K+S Aktiengesellschaft — Investor Presentation (August 2024)
80 slides from K+S Aktiengesellschaft's investor presentation, August 2024
Slide 1: Company Presentation
Company Presentation Information for investors, analysts, and interested parties Publication August 2024
Slide 2: Table of contents
Table of contents 2| 8 Relevant megatrends 3| 8 Market situation 4 [8 Sustainable transformation as 2 part of our strategy 5|8 Customer Segment Agriculture _ 718 Productfon Shia residue Management ie ra 8] 8 Financial data & IR
Slide 3: K+S Group
1 | 8 K+S Group
Slide 4: K+S Conspect
K+S Conspect The roots of the K+S Group date back to the K+S Group financials H1/2024 middle of the 19th century. At that time, miners in Germany exploited the world's first potash Revenues EBITDA deposits and started fertilizer production. €1,861.8 million €328.4 million Today, the K+S Group is an
Slide 5: Board of Executive Directors
Board of Executive Directors Dr. Burkhard Lohr Dr. Christian H. Meyer Chief Executive Officer Chief Financial Officer Mandate until May 31, 2025 Mandate until March 14, 2026 Dr. Carin-Martina Tröltzsch Christina Daske Chief Operating Officer Labor Director Mandate until February 19, 2026 Mandate unt
Slide 6: K+S at a glance: customer segments
K+S at a glance Customer segments (no segments according to IFRS) With our wide range of potassium chloride We produce, refine, and supply natural (MOP) and fertilizer specialties, as well as raw materials for communities, con- accompanying advice, we support sumers, and numerous industrial applica-
Slide 7: Key investment highlights
Key investment highlights Our products are indispensable for people, animals, and plants Global megatrends call for efficient fertilization. With our fertilizers, we support farmers in combating world hunger. 1 K+S offers high-purity salts for over 5,000 different applications, including in pharmace
Slide 8: Relevant megatrends
2 | 8 Relevant megatrends
Slide 9: Important megatrends and their implications
Important megatrends and their implications Implications for K+S 8.6 billion 0.2 ºC Average global warming ▪ Arable land shrinking Global population in 2030 Today: 8.0 billion per decade ▪ Yield needs to be improved ▪ Higher efficiency of fertilization and irrigation needed 40% ▪ Plants have to be m
Slide 10: Why use fertilizers?
Why use fertilizers? “The Natural Laws of Husbandry“, Justus von Liebig, 1863 “The growth and yield of a plant is limited by the nutrient available in the smallest amount.“ ▪ Plants need sunlight, water, and minerals to thrive. ▪ There are few soils on earth which have a sufficient content and avail
Slide 11: Long-term key drivers for our fertilizer business
Long-term key drivers for our fertilizer business Less arable land – but more protein consumption per capita 1960 2010 2050 Global Each year, an additional 80 million people needs to be fed – population development this equals the population of Germany. 3.0 billion 6.9 billion 9.7 billion Arable lan
Slide 12: Long-term demand drivers
Long-term demand drivers Demand drivers Arable land shrinking Industry & Water scarcity Pharma Increasing standard of living Agriculture Industry + Population growth Economic growth and industrialization Consumers Urbanization Winter weather conditions Infrastructure development Communities Global w
Slide 13: Farmer profitability of corn (USA)
Farmer profitability of corn (USA) Expenditure for potash products of an agricultural farm: approx. 4% of the total cost The earnings prospects should give the agricultural industry sufficient incentive to increase the yield per hectare by using plant nutrients. Profit potential in % of revenues 100
Slide 14: Market situation
3 | 8 Market situation
Slide 15: World potash production and sales volumes by region
World potash production and sales volumes by region (preliminary) in million tonnes 28 ▪ Even before limitation of Russian exports and sanctions against Belarus, 24 the potash market was fully used at 24 capacity limit. 5 35 ▪ Until 2021, Russia’s Uralkali and 11 6 5 Belarus each accounted for appro
Slide 16: Increasing demand for potash
