K+S Aktiengesellschaft — Non-Deal Roadshow (December 2021)
32 slides from K+S Aktiengesellschaft's roadshow presentation, Dec 9, 2021
Slide 1: Scotiabank Virtual Roadshow North America
December 9, 2021 K+S Aktiengesellschaft Scotiabank Virtual Roadshow North America Dr. Burkhard Lohr Julia Bock, CFA CEO Head of Investor Relations
Slide 2: 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
Slide 3: Rapid Debt Reduction and Value Generation
Rapid Debt Reduction and Value Generation Sale of the Americas operating unit ▪ Closing completed on April 30 ▪ Net proceeds ~ €2.6 billion ▪ Book gain ~ €742 million Financial debt reduced significantly by ~ €1.7 billion ▪ > €1 billion credit facilities, promissory notes, commercial papers ▪ Succes
Slide 4: REKS antitrust clearance granted
REKS antitrust clearance granted ▪ On December 1, 2021, the German Federal Cartel Office (“Bundeskartellamt“) granted clearance for REKS joint venture. ▪ Closing of the transaction is expected before the end of the year: ✓ one-off gain (+ €200m EBITDA) and ✓ cash inflow (+ €90m before taxes) expecte
Slide 5: Final FREP findings: No adjustments to valuations necessary
Final FREP findings: No adjustments to valuations necessary Valuation of the Potash and Magnesium Products CGU subject to the examination of the 2019 and H1/2020 financial statements by the Financial Reporting Enforcement Panel (FREP – DPR) November 25, 2021 ✓ Final examination findings received fro
Slide 6: EBITDA more than quadrupled in Q3
EBITDA more than quadrupled in Q3 Continuing operations Revenues Q3 EBITDA Q3 Agriculture - in € million - - in € million - ▪ ASP: 300 €/tonne (Q3/20: 238 €/tonne) ▪ Sales volume: 1.76 mt (Q3/20: 1.66 mt) +31% +382% Industry+ 746 ▪ Normalized demand 121 ▪ Good early fills season with 566 de-icing sa
Slide 7: Q3/21 EBITDA more than quadrupled YoY
Q3/21 EBITDA more than quadrupled YoY Highlights Financials (continuing operations) ▪ Q3/21 EBITDA increased to €121m (Q3/20: €25m, excluding positive non-cash, one-off effect of € 56 million) € million Q3/2020 Q3/2021 % ▪ COVID-19: Minor efficiency losses on the previous year’s Q3 level Revenues 56
Slide 8: Affordability concerns? Farm economics still attractive!
Affordability concerns? Farm economics still attractive! Futures, indexed, Bloomberg, as of 4 November 2021 U.S. Corn Farmer Profitability Outlook per acre* 300% 275% 250% 225% 200% 175% 150% 125% U.S. Soybean Farmer Profitability Outlook per acre* 100% 75% 50% Wheat Soybean Corn Palmoil → While far
Slide 9: New potash capacities necessary to meet rising demand
New potash capacities necessary to meet rising demand thousand tonnes 120,000 100,000 +3.0% (Upside scenario) +1.6% (IFA prognosis) 80,000 60,000 40,000 20,000 ,0 '00 '05 '10 '15 '20 '25e '30e Nameplate capacity New capacities Short supply Global sales volume Production 9 Source: IFA, K+S; including
Slide 10: Agriculture customer segment in Q3/21
Agriculture customer segment in Q3/21 Q3/2021 USD/t EUR/t • Price hike in Brazil continued 850 800 on the back of very strong 800 demand 750 700 • Concerns about supply due to 700 Potassium 650 Sulfate US sanctions against Belarus (SOP) Potassium 600 600 Europe Chloride (MOP) Brazil • Positively inf
Slide 11: Q3 trading update: Industry+
Q3 trading update: Industry+ De-icing salt business ▪ Strong performance in Q3 ▪ Good early-fills business Pharmaceutical industry ▪ Increase after COVID-19-related declines in previous year Food service ▪ Still burdened by COVID-19-effects Chemical industry ▪ Increase after COVID-19-related decline
Slide 12: 2021 EBITDA outlook raised to €830 million
2021 EBITDA outlook raised to €830 million ▪ Significantly higher average price in EBITDA in €m continuing operations ~830 Agriculture product portfolio + REKS (~200) ▪ Sales volume in the Agriculture customer segment expected to be - Higher freight costs >7.5 million tonnes - Higher energy costs (2
Slide 13: Sneak preview 2022
Sneak preview 2022 Cost inflation included: − freight rates, especially containers ▪ EBITDA of €1 billion* in reach − gas prices/energy costs − price of raw materials, e.g. for pallets, ▪ Significantly positive FCF packaging or maintenance material, also influencing capex − personnel costs 13 * excl
Slide 14: Our new dividend policy
Our new dividend policy Current situation: Discretionary premium ▪ Still high environmental expenditures upon balance sheet structure, ▪ K+S still in restructuring phase outlook etc. Considerations: ▪ Shareholders should participate in K+S’s success through attractive dividend ▪ Strategic measures a
Slide 15: Strategic financial targets
Strategic financial targets MOP gran. bulk CFR Brazil price development USD/t 1. ROCE 1200 above cost of capital through the cycle (WACC 2020: 9.4%) 1000 800 2. EBITDA margin at minimum 20% through the cycle 600 400 3. Free cash flow positive free cash flow even with 200 temporarily low potash price
Slide 16: Guiding principles of strategy and management focus
Guiding principles of strategy and management focus New business areas Grow the core 10% Optimize the 20% REKS existing Circular economy Fertigation 70% Digitalization Micronutrients Automation Operations excellence Biostimulants Carbon footprint Bethune ramp-up Soil health Werra 2060 Climate strate
Slide 17: Strategic classification of salt business
