains a strong, flexible balance sheet<br />
• Limited overlap facilitates smooth integration<br />
• Immediate delivery of benefits to employees, customers and shareholders<br />
Morton Salt – another milestone of our growth strategy<br />
August 2011 <strong>K+S</strong> Group 93
Salt<br />
Morton Salt at a glance<br />
• Largest producer of food grade salt, industrial<br />
and de-icing salt in North America<br />
• North America’s favorite salt consumer brand<br />
(“The Morton<br />
Umbrella Girl”)<br />
Revenues by product group *<br />
2009<br />
De-icing salt<br />
38%<br />
Food grade salt<br />
26%<br />
• 6 rock salt mines, 7 solar evaporation facilities<br />
and 10 vacuum salt operations as well as<br />
62 salt stockpiles and 61 distribution centers<br />
Salt for chemical use<br />
2%<br />
Industrial salt<br />
34%<br />
• Annual salt production capacity<br />
of 13.1 million tonnes<br />
Key figures<br />
USD million<br />
2009<br />
2008<br />
2007<br />
• 2,900 employees<br />
Sales volume<br />
(million tonnes)<br />
10.1<br />
12.7<br />
11.9<br />
• Headquartered in Chicago; founded in 1848<br />
Revenues 1,134 1,220 1,059<br />
EBITDA 283<br />
270<br />
204<br />
* Adjusted to <strong>K+S</strong> classification<br />
August 2011 <strong>K+S</strong> Group 94
3,50<br />
<strong>K+S</strong> Group<br />
3,00<br />
Development of Earnings per Share, Adjusted *<br />
2,50<br />
2.00 2,00<br />
€<br />
1.50 1,50<br />
1.00 1,00<br />
0.50 0,50<br />
0.00 0,00<br />
(0.50) -0,50<br />
1.37<br />
0.74<br />
0.89<br />
0.75<br />
0.66<br />
0.45<br />
0.10<br />
0.25<br />
(0.01)<br />
(0.27)<br />
Q1 - Q4/2009 Q1 - Q4/2010 Q1 - Q2/2011<br />
FY *<br />
0.47 €<br />
0.56 €<br />
6 months * 1.34 € 2.03 €<br />
2.34 €<br />
-<br />
* Information for 2011 and 2010 refer 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 />
August 2011 <strong>K+S</strong> Group 95
<strong>K+S</strong> Group<br />
Revenues and Earnings 1)<br />
€ million<br />
LTM 2) 2010 %<br />
Revenues<br />
4,962.5<br />
4,632.7<br />
+ 7.1<br />
Earnings before interest, taxes,<br />
depreciation and amortisation (EBITDA)<br />
1,104.6<br />
953.0<br />
+ 16.0<br />
Operating earnings (EBIT I)<br />
876.3<br />
714.5<br />
+ 22.7<br />
Result after operating hedges (EBIT II)<br />
944.5<br />
719.1<br />
+ 31.3<br />
Financial result<br />
(100.8)<br />
(120.0)<br />
(16.0)<br />
Earnings before income taxes (EBT)<br />
843.7<br />
599.1<br />
+ 40.8<br />
Taxes on income<br />
of which deferred taxes<br />
214.2<br />
(10.6)<br />
147.2<br />
(29.9)<br />
+ 45.5<br />
(64.5)<br />
Group earnings after taxes & minority interests<br />
628.9<br />
451.1<br />
+ 39.4<br />
Earnings before income taxes, adjusted 3)<br />
775.5<br />
594.5<br />
+ 30.4<br />
Group earnings after taxes, adjusted 3)<br />
579.8<br />
447.8<br />
+ 29.5<br />
1)<br />
Infomation refers to the continued operations of <strong>K+S</strong> Group<br />
2)<br />
LTM=Last twelve months as of 30 June 2011<br />
3)<br />
The adjusted figures unalteredly 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 />
August 2011 <strong>K+S</strong> Group 96
<strong>K+S</strong> Group<br />
Changes in revenues as of 30 June 2011<br />
Changes in Revenues H1/11 (€ million)<br />
(39.0) 2,676.7<br />
+290.9<br />
+77.9<br />
2,346.9<br />
Revenues<br />
H1/10<br />
Volume/<br />
structure<br />
Price/<br />
price-related<br />
Exchange<br />
rates<br />
Revenues<br />
H1/11<br />
August 2011 <strong>K+S</strong> Group 97
<strong>K+S</strong> Group<br />
Cash Flow Statement 1)<br />
€ million<br />
LTM 2) 2010<br />
%<br />
Gross cash flow<br />
887.1<br />
830.2<br />
+ 6.9<br />
Cash flow from operating activities<br />
707.3<br />
826.4<br />
(14.4)<br />
Cash flow for investing activities<br />
(509.8)<br />
(177.7)<br />
(186.9)<br />
- of which acquisitions/divestments<br />
(242.8)<br />
-<br />
-<br />
Free cash flow<br />
197.5<br />
648.7<br />
(69.6)<br />
Free cash flow before acquisitions/divestments<br />
440.3 3)<br />
648.7<br />
+ 32.1<br />
Cash flow from/for financing activities<br />
(258.7)<br />
(439.5)<br />
+ 41.0<br />
1)<br />
Information refers to the continued operations of the <strong>K+S</strong> Group. Only the gross cash flow also contains the discontinued operations<br />
2)<br />
LTM=Last twelve months as of 30 June 2011<br />
3)<br />
Without taking account of the out-financing of pension provisions as well as the purchase of securities and other financial investments, the free cash flow<br />
before acquisitions/divestments would have been at € 605.9 million<br />
August 2011 <strong>K+S</strong> Group 98
<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 />
Current assets<br />
of which Inventories<br />
Accounts receivable - trade<br />
Cash and cash equivalents<br />
Assets classified as held for sale<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 />
Liabilities directly associated with<br />
assets classified as held for sale<br />
Balance sheet total<br />
30.06.11<br />
3,118.7<br />
935.0<br />
2,014.3<br />
30.3<br />
2,438.5<br />
545.1<br />
766.6<br />
550.8<br />
274.0<br />
2,626.7<br />
1,875.4<br />
767.7<br />
632.7<br />
310.2<br />
1,055.1<br />
2.4<br />
227.9<br />
5,557.2<br />
31.12.10<br />
2,936.4<br />
999.7<br />
1.803.6<br />
57.8<br />
2,637.3<br />
740.2<br />
949.8<br />
748.4<br />
-<br />
2,651.6<br />
1,919.1<br />
769.1<br />
713.2<br />
261.6<br />
1,003.0<br />
17.5<br />
-<br />
5,573.7<br />
August 2011 <strong>K+S</strong> Group 99
<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 />
August 2011 <strong>K+S</strong> Group <strong>K+S</strong> Group 100
August 2011 <strong>K+S</strong> Group 101
<strong>K+S</strong> <strong>Aktiengesellschaft</strong><br />
Bertha-von-Suttner-Straße 7<br />
34131 Kassel | Germany<br />
phone: +49 (0)561 / 9301-0<br />
fax: +49 (0)561 / 9301-1753<br />
Investor Relations<br />
phone: +49 (0)561 / 9301-1100<br />
fax: +49 (0)561 / 9301-2425<br />
email: investor-relations@k-plus-s.com<br />
Internet: www.k-plus-s.com<br />
Experience growth.<br />
August 2011 <strong>K+S</strong> Group 102