Increasing demand for potash New potash capacities needed to meet rising demand 1,000 tonnes 120,000 (IFA forecast: 2.5%) 100,000 +3,0 % +2,0 % 80,000 Worldwide potash demand 60,000 Capacity Missing supply w/o 40,000 capacity expansions New capacities (11 mt from 20,000 Belarus/Russia) Production ,0
Slide 17: Potash price development
Potash price development USD/t 1.200 1.200 EUR/t 1.100 1.100 Potassium 1.000 Chloride 1.000 (MOP) Brazil Potassium 900 Sulfate 900 (SOP) 800 Europe 800 700 700 600 600 500 Potassium 500 Chloride 400 (MOP) Europe 400 300 300 200 200 MOP gran. Brazil USD/t, cfr (left scala) SOP Europe EUR/t, cfr (righ
Slide 18: Supplier structure on the global potash market 2023
(preliminary) Supplier structure on the global potash market 2023 World potash sales volumes 31% 2023: 73.5 mt 30% 2022: 63.7 mt 16% 14% 13% 12% 12% 10% 10% 9% 8% 7% 4% 4% 4% 4% 4% 3% 3% 2% Canpotex Uralkali BPC ICL APC EuroChem Laos China Other ▪ Nutrien Belaruskali ▪ DSW > 20 Intrepid, Compass, ▪
Slide 19: New potash capacities needed to meet rising demand
New potash capacities needed to meet rising demand! in million tonnes eff. (product) 8.5 24 5.5 6 4 Demand growth Capacities announced Assumption: Addition of Supply expansion Capacities still until 2032 by BHP until 2032 only half of the Russian via other announced needed to meet (CAGR = IFA foreca
Slide 20: Between desire and reality
Between desire and reality Classification of potash projects announced since 2006 (Greenfield) Various greenfield projects planned in Thailand, Laos, Russia, Kazakhstan, Announced Uzbekistan, Belarus, Canada, USA, Brazil, and Argentina, among others. projects Companies involved include BHP Billiton,
Slide 21: Farmer profitability still at high level
Farmer profitability still at high level Price development of agricultural commodities since 01/2020 220 ▪ Sharp increase in crop prices significantly Maize exceeds higher input costs. 200 Soybeans ▪ Farmer profitability reached highs in some 180 regions all-time highs. ▪ Potash costs only account f
Slide 22: Potassium use by crop in selected countries
Potassium use by crop in selected countries 100% 6% 90% 18% 8% 80% 4% 1% 42% 70% 60% 11% 49% 70% 50% 1% 4% 40% 11% 30% 14% 20% 16% 10% 10% 17% 12% 1% 3% 0% 2% 4% EUR - 28 Brazil Indonesia Wheat Corn Oil seed Sugar Soybean Rice Oil palm Fruits and Vegetables Rest Source: IFA, “Fertilizer Use by Crop”
Slide 23: Global potash sales volume by region
(preliminary) Global potash sales volume by region million tonnes 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Western Europe 5.6 5.8 6.2 6.0 5,9 6,2 6,2 6,0 6.2 6.5 4.9 5.2 Central 5.1 4.7 4.4 4.8 4.8 5.2 5.4 5.5 5.6 6.0 4.4 4.9 Europe/FSU Africa 0.7 0.8 1.0 1.0 1.1 1.4 1.6 1.4 1.6 1
Slide 24: Supplier structure on European salt market
Supplier structure on European salt market Capacity in million tonnes (crystallized salt and salt in brine; excl. captive use) 9 Salins 8 Artyomsol 7 9 Nouryon 5 Südsalz 4 Source: Roskill, K+S 24
Slide 25: Development of salt consumption and production
Development of salt consumption and production Consumption (in million tonnes) Production (in million tonnes) Between 2010 and 2019, global consumption increased by World production reached a record of more than 330 million about 0.90% yoy to a record 332 million tonnes. tonnes in 2019. It increased
Slide 26: Sustainable transformation as part of our strategy
4 | 8 Sustainable transformation as part of our strategy
Slide 27: Guiding principles of strategy and management focus
Guiding principles of strategy and management focus Financial ambitions ▪ Earn cost of capital over a 5-year cycle ▪ At the same time, an EBITDA margin of > 20% is aimed for over this cycle ▪ Generally striven for a leverage ratio (net debt/EBITDA): maximum 1.5x 27
Slide 28: K+S Sustainability Goals
K+S Sustainability Goals We have set ourselves ambitious goals in these three areas of action: Society & Employees, Environment & Resources and Business Ethics & Human Rights ▪ The human being is our focus ▪ Active commitment to environmentally friendly production ▪ Integrity & a sense of responsibi