Strategic classification of salt business Global market position of the continuing K+S salt business ▪ After sale of OU Americas, reduced global relevance and reach ▪ Risk of new competitors entering the market (e.g., Ciech, Varnitsa) ▪ Continued high dependence on de-icing salt business with simult
Slide 18: Bethune: Commodity site with cost leadership
Bethune: 70% Commodity site with cost leadership ▪ Growth on the way to 4mt pa is achieved through secondary mining & cooling pond technology ▪ Improvements in efficiency through automation, start of secondary mining and reduction of energy input per tonne of end product ➢ Reduction of energy and wa
Slide 19: Bethune
Bethune Ramp-up to 4mtpa 4mtpa 4mtpa Next Target: Stage >=1 FEL 0 3mtpa Capacity 2024 Next Target: Stage >=2 FEL 1 2.3mtpa FEL 0 FEL 2 Next Target: Stage >=4 FEL 1 FEL 3 2mtpa FEL 0 FEL 2 FEL 4 Timing: This project Completed represents a conti- FEL 1 Engineering completed by % of value FEL 3 nuous c
Slide 20: Site costs (FOB) in comparison
Site costs (FOB) in comparison Further ramp-up USD/t of Bethune to 4mt will bring Bethune -30% into the first quintile Best-in-class * K+S Bethune K+S Bethune K+S Zielitz 1st Quintile of lowest cost (mid-term) (today) (purely MOP) production volume * column width = Source: CRU Report 2019, K+S produ
Slide 21: Zielitz: Clear focus on potash products
70% Zielitz: Clear focus on potash products ▪ Focus on innovative strategic future projects and concepts: ➢ Operations Exellence (cash cost reduction) ➢ Autonomous mining and process control systems ➢ Renewable energy, H2 and CO2 infrastructure ▪ Expansion of KCl 99 to become the industry leader in
Slide 22: Werra: World's largest potash, magnesium and sulphur specialties plant
Werra: 70% World's largest potash, magnesium and sulphur specialties plant 1. Optimize portfolio ➢ Maximize CMS (Epsom Salt) ➢ Increase granulated products ➢ Increase of SOP production ➢ New specialties, incl. green fertilizers 2. Future proof ➢ Increase extraction rate ➢ Reduce process water ➢ Redu
Slide 23: Neuhof: Specialties plant for the European market
70% Neuhof: Specialties plant for the European market Increase plant lifetime 1. Efficiency ➢ Increase extraction rate ➢ Reduction in chemical consumption ➢ Increase own power generation ➢ Reduce energy usage 2. Optimize portfolio ➢ Increase kieserite production ➢ Increase granulated products 3. Fut
Slide 24: Strategic direction of the potash primary sites
70% Strategic direction of the potash primary sites Commodity alignment Cost leadership, ramp up Profitability * Commodity alignment Specialties alignment Highly efficient potash site Expansion of product portfolio Neuhof high Zielitz Turn-around Winters- Hattorf hall low Unter- breizbach Bethune We
Slide 25: Centers of excellence for focus topics
70% Centers of excellence for focus topics Bethune Zielitz Neuhof Werra Increase extraction rates X Autonomous mining X Process automation X Energy efficiency and CO2 footprint reduction X New business models X e.g., CO2, H2, energy 25
Slide 26: Optimization of K+S salt sites
70% Optimization of K+S salt sites Generally • Focus on cost optimization; manage capex at base level; maintenance and operational improvement measures with ROI ≤ 3 years Shaping concepts for commodity vs. specialty sites • Concentration of de-icing salt volumes at low-cost sites • Optimization logi
Slide 27: Operations Excellence at K+S: Sales, Marketing and Supply Chain
70% Operations Excellence at K+S: Sales, Marketing and Supply Chain • Improve net backs (e.g. pricing, product allocation) Digitalization throughout the value chain • Production planning (margin optimized production portfolio ) Application and use of cloud data and AI-based algorithms • Sales and se
Slide 28: Share of additional EBITDA contribution by 2023
70% Share of additional EBITDA contribution by 2023 Plants Market Supply Chain Other 28
Slide 29: Grow the core: Contribution of the product groups
20% Grow the core: Contribution of the product groups Product groups (top line potential by 2030) Fertigation (>€ 200 million) Time Share of Micronutrients (>€ 200 million) EBITDA contribution Biostimulants (>€ 50 million) Half of the potential can be realized by 2025 Further inorganic growth potent
Slide 30: K+S Climate Strategy
K+S Climate Strategy 80% reduction of GHG emissions (1990 – 2020) Short-term goal: already achieved by a change of fuels, increase of Introduction of a “K+S climate protection energy efficiency and closing of sites fund” from 2022 to reduce our CO2 emissions. Values in Germany million t CO2 K+S -79%
Slide 31: Housekeeping items / Financial calendar
Housekeeping items / Financial calendar Additional information on 2021 FY outlook – continuing operations ▪ Tax rate: 30% ▪ Financial result: on the level of last year (2020: €-106m) ▪ CapEx: < €400m (2020: €428m) ▪ D&A: ~€300m Financial calendar Commerzbank German Investment Seminar (New York) – CE
Slide 32: Investor Relations Contact
Investor Relations Contact Julia Bock, CFA Nathalie Frost Esther Beuermann Head of Investor Relations Investor Relations Manager Investor Relations Manager Phone: + 49 561 / 9301-1009 Phone: + 49 561 / 9301-1403 Phone: + 49 561 / 9301-1679 Fax: + 49 561 / 9301-2425 Fax: + 49 561 / 9301-2425 Fax: + 4
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