Slide 29: Our sustainable transformation pays off
Our sustainable transformation pays off K+S is the first producer to offer ▪ Our capital expenditure will be increased in the course Werra 2060 of the sustainable and economic transformation • Increase in energy green salt + efficiency, more green potash! (especially in the years 2024 to 2026). spec
Slide 30: Optimize the existing
Optimize the existing 70 % EBITDA impact: around €30 million p.a. ▪ Increase of marketing in USA ex Bethune Agriculture ▪ Increase of trading business in Middle East, China and India ▪ Improved leveraging of local sales network ▪ Focus on potash product groups for industrial product sales Industry+
Slide 31: Werra 2060 – Securing a sustainable future
Werra 2060 – Securing a sustainable future 70 % How do we want to achieve this? ▪ Unterbreizbach and Wintershall sites: Focus on wastewater-free processing methods Innovations in Methods already ▪ Unterbreizbach mine: Expansion of secondary mining operations (drill and blast) extraction and tested o
Slide 32: Capex: Werra 2060
Capex: Werra 2060 70 % Schematic course of capex ▪ Compared to unchanged 250 operation mode only +€300m within 10 years 200 ▪ Gross capex of about €600m 150 ▪ Additionally positive impact on opex: e.g. - 20% vs. unchanged 100 operation in 2030 50 Capex difference Werra 2060 vs. unchanged operation m
Slide 33: Bethune – Efficient Production in Canada
Bethune – Efficient Production in Canada 70 % Primary and Secondary Mining – Ramp-up of the Canadian production from a good 2 to 4 mln. tonnes p.a. In primary mining, fresh water is In secondary mining, only saturated pumped into the layer containing NaCl brine is injected instead of potash, creatin
Slide 34: More ambitious climate strategy adopted
More ambitious climate strategy adopted CO2 emissions in milllion tonnes p.a. (Scope 1 and 2) ▪ We have already reduced 80% of our CO2 emissions 4 CO2 K+S Group (1990 – 2020): % Reduction vs. 2020 ▪ We have achieved this through the extensive use of highly efficient combined heat and power (CHP) tec
Slide 35: Decarbonization – Climate Neutrality
Decarbonization – Climate Neutrality * Targets Implementation Expectation By 2030: Focusing on the following key areas to reduce CO2 emissions: Conditions in the energy Reduction of absolute industry framework CO2 emissions by that provide incentives for at least CO2 decarbonization. 25% A This also
Slide 36: Our future – The climate-friendly potash production
Our future – The climate-friendly potash production In future, we want to produce "green potash" with the lowest possible CO2 footprint – compared to today and compared to our foreign competitors. To do this, we are treading two paths in parallel: The change in production and processing processes –
Slide 37: Green potash for sustainable agriculture
Green potash for sustainable agriculture Development of CO2e footprint green potash (MOP) Essential requirements for the change in technology The reduction in In future, we will be able to produce “green potash” in emissions results from Germany with the lowest possible CO2 footprint. Both ways the
Slide 38: Green Salt by 2030
Green Salt by 2030 Current system System conversion from 2030 Conversion of the salt works to low CO2 operation and the CO2 plants to "green" electricity procurement (CO2-neutral) Electricity Braunschweig-Lüneburg CO2 Natural gas ▪ Already very low in CO2 Natural as heat is generated in a biogas pla
Slide 39: Grow the core
Grow the core 20 % We enable farmers to achieve greater economic success Expansion of the portfolio ▪ Fertilization ▪ Micronutrients ▪ Concepts for soil health ▪ Further additions to the portfolio Logistic access ▪ Circular economy ▪ Last Mile Distribution Digital sales ▪ Agronomic services ▪ Digita
Slide 40: New business areas
New business areas 10 % Subsequent use of existing assets and development of new business areas Carbon dioxide (CO2) Renewable and green energy ▪ CCS: underground storage (solid and gaseous) ▪ Increasing use of renewable energies (wind, sun) at our sites ▪ CCU: use for the production of biomass or a
Slide 41: Performance Indicators
Performance Indicators Key Financial Performance Indicators Non-financial Performance Indicators The Company’s activities are managed based on the Performance indicators and target values in sustainability following key financial performance indicators, which are the management were defined for the
Slide 42: Performance Indicators
Performance Indicators Key Financial Performance Indicators 2019 2020 2021 2022 2023 EBITDA € million 640.4 444.8 1,067.3 2,422.9 712.4 Group earnings after tax, adjusted € million 77.8 -1,802.5 2,182.4 1,494.0 161.9 Capital expenditure € million 493.2 526.0 334.3 403.8 525.3 Adjusted free cash flow
Slide 43: Sustainability Goals 2030: Employees
K+S Sustainability Goals 2030 Target KPI Unit Target Value 2023 Deadline Target Achievement 34 % Employees Health & Safety Injury with lost time * LTI rate 0 7.6 Vision 2030 Society & Diversity & Positive perception of an inclusive 97 % % > 90% 87.0 2030 Inclusion working environment by employees 1
Slide 44: Sustainability Goals 2030: Environment & Resources
K+S Sustainability Goals 2030 Target KPI Unit Target Value 2023 Deadline Target Achievement Additional reduction in saline process water to be disposed of from potash production in million m³ p.a. -0.5 -0.06 2030 11% Germany 1 Reduction of saline process water from potash m3/t 0.370 0.467 2030 produ
Slide 45: K+S Sustainability: Ratings and Standards
K+S Sustainability: Ratings and Standards Current Trend over the Organization Rating scale Significance of rating rating last 12 months Rating scale from AAA to CCC AA Class of „Leader“ „medium” and only 2 steps away from prime status Rating scale from A+ to D- C (from B-) Rating scale from 0 to 40+
Slide 46: Our contribution to the 17 SDGs
Our contribution to the 17 SDGs K+S makes a direct contribution to a number of global sustainable development goals – and thus contributes to the fulfillment of the goals. More information and more details about our article can be found here. 46
Slide 47: Customer Segment Agriculture
3. Landwirtschaft 5 | 8 Customer Segment Agriculture
Slide 48: Agriculture customer segment at a glance
Agriculture customer segment at a glance Revenue split by region 2023 (%) Revenue split by products H1/2024 (%) Fertilizer others specialties 11 49 Asia 17 Potassium Europe chloride 44 51 thereof Germany 8 South America 20 North America 8 Characteristics in € million ▪ Close proximity to our most im
Slide 49: Our ingredients of natural origin
Our ingredients of natural origin Soil fertilizer Foliar and liquid fertilizer ✅ Our all-rounder - for your most different applications ✅ The basic ingredient for foliar fertilization ✅ Our all-rounder - for you also now with boron ✅ Our specialist for root and leaf crops ✅ Our all-rounder - for you
Slide 50: Customer Segment Industry+
6 | 8 Customer Segment Industry+
Slide 51: Industry+ customer segment at a glance
Industry+ customer segment at a glance Characteristics Revenue split by products H1/2024 (%) ▪ Emerging markets: Growth, especially in Asia, leads to thereof increasing demand for electrolysis. water softening 7.9 ▪ Electrolysis and specialties: Focus on product quality, Consumers 7.4 thereof indust
Slide 52: Main areas of application I
Main areas of application I Food Processing Industrial Applications Products for food production and processing, e.g. Products for many branches of industry, as a raw material or process additive, e.g. ▪ Meat & bakery products, cheese, snacks, ready meals, etc. ▪ Seasoning & preservative, texturizer
Slide 53: Main areas of application II
Main areas of application II De-Icing Water Treatment Products for greater safety - can be used for winter Products for water treatment, e.g. road maintenance on motorways, country roads, city streets, footpaths and cycle paths, e.g. ▪ Soft water to protect systems and equipment ▪ Disinfection of sw
Slide 54: Production and residue management
7 | 8 Production and residue management
Slide 55: Adding value along our entire supply chain
Adding value along our entire supply chain Our potash and salt deposits came into being millions of years ago. They are either our property or we Exploration have corresponding rights or approvals that allow the extraction or solution mining of the raw material reserves. We extract raw materials in
Slide 56: Underground mining production cycle
Underground mining production cycle Conventional mining 1 2 Muck pile load 3 4 Clearing Blasting after and dump Roof scaling shift end 9 Charging 5 Roof bolting with explosives 8 7 6 Drilling Face cleaning Auger drilling 56
Slide 57: Main production methods for salt
Main production methods for salt Rock salt Sea/solar salt Evaporated salt Brine Conventional Crystallization Recrystallization Controlled mining of sea water of purified brine solution mining ▪ Around 60% of worldwide salt production (more than 290 million tonnes including brine) is obtained from ro
Slide 58: Production sites in Germany
Production sites in Germany Potash sites (Share of production capacity in %) 1. Wintershall 2. Unterbreizbach Verbundwerk Werra ~ 50 3. Hattorf 9 6 4 4. Zielitz ~ 25 7 8 5. Neuhof-Ellers ~ 20 Kassel 1 6. Bergmannssegen-Hugo ~5 2 3 (only production site, no mining) 5 Salt sites 7. Borth 8. Bernburg 9
Slide 59: K+S in Canada: Bethune
K+S in Canada: Bethune Strengthening our global presence ▪ Expanding our current production portfolio in Germany with a North American production site → Only supplier with production sites in Europe and North America ▪ Securing a good asset base with competitive production costs China India North Am
Slide 60: Cost curve at customer's gate much flatter
Cost curve at customer’s gate much flatter Ramp-up of Bethune as well as measures to optimize the portfolio business USD/t Bethune's further ramp- up to 4 million tonnes will bring Bethune to the first quintile. fob cost curve 2024 cost curve at Brazil (25 USD up from 2020) customer‘s gate 2024 fob
Slide 61: Potash processing above ground
Potash processing above ground Electrostatic separation Thermal dissolution Flotation (ESTA®) Heating Floatation brine Finely ground 25 °C 110 °C crude salt Finely ground Mother brine Finely crude salt ground Conditioning Flotation Undis- crude salt agent solved residue + dissolved Air bubbles Tribo
Slide 62: Potash production: management of residues
Potash production: management of residues ▪ Crude salt has only a limited recyclable content (max. 30%), therefore the generation of residues is inevitable. All potash producers worldwide face this challenge. ▪ The recycling of partial volumes is performed at all producers. ▪ The methods, processes,
Slide 63: Green investments = long-term planning security
Green investments = long-term planning security Tailings piles extensions Hattorf ▪ Approval of Hattorf tailings pile expansion (phase 3) in mid-2025 and investments required Wintershall ▪ Next approval and significant investments in tailings pile extensions will not be necessary again until the end
Slide 64: Tailings pile coverage and greening
Tailings pile coverage and greening Our objectives The procedure ▪ From 2030 onwards, K+S will be able to use three Soil and construction rubble are installed in several million tonnes of residue annually for purposes layers on the stockpile in a precisely defined process. other than rearming. → For
Slide 65: Tailings pile and process water at the Werra site
Tailings pile and process water at the Werra site Development of saline wastewater Disposal of saline wastewater Utilization/Avoidance Reduction of saline wastewater based on various measures within (CapEx: almost €500 million) the last 25 years: Further No discharge ▪ Underground disposal in Unterb
Slide 66: Underground storage in Springen
Underground storage in Springen Our objective The procedure ▪ Our first goal of discontinuing the injection of saline ▪ Highly concentrated saline solution from potash wastewater into the plate dolomite as of 2022 has production is discharged into the mine field via been accomplished. existing lines
Slide 67: Financial data & IR
8 | 8 Financial data & IR
Slide 68: Key financial figures
1 Key financial figures Revenues (€ billion) EBITDA vs. Net financial liabilities/EBITDA2 5.7 7.2 2,423 4.9 4.1 3.9 3.7 3.2 1,067 640 445 712 0.6 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 EBITDA margin (%) FCF (€ million) +932 43 33 +140 +93 -42 +311 16 18 12 2019 2020 2021 2022 2023 2019 20
Slide 69: Operating and adjusted cash flow
1 Operating and adjusted cash flow 1,394 932 822 669 640 445 429 347 311 307 309 140 93 -42 -206 -390 -636 -777 2015 2016 2017 2018 2019 2020 2021 2022 2023 Operating Cash Flow Free Cash Flow (adjusted) 1 The figures relate to the continuing and discontinued operations of the K+S Group for the years
Slide 70: Cash flow and balance sheet
Cash flow and balance sheet 3M/22 H1/22 9M/22 FY/22 3M/23 H1/23 9M/23 FY/23 3M/24 H1/24 Operating cash flow 254 486 1,143 1,394 221 484 657 822 226 321 Investing cash flow -151 -252 -329 -462 -107 -210 -329 -510 -115 -235 (adjusted by sale/purchase of securities and other financial investments) Adju
Slide 71: K+S Share
K+S Share Key data Shareholder structure as of Dec 31, 2023 ▪ WKN: KSAG88 Private Investors ▪ ISIN: DE000KSAG888 40% ▪ Type of shares: registered shares of no-par value Free float ▪ Total number of shares: 179,100,000 100% ▪ Trading segment: Prime Standard Institutional ▪ Ticker symbols: Bloomberg S
Slide 72: Share performance
Share performance Performance of the K+S Share Market capitalization Index: December 31, 2020 = 100 450% K+S 400% 4.1 4.5 MDAX 4.3 4.3 4.0 350% 3.5 300% 3.0 2.9 250% 2.6 200% 2.1 150% 1.5 100% 50% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0% 01/2021 01/2022 01/2023 01/2024 As of Dec. 31
Slide 73: Performance of the K+S share in comparison
Performance of the K+S share in comparison Index: December 31, 2021 = 100 250% MDAX K+S 200% Nutrien Mosaic 150% ICL 100% 50% 0% 01/2022 01/2023 01/2024 Source: Bloomberg; as of August 2024 73
Slide 74: Distribution policy
Distribution policy K+S sets guiding principles for attractive shareholder participation Shareholder participation in K+S aims to return 30% to 50% The following factors are applied K+S wants to maintain a K+S's corporate success will of the adjusted free cash flow in determining the exact strong ba
Slide 75: K+S ADR Programme
K+S ADR Programme The K+S ADR Program offers North American investors the opportunity to take stock in K+S. Since the ADRs are quoted in US dollars and dividends are also distributed in US dollars, this financial instrument closely resembles an American share. Two ADRs represent one K+S ordinary sha
Slide 76: Share buyback 2023
Share buyback 2023 K+S has successfully completed the share buyback. Since mid-May 2023, K+S has bought back a total of 12.3 million of its own shares for just under €200 million (ISIN DE000KSAG888) at an average price of around €16 per share. This corresponds to 6.4 percent of the Company's share c
Slide 77: K+S debt instruments and issuer rating
K+S debt instruments and issuer rating Issuer rating (S&P): BBB- (outlook: stable) since June 2023 Bond 06/2029 (3-months-par-call) WKN A383E2 ISIN XS2844398482 Listing Luxembourg SE Issue volume €500 million Outstanding volume €500 million Issue price 99.147% Coupon 4.250% Maturity June 19, 2029 De
Slide 78: Financial calendar
Financial calendar Quiet period prior to the report October 17 to November 14, 2024 (7 a.m. CET) Quarterly Report: September 30, 2024 November 14, 2024 Quiet period prior to the report January 30 to March 13, 2025 (7 a.m. CET) 2024 Annual Report: December 31, 2024 March 13, 2025 Quiet period prior t
Slide 79: Investor Relations Contacts
Investor Relations Contacts Nathalie Frost Julia Bock, CFA Esther Beuermann, MBA Senior Investor Relations Manager Head of Investor Relations Senior Investor Relations Manager Phone: + 49 561 / 9301-1403 Phone: + 49 561 / 9301-1009 Phone: + 49 561 / 9301-1679 Fax: + 49 561 / 9301-2425 Fax: + 49 561
Slide 80: Disclaimer
Disclaimer No reliance may be placed for any purpose whatsoever on the information or opinions contained in the Presentation or on its completeness, accuracy of fairness. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its respective direc